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Priyanka Jayashankar

A look at how corporates use online banking services for their day-to-day financial operations.

Bid adieu to cheques, floats and demand drafts — and make way for automatic fund transfers and real-time settlements. `Business @ the speed of thought' is the virtual reality for Net-savvy corporates.

For the Lucas-TVS staff in Chennai, the online payment of shipping bills is now a hassle-free job. With a mouse click, the company saves transaction time and cuts down on costs. Supply chain management is also getting a cyber twist: bulk payments to the company's vendors are made in 15 to 20 minutes through a remittance advice and Web-based services. Vendors are assured of "the predictability of payment at a particular time," says Senior Vice-President (Finance) of Lucas-TVS, A.S. Ravi. Banking on the Internet has improved the liquidity position of his company, he adds. Such an IT-enabled supply chain enhances value to the customer and minimises the cost of inventory, transportation and handling.

Software enterprise Polaris has backed up its huge retail network and supply chain with e-banking facilities. Bills from vendors are processed online thrice a month. The cash surplus gets automatically re-allocated overnight, explains a finance department official from Polaris, adding that e-banking has reduced the cost of logistics. Similarly, Lucas-TVS also has an auto-sweep system in place wherein surplus funds get transferred to a mutual fund. Some companies go in for online banking solutions to save transaction time rather than trim down expenses. "Though online banking has not brought down the actual cost, the efficiency of cash disbursement has gone up," says S. Sundar, Finance Manager - Global E-business Operations, Hewlett Packard (HP).

In this context, one must keep in mind that corporates can reap one or more of the following goals through online banking: increased revenues, reducing costs and improved services. Marico made headway in online banking with the launch of `e-collections' this August. The scheme entails the online transfer of funds from distributors, instead of cheque collections. Online collections will definitely reduce the cost of cash management services, points out Milind Sarwate, CFO of Marico Industries. "But it is still in a nascent stage and would stabilise in the near future," he adds. An e-payment project for vendors is also in the pipeline.

Tech-savvy employees

Polaris has gone the distance to provide "anywhere" banking facilities for its employees. About 20 to 25 per cent of its employees travel overseas and they can access their bank accounts even from kiosks at airports. "I had met online bankers in the US and they told me that the older population prefers to personally interact with bankers," says the Polaris spokesperson, adding that their older employees were not keen to use the online banking facility. While Polaris staff salaries are transferred by ECS (electronic clearing service) to theirHDFC or Citibank accounts, the ATM facility is available at the company's offices in Chennai and Gurgaon. Most Marico staff, according to Sarwate, extensively use anytime banking services. About 75 per cent of HP's employees use their salary accounts through Internet banking, says Sundar.

Salary accounts too are becoming globalised. For instance, the bank accounts of the overseas employees of Polaris (at its subsidiaries in the US and Switzerland) can be accessed from India. "We are planning payroll processing of the overseas employees through a BPO in India," he adds. HP, too, has outsourced its payroll accounts to third parties. Lucas-TVS, so far, has not considered payroll outsourcing as a cost-effective option, but the company remains open to the possibility. M-banking (mobile banking) has gained a foothold in HP. While account balances can be displayed on the employee's cell phone, transactions cannot be carried out through it, adds Sundar.

Making it easy for stakeholders

Shareholders are also turning to cyberspace to maximise profits. Small wonder then that Marico will soon be using ECS to pay dividends.

Security measures

But security of Net transactions continues to remain a concern. HP, too, faced teething problems when it went in for online banking. Employees were concerned about the security risks of operating their salary accounts on the Net. Hence HP beefed up the e-banking services with data security software such as firewalls and dynamic security solutions. In fact, Lucas-TVS has taken precautions for online salary payments by handing over back-up floppies and CDs to its employees. When it comes to bulk payment to vendors, a hardcopy is physically delivered to them.

But HP prefers to make transactions with government agencies in the traditional way — through cheques and demand drafts. Its letters of credit are also physically delivered. E-signatures have not caught on with corporates for security reasons.

Online banking still has to tide over technical glitches, before it reaches out to all medium-sized companies across the country. As Bill Gates, Chairman and Chief Software Architect, Microsoft Corporation, observed, "The world needs banking, not bankers."

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