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April 15, 2010
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The banking, financial services and insurance (BFSI) sector has come a long way in India. The use of communication and information technology (IT) has given this vertical a big fillip.The long queues that were once visible in front of teller counters are now nonexistent. ATMs are present everywhere, even in many rural areas, and credit and debit card facilities are easily available.Likewise, the insurance sector has witnessed a sea change. The internet has made it convenient to obtain life or general insurance policies.

The automation process, which began in the late 1980s with the computerisation of branch offices, has led to huge improvements in the quality of service, which has helped such companies attract and retain customers in an increasingly competitive environment.

Technology has changed the contours of three major banking functions: access to liquidity, transformation of assets and monitoring of risks. In all three areas, investing in an extensive and robust telecom and IT infrastructure has helped banks increase productivity, reduce costs and develop customised products. The introduction of mobile and internet banking is a case in point. Today, most banks offer internet banking facilities such as payment of insurance premiums, and phone, electricity and other utility bills. By logging on to a bank's website, users can experience a quick and easy transaction process.

Similarly, the internet and mobile handset have played a vital role in achieving these goals for insurance companies.Most insurance companies have developed web portals to provide enhanced services.Users can register themselves online to view their policy status using their PIN number and access relevant information.Similarly, SMS gateways are also being used extensively to send messages from the head office to branch offices and field staff.This has helped top executives to communicate easily with the field staff and reduce the response time for new customers.

Moreover, the communications infrastructure itself at such organisations has evolved from an independent, stand-alone set-up for each branch to a fully networked backbone. All banks, insurance companies and financial institutions are connected to their zonal or regional offices via wide area network (WAN), comprising digital loop carrier (DLC) (both local and national long distance [NLD]), ISDN, multi-protocol label switching (MPLS) and very small aperture terminals (VSATs). While leased lines are a popular option for interbranch connectivity, ISDN is a back-up medium. VSATs are being used for connecting offices in remote locations as well as for back-up.

To cater to these requirements, several telecom operators such as Bharat Sanchar Nigam Limited (BSNL), Mahanagar Telephone Nigam Limited (MTNL), Reliance Communications (RCOM), Tata Teleservices Limited (TTSL), Sify Technologies and Hughes Communications India Limited have developed a portfolio of customised and scalable products. BSNL and Bharti Airtel are both equipped to provide broadband, mobile and VSAT solutions apart from basic connectivity. In fact, VSAT operators are focusing not just on providing connectivity for ATMs but also on offering a full suite of services such as network management, hosting and data centre services, customer relationship management (CRM), enterprise resource planning (ERP) and supply chain management.

Banks, financial institutions and insurance companies have realised that the deployment and effective use of IT could differentiate services in a competitive environment. Therefore, mediums such as the internet and intranet are being employed. These mediums have played a crucial role in making services such as mobile banking, multiple customer touch points and superior customer service available as well as in converting banks into tech-savvy financial vendors.

tele.net carried out a survey among leading banks and insurance companies to assess their telecom requirements and solutions, and the key issues and concerns. The following questions were asked in the survey:

  • What are the company's key technology requirements?
  • What mix of service providers and vendors is being used?
  • What are the biggest concerns with respect to telecom infrastructure?
  • What are some of the software and enterprise applications implemented by the organisaton?
  • Which network security tools has the organisation implemented?
  • What redundancy tools are being utilised by the company?
  • Which new product or service holds the most interest or relevance for the organisation?

  • Key technology requirements The results of the survey suggest that a cost-effective communications infrastructure that offers real-time use of system resources and ensures business continuity is of highest priority for most companies in this space.

    To achieve this, most players have opted for WAN and last mile access technologies.

    DLC (NLD) and ISDN have been the most widely used technologies for WAN connectivity, followed by MPLS, DLC (local loop) and VSATs. Leased lines, in the form of a dedicated link between two or more offices, have been used primarily for interbranch connectivity. This is owing to their capability to provide sufficient bandwidth for frequent, faster and secured data transfers.ISDN is widely used as a back-up medium and for video conferencing.

    MPLS, which offers a secured medium and high data transfer rates, is being used by a number of respondents. DLC (local loop) and VSATs are also in use. VSATs are ideal for connecting offices in remote locations, and are also being used for backup and connecting ATMs.

    Optic fibre and digital subscriber line (DSL) have been the preferred routes for last mile connectivity. Wireless (primarily radio frequency) is also being used in tandem with either DSL or optic fibre for remote connectivity and back-up. Optic fibre is a popular medium for last mile connectivity owing to its cost effectiveness, higher bandwidth, easy maintenance, low attenuation and ability to transmit signals over long distances.

    Service providers and vendors

    The survey findings indicate that a mix of service providers have been supplying WAN infrastructure. BSNL is the most preferred service provider for domestic leased lines and ISDN. Other major players in the leased line segment include MTNL, Bharti Airtel, RCOM and Tata Communications. While Bharti Airtel is the leading service provider for both MPLS and international private leased circuits (IPLCs), BSNL, Tata Communications, RCOM and Sify Technologies have a name in the MPLS space. A few respondents have also been using products supplied by global operators like Verizon and AT&T for MPLS.

    Similarly, for IP-VPNs, aside from BSNL and Bharti Airtel, some respondents are also using the services of international players such as KDDI in partnership with Airtel.

    Hughes Communications India and HCL Comnet are the VSAT market leaders while a few respondents are also using the services of TTSL and Tulip.

    BSNL is the leading provider of DSL and WAN infrastructure except for IPLCs, which is Bharti Airtel's stronghold.RCOM has been dominating the metro Ethernet segment.

    The services of Sify and Tulip are being predominantly used for wireless access technologies while BSNL, RCOM and Bharti Airtel have been the leading optic fibre providers.

    Issues and concerns

    Out of the 10 BFSI enterprises surveyed, six expressed the need to improve their communications infrastructure, while the rest said they were satisfied with their current network.

    Downtime emerged as the most important network-related problem faced by the companies, followed by capacity constraints and security.

    Increasing technology costs was a major management-related problem for six companies, while the remaining respondents were concerned about technology obsolescence and the lack of IT staff.

    Software, mobile and enterprise applications

    Apart from email, which is being utilised by all organisations, the most widely used applications in the BFSI vertical are audio and video conferencing, toll-free services and instant messaging.

    Telepresence and Web 2.0 tools are also being used by a few entities. Cost, however, has been a key deterrent in adopting telepresence services.

    Software applications such as core banking solutions, ERP, CRM, and business intelligence and inventory management are being widely used.

    List of respondents

  • Andhra Bank, Raman Rao, Manager, IT
  • Axis Bank, Senior Official
  • Bajaj Allianz General Insurance, Senior IT Official
  • Birla Sunlife Asset Management, Senior IT Official
  • HDFC Bank, Senior IT Official
  • HDFC Standard Life Insurance, Bhuvnesh Sharma, Senior Manager, IT
  • IFFCO Tokio General Insurance, U.C. Dubey, Executive Director, IT
  • NSE.IT, Senior IT Official
  • Saraswat Bank, Sagun Kulkarni, Head, IT
  • Syndicate Bank, Pradeep Saxena, Deputy General Manager, IT

    Of these, core banking applications are being utilised by all respondents, CRM and business intelligence are being used by four companies, and ERP by two. Finacle, a core banking solution from Infosys, has been the most popular service in the segment. A centralised web-based, multi-currency and multilingual application platform, this solution has helped the respondents' scale up to handle the vast volumes of day-to-day transactions. This has been achieved by seamlessly interfacing with the multiple delivery channels of banks.

    Several banks have adopted other automated processes as well to simplify operations. Electronic clearing systems and fund transfer systems have been installed to facilitate paperless direct debit and credit transactions. Respondents have also implemented a centralised fund management system (CFMS), which offers their branch offices access to secured account information. Typically, the CFMS comprises an apex-level server, which is installed at the bank's headquarters; and a local bank fund management system software, which operates from the branches.

    In addition, nine organisations have been using multiple mobile applications, while one has been using mobile devices for voice services.

    Mobile email, mobile data connectivity, corporate intranet and push alerts are the most widely used mobile applications.

    Mobile conferencing and sales force automation are being deployed by three and four respondents respectively, while six are looking to deploy both sales force automation and field force automation by next year.

    However, apart from mobile email, the usage of mobile applications has been limited. Four respondents are not considering deploying mobile applications by 2011, citing security as a key hurdle.

    Network security

    Firewall is the key network security tool used by the enterprises, followed by access logs, security audits, user authentication, unified threat management, penetration testing, intrusion detection and prevention systems, and proxy servers. Operating system security patches are being used by three enterprises.

    The adoption of virtualised unified threat management solutions is limited to only two companies.

    Redundancy options

    Most of the companies have a robust redundancy infrastructure in place.Disaster recovery is the most popular redundancy option, with 50 per cent of the surveyed companies using it, followed by mirror servers. Three out of the 10 companies surveyed said they utilised several redundancy options, including server provider diversity, hybrid model, mirror servers and disaster recovery.

    Server provider diversity and log shipping are used by one respondent each.

    The way forward

    Most of these companies plan to expand or upgrade their telecom and IT infrastructure.

    "We are considering increasing our network spending. This increase is driven primarily by the expansion of our branches. We are expanding our geographic reach to Class C cities. We are considering the deployment of Wi-Max in some locations where wirelines are not feasible.Also, we carry out WAN technology upgrades on a need basis," says a senior Axis Bank official.

    The bank is in the final stage of implementing software applications such as business intelligence and CRM, which are expected to be launched within six months.

    Similarly, the National Stock Exchange plans to increase its points of presence (PoPs) in the country. The PoPs are expected to help members from across the country to access and use services as easily as those at the headquarters. The company also plans to increase the bandwidth of its leased lines, which will not only help in providing seamless connectivity and overall flexibility, but will also support new services on a single platform like algorithm trading.

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