The Corporation Bank, Indias premier public sector bank is affecting a sea change in its technology adoption to stay ahead of other public sector banks. The move is aimed at bridging the technological gap with new private sector banks.
In a move to become technologically competent, the bank has entered into a strategic business alliance with Netsavvy Solutions Pvt. Ltd., to provide Internet banking facilities to its customers. The bank has already web - enabled its cash management products to facilitate easy access of information by corporate clients and is now offering services such as NRI deposits, anywhere-anytime banking online. In the next phase, the bank plans to offer a range of services such as web shopping, electronic payment with the aim of offering B2C services.
The bank has also opted to implement treasury management solution from Laser Soft Infosystems Ltd., which is a banking software solution provider. This software would enable online interaction of domestic and foreign treasury operations and investments with more than 500 functionalities. It will cover operations such as foreign exchange transactions, money market operations and investments. The package will be the first of its kind in India and will have facilities for bullion operations, cross-border remittances and asset-liability of the user bank.
Corporation bank has a well-established communication network on a VSAT backbone. The bank also plans to offer phone-banking facilities in major metropolitan cities within a month.
This initiative of the bank suggests that it is transforming itself with the changing scenario. Although the bank has automated around 80% of its business, they are nowhere in league with the new private banks. Still they are appreciable considering the government holding of 68.3%. This is also one of the reasons for its comparatively lower valuations.
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In the immediate future, the bank is likely to face greater competition in one of its premier offerings - the cash management product, which contributed more than 30% to its total profits. Its leadership position in this market is under threat from new players such as ICICI Bank and HDFC Bank. A couple of other public sector banks have also entered the fray. To minimize its risk, the bank plans to diversify its revenue stream by foraying into primary dealership, depository services and tapping domestic gold deposits. The bank has also expressed its desire to enter into the insurance sector.
The Government's stated intention in the Budget to bring down its stake to 33 % in all public sector banks, may act as a trigger for interest in the stock. The bank's infrastructure, its lean workforce, large branch network, and its good asset quality is likely to interest private sector banks for acquisition purpose.
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