Digitisation is rapidly changing the banks and the banking . The modern techno prone banking are leading new stiff challenges to Cooperative Banks . The cooperative banks , community banks have to muscle hard to continue with their legacy , to keep on rolling in their strength based area .
The horizon and number of co operative number have declined during the decade mainly the financially weak Urban Cooperative Banks (UCBs) vanished , speaks the losing their pie to others . The giant leaps in technology taken by the new era banks ,PSU Banks and the advent of fintech companies are in all way pushing cooperative banks to gearup to march ahead with technology . To remain effective, vibrant and to keep on doing business these banks need technology support . The technology and innovation is competing with traditional financial methods in the delivery of banking services . The sooner the shift to technology the better it is for cooperative banks .
From Government also their is a major thrust to modernize the Urban Cooperative Banks .Their is a allocation of Rs 1900 crore in Union Budget 2017-18 to modernize credit societies and district cooperative banks through Nabard . The RBI is the regulator and NABARD is the supervisor for the cooperative banks . Nabard is playing key role in transforming their services to IT platform.
Indian Banks and financial institutions are investing heavily on Information Technology and to upgrade them technically. The ideation of shifting to digitisation and innovation is catching high to many of UCBs . But their will be various challenges of different frequencies to catch the race.
It is a expensive affair and a big capital expenditure which is tough to executive . Limitations are their to develop in house cloud –based solutions or possessing such solutions for them . Hosting supported by the IT companies can be a way. Rather than developing software , taking software as a paid service can be a less costly affair . The IT Company can host the solutions and these bank will pay for transaction and the model they deploy. In this way the requirement for own servers and data centre will not be their, a costing measure without compromising the matched IT platform/services . For small cooperative banks it will be fantastic approach.
In fact the journey towards digitisation for cooperative banks have already started and at present they represent good share out of 144 banks that are live on the Unified Payments Interface (UPI) , a promising step . The number of banks becoming live in AePS (Aadhaar Enabled Payment) and IMPS (Immediate Payment Service ) is increasing . Paving the way to their customers to pay digitally by using UPI apps likeBhim, Paypal, Google Pay, PhonePe .
Establishing ATM and Infrastructure for it , is the another area where these entities have started invested . Andaman and Nicobar Sate Coop Bank has taken lead in this and have established more than 50 ATMs . Only once they become part of interoperable payment networks their visibility among customers will penetrate and new avenues will arise .
Training the employees and scarcity of talent are breaking the speed of digitisation . In coordinating with leading banks and IT companies training can be propelled nicely .And on contract basis talent can be hired to accelerate the journey of digitisation.
Maintenance and continuous upgrading the IT Platform and software is necessary for smooth and hassle free sailing . The cooperative banks have to mark up profit chunk on regular basis for the same.
Tie –up with fintech companies can keep on floating the cooperative banks with time and innovation in products & services can some how to be addressed . The time is for Robotics and Artificial Intelligence and for many new alternates.
The cooperative banks are controlled by the state government and RBI and some how effected by political influence . This hampers the governance and effects the time needed steps for technology transformation.
Creating a strong wall of cyber security to protect IT infrastructure is no more less important . Today Hackers are well equipped with latest technology and unfortunately through dark webs advanced systems are available to hackers. Their is wide variation in security framework among the cooperatives banks .Their is need for standardised framework . Observing wide variations in the sector , the Banking Regulation last year outlined cyber security framework for them. Much more to be done by the regulators and the cooperative banks.
Cooperative banks in localized patches enjoys the legacy of customers and relationship is a strong bonding, the beauty of digitisation will add flying colours to their journey in today’s techno savy banking . And off course would also help deep penetration of financial inclusion.