In an award function organised by the Institute for Development and Research in Banking Technologies, RBI Governor Raghuram Rajan emphasised on the use of Information Technology (IT) in banking system, which is quite low at the moment. He said that banks should use new technologies to bring down the costs, further adding that the process of setting up an IT subsidiary of RBI is currently underway.
Talking about the challenges before the banking system, the Governor advised banks to use the information available about the customers for serving them in terms of services and designing new products.
Rajan said, “A lot of information about the customer is there that is made available through the system ranging from their social media habits and also a number of products being used by them. All this can be used to formulate better in terms of what the customer is likely to use or want and essentially to serve the needs of the customer.”
He added, “Banks that are still using traditional systems and offering traditional products will be facing a lot of challenges in future from the modern banks.”
Regarding the cyber security and the prevention of frauds, Rajan said, “For small bank transactions, if banks or credit card providers are willing to take risk, RBI may allow small-value payments, which are based on direct usage of cards, without a second level of protection.”
Finally, Rajan distributed Banking Technology Awards announced by IDRBT for the use of technology in banking.