IT solutions a must for complex bank transactions

MANILA, Philippines—Banking has become so complex that, for an institution to thrive in the industry, it will need to have an edge in smartness and sophistication.

Because of the latest global crisis—brought on largely by unsound banking practices—banks all over the world are now facing numerous and much tougher regulations.

Also, they now need to exert more effort in winning the confidence of depositors and investors.

“Banking is so complicated now. There are just too many regulations. And the level of complexity of the tasks involved in banking has increased,” says Sanjay Varma, regional managing director for IT-solutions provider SunGard.

Central banks worldwide are enhancing their supervision standards to prevent the recurrence of the recent global crisis, which stemmed from banking failures in the United States that spilled over to Europe.

With the release of Basel 3, central banks across the globe are now being urged to adopt this strict set of regulations.

The Philippines is not exempt. Already, the Bangko Sentral ng Pilipinas has begun implementing some provisions of Basel 3, even though the local banking sector is considered to be quite healthy.

The complex and lengthy list of new regulations covers capitalization, risk-taking, corporate governance and transparency. But 100-percent compliance will be impossible without information technology solutions that can help a bank store and interpret data generated in its day-to-day operations.

“IT solutions have become a necessity for banks, given current trends,” says Varma, who oversees the company’s operations in the Asia Pacific.

He says SunGard offers software products that can help banks manage data and, thus, ensure they comply with the BSP’s regulations.

Also, banks are now facing stiffer competition when it comes to reeling in customers, who have become more demanding in terms of financial services, particularly online and mobile banking.

“The motto for banks these days is to provide services anytime and anywhere,” says Varma.

This is the reason why banks that do not have capability to provide IT-enabled services will not succeed in the industry, he says.

This is where IT companies like SunGard come in, Varma says. Software applications that allow transactions 24/7 will enable a bank to win more customers. A bank may gain the loyalty of its clients by providing consistent and reliable services.

Most banks in the West failed because of excessive risk taking, he explains. That is why banks are now under pressure to modify their investment strategies and keep their stakeholders happy.

Varma says IT solutions help guide banks in making sound investment decisions.

With the right software products, a bank can more easily analyze data, such as market trends and their capacity for risk-taking. Sound analysis, in turn, helps a bank to make prudent investment decisions, the executive says.

Varma also dispels notions that IT solutions are expensive. He says a bank can avail itself of IT solutions that fit its business size and requirements.

“Technology is something a bank can afford. It simply has to define the technology it needs,” Varma says.

“A bank can go with a single or a couple of modules depending on its own requirement,” he adds.

According to Varma, given the stricter regulatory environment and tougher market competition, failing to invest in appropriate IT solutions will actually cost a bank much more.