It is almost 15 years since the Indian banking sector was liberalized and paradigm shift happened in the Indian banking services. All banks have either totally implemented `core banking systems' or halfway through. The results of a survey were obtained from 292 respondents about their views on electronic banking channels, indicate that the banks are exceeding the expectations in technology based services; and their perceived service level on branch network is below the expected levels of the respondents. This result is in tune with the respondents' opinion on the perceived `gap' with the bank because of the introduction of technology, and on the necessity of human contact with the clients by the banks. This throws up a challenge to banks. Technology alone cannot give a sustainable competitive advantage for the banks. When all banks introduce IT, it will lose its position as a differentiator. Beyond a point, IT along with `personal touch' will be necessary for the banks to retain existing clients and to attract new ones. Banks have to incorporate this in their operational strategy.
For the past two decades, both the global and Indian banking industries have been undergoing rapid changes, reflecting a number of underlying developments. The most significant change has been advances in communication and information technology, which have accelerated and broadened the dissemination of financial information while lowering the costs of many financial activities. A lot of structural changes were introduced in 1991 in the Indian banking industry, which coincided with the Information Technology Revolution of the 1990s. The Reserve Bank of India (RBI) appointed a committee under Dr Rangarajan in 1980s to implement computerization in phases to improve customer service, productivity, and to enhance management control. A new class of banks `New Private Sector Banks (NPSBs)' came into existence as a result of liberalization of Indian economy, which competed with both foreign banks and Indian banks for market share. The domination of public sector banks has declined over the years with the entry and aggressive expansion of the private banks. NPSBs perceived future competition among banks would be essentially based on the state-of-the art technology infrastructure, comparable to that of banks in developed countries. NPSBs also stress that the importance of branch banking will diminish due to IT-based channels like ATMs, Internet/Mobile/Phone banking. Tech-savvy foreign banks and NPSBs have progressed a lot in offering a wide range of innovative services to their clients, while other banks (both PSBs and Old Private Sector Banks (OPSBs)) are racing to catch up. All the banks are moving towards core-banking solutions and are investing heavily on Technology. As almost a decade is over since the arrival of NPSBs, it will be in fitness of things to study in the Indian context how computerization has influenced the banking habits and preferences of Indian customers. A survey was conducted and the responses received from 292 respondents were analyzed to understand the perception on technology based services and preferences in banking. The study also listed the factors of importance in choosing a bank by customers and also measured the performances in a five-point scale.
While the entire Indian banking industry is moving fast to improve the IT infrastructure and to implement core-banking solution to integrate the entire banking operations, it is imperative to study in the Indian context the impact of computerization.
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