IT Helps Bank of India Reach Out to Rural Clients

CIO 100 Winner: Banking in rural India has always been ridden with challenges, be it with telecom connectivity or availability of electricity. But Bank of India came up with a unique idea and brought core banking to 1,868 rural branches, despite the multiple challenges.

Team CIO Nov 13th 2009 A-A+

Publish Date:2009-11-13

Summary:

CIO 100 Winner: Banking in rural India has always been ridden with challenges, be it with telecom connectivity or availability of electricity. But Bank of India came up with a unique idea and brought core banking to 1,868 rural branches, despite the multiple challenges.

Highlights:

  • Kalyansundar turned to VSATs to overcome the bank’s connectivity problems.
  • They started one of the largest solar-powered initiatives in the country.

Reader ROI:

  • How to overcome the challenges of connectivity in rural India
  • Importance of user training for banking applications

The Bank of India is one of the first in India to establish fully-computerized branches and ATMs in Mumbai - twenty years ago. But 1,868 of its rural branches were not part of its core banking system, which put its rural clients at a disadvantage.

“With 70 percent of India living in rural areas it became imperative to extend core banking facilities to them.”

"With 70 percent of the country's population living in rural areas and with the kind of economic growth they have seen, it became imperative that they were provided similar types of services. Moreover, with new Government schemes like the New Pension Scheme and the National Rural Employment Guarantee Program, rural customers needed better facilities," says P.A. Kalyanasundar, general manager, Bank of India.

The immediate challenge before Kalyanasundar was a problem that plagues many businesses operating in rural India: connectivity. "The infrastructure at the datacenter was already available. The challenge was in providing infrastructure and last mile connectivity at these branches," says Kalyanasundar.

Given India's spread-out geography and poor Internet penetration, Kalyansundar turned to VSATs to overcome the bank's connectivity problems. What was harder was getting electricity to these branches which typically suffer from prolonged power-cuts. Using generators to run the servers and VSATs would have been expensive so Kalyansundar's team chose to use the sun. They started one of the largest solar-powered initiatives in the country.

The next step was training users in rural branches to use core banking applications. The skills of these workers needed upgrading, which the bank is tackling with ongoing training.

The project which will cost the bank Rs 175 crore over five years went live in May 2009. "With all 3,000-plus branches now on a uniform system, we integrated them to the various payment systems like foreign inward remittances, RTGS/NEFT, SWIFT, electronic clearing services, etcetera. Today, all inward and outward remittances happen in a seamless manner via straight through processing," says Kalyansundar.

“With 70 percent of India living in rural areas it became imperative to extend core banking facilities to them.”

The benefits have begun to show with rural areas bringing in low cost deposits. Plus, Kalyansundar adds, the government has chosen the Bank of India as the trustee bank for its New Pension Scheme and the beneficiaries expected to have banking arrangements with them. The project achieved ROI in seven months.