State Bank of India (SBI) plans to launch banking services on the Internet. This was reported by a leading financial daily.
SBI's move to launch e-banking services has a lot to do with the fact that private sector banks have stolen a march over their public sector counterparts in e-banking. HDFC Bank and ICICI Bank already offer clients the facility to check their accounts, withdraw cash, order cheque books, etc. on-line. Yesterday, Global Trust Bank, (also in the private sector) launched its services on the Internet.
SBI, India's largest bank, will have definite advantages over its private sector competitors when it goes on line. With the largest client base in the country, SBI will be benefit from e-banking in a big way. This is because while other private sector banks have built a client base using e-banking as a major draw, SBI already has a ready client base in place.
However, SBI has only initiated talks with infotech (IT) consultants to prepare a comprehensive IT plan. There was nothing in the news report to indicate how long it would take for the e-banking services to take off. SBI will have to move fast if it wants to protect its turf from private sector invasion. As Internet subscriptions rise, more and more users will prefer e-banking to the traditional method. This could lead to an erosion of its client base.
Moreover, with many corporates planning ambitious e-commerce strategies, e-banking services will become the order of the day. Also with the Securities and Exchange Board of India (SEBI) hinting at e-broking, e-banking will get a huge fillip.
Analysts have rated the stock as a 'BUY' on account of the turnaround in the Indian economy, which will lead to an increase in credit growth and the demand for other banking services
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