The State Bank of India (SBI) is the latest to be bitten by the information technology bug. It plans to network its 2,500 computerised branches and automated teller machines and also make a foray into internet banking by Year 2000.
The SBI (FY99 Total Income Rs 19.11 bn) is India's largest bank. It runs the world's largest network of 8,900 branches and controls about 22% of India's loans and deposits.
The Indian banking industry has been witnessing a quiet revolution over the last few years. There has been a steady rise in the number of private sector and foreign banks and their branches. Also, on the technological front, the private sector banks have altered the way banking was done in India. However, in this entire process, it is the public sector banks that have been playing catch up with the private sector banks. SBI, the largest of them all, too, has been feeling the pinch and has consequently become more aggressive in its spending to upgrade existing technology.
The move to network the existing systems, introduce internet banking and extend working hours will help SBI regain some ground from the private players. Better technology will also help SBI to manage its funds more efficiently. This could translate into better spreads for the bank.
With the competition in the banking industry likely to become more intense, banks would have to cut costs and manage funds more efficiently. This could be facilitated by adopting the right technology, which can guide the managers to optimise the utilisation of funds. Although SBI has the advantage of a large deposit base, it will have to become more agile if it were to retain its market share. This is so because a number of private and foreign banks are considering a retail thrust to build a low cost deposit base.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407