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Companies in the services sector of an economy bank on technology to differentiate their products. If it is banking, all the more so.
However, when ATMs were being set up across the country in the early 1990s, many were sceptical about their touted ability to revolutionise withdrawal of money. Computerisation of bank processes was frowned upon, as employees feared it could take away their jobs. From being an unwelcome entrant, technology in banks has become a differentiator.
A vast number of players buzz in the financial beehive now, coming up with newer investment products and loan schemes – a corporate looking for funds has options ranging from banks and non-banking financial companies to the external commercial borrowings.
“From acting as intermediaries in the flow of money, financial firms have come a long way. And this opens up many opportunities for you,” Mr G. Natarajan, Head – Wholesale Banking (South), Kotak Mahindra Bank, told the MBA students of Velammal Institute of Technology in a BL Club lecture organised by Business Line and presenting sponsor Central Bank of India. He said banks are keen on developing innovative financial products to outrun competitors, especially in the small and medium enterprises sector. The credit risk expert highlighted banks' easing of procedure in lending to small entrepreneurs.
“Earlier public sector banks had a central credit department for loan assessments. Now, private banks have set up specific sections – like mid-market, SME departments – to assess a borrower's capability to pay back. For small entrepreneurs, they are following the simple principle of 20 per cent of turnover is maximum loan amount.”
Answering a question on the security risks that accompany electronic fund transfers, he said banks are working on 16-bit, even 32-bit, encryptions to make sure essential details are not tapped into. “Security risks, there are. But banks don't have to go slow on technology for that. In fact, fraud has come down after the advent of technology.”
He advised students to become specialists in an area before the interviews begin.
“In the mid-1980s, probationary officers who joined public sector banks were asked to seal covers and despatch them. Now, they expect you to read a small firm's balance sheet and reason out why a loan is not feasible.”
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