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The journey of public sector banks (PSBs) in technology adoption since their nationalisation in 1969 has been fascinating. Today, it can easily be said that the economy is driven by banks, while technology drives banking transactions. The Institute for Development & Research in Banking Technology (IDRBT), an arm of the Reserve Bank of India, played a key role in the transformation of banking technology over the years. On the occasion of 50 years of the first nationalisation of public sector banks in India, BusinessLine spoke to its Director AS Ramasastri. Excerpts:
How do you evaluate the evolution of banking technology in the last five decades?
We have come a long way since 1969. In the 1970s, technology level was low with only printers, faxes and calculators being used. In 1980s, there was first the deployment of Mainframes for internal processing and the RBI had a big mainframe computer. The same was used by insurers too. In 1980s, Magnetic Ink Character Recognition (MICR) data was a significant change in cheque processing and the Rangarajan Committee had set the tone for the next phase of growth. Advance Ledger Posting Machines were used, bringing computers into banking. Core Banking Solution was a major step in the 1990s in providing connectivity and internal reconciliation during 1990s.
In 2000s, the introduction of Real-Time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT) brought a technology shift. From 2010 onwards, mobile banking has been taking a prime seat.
What role did IDRBT play in this process?
Over the years, we have been engaged in design and deployment of technology such as structured financial messaging system, Indian Financial Network (INFINET) and National Financial Switch. We are now working on a range of advanced technologies such as blockchain, artificial intelligence, machine learning, cyber security and analytics.
How do you compare technology adoption and use in Indian PSBs vis-a-vis their Western counterparts?
We may have started a bit late, but our technology practices and systems are very much comparable to those of western banks now. For instance, on the security front, we have built robust systems, as strong as those being used by banks in advanced countries.
Any guess on the face of banking technology after 50 years from now?
There will be lot of integration of brain and artificial intelligence. All assets will be in digital form, I guess. Banks will be more like virtual service providers. Fintechs and P2P lending will witness growth in next 10 years.
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