Indian banks are at the technological leading edge in the region, according to Hewlett Packard. That is because some of India's newer banks started later and thus have fewer legacy systems to deal with.
Top of the class according to HP are banks like HDFC Bank and ICICI Bank. "Banks like HDFC Bank and ICICI Bank started later and they've thus started off with a good adaptive enterprise," says Mike Stephens , the Asian general manager of Hewlett Packard's financial services industry division.
"Both banks have adopted open systems for their core functions. Therefore, they've been able to scale out very quickly. Look at how quickly they've been able to grow. They've been able to double their customer base every year - and they've doubled their call centres. Most big banks can't grow at that rate because of their legacy systems."
Stephens says both represent what he describes as "an adaptable enterprise," which he defines as "one that can sense an area of change and respond very quickly."
He adds: "Both banks are good examples of this, and are very good at sensing and responding, and launching new products into the market place. That's why the other big banks in India are quickly modernising and re-engineering too."
He adds that the Indian experience is being closely followed in China. "The youth market and the mass affluent markets are growing massively in both of those countries, and they require different demands and levels of service from the banks, such as mobile banking."
He says that just as in India, the newer, smaller banks in China have the technological upper hand because they have fewer legacy systems to contend with. That means banks such as Minsheng Bank and Bank of Shanghai.
"Certainly they have the ability to move much faster than many of the larger banks," says Stephens. "A part of that is that we've already launched a financial services centre in Shanghai. The goal is to showcase these new solutions, and showcase the new technologies so as to better work with the customers and show best in class. Minsheng Bank and the Bank of Shanghai are very aggressive in launching these new products. I suspect that they'll start to mirror the HFDC Bank and ICICI Bank model. We're helping them do that."
Stephens says that HP's Asian financial services business is now a $600 million a year business and "is growing rapidly after the merger of HP with Compaq."
He says; "We see Asia as a high growth market. Japan, Indonesia, Thailand, India, Korea, Thailand, China are going through massive changes in the financial services sector."
But he says HP's approach is somewhat different from some of its competitors, which are trying to get banks to allow them to outsource all their tech operations - a trend that started regionally in Australia.
"The trend will be for banks to outsource selectively," he says, citing a contract HP has with Bank of India. "In the case of the Bank of India, the outsourcing agreement is that we've taken on the charter to re-engineer their technology and applications. Our view is that to make a customer competitive, not just reduce costs, you actually must re-engineer the technology - and do so inside the term of the contract - and in five years you can then hand the keys of the new bank back to the bank, or else we can keep on running the technology. We're trying to add a lot more value in the process. It's not just an IT thing - it's more a business enabler."
He adds: "We can take a bank through that cycle and re-engineer it and make the bank so efficient that when you hand the keys back to the bank a number of those banks have such an efficient infrastructure that they can actually go and act as co-hosts for other banks [ie act as an ASP]. We're doing this with a bank in Southeast Asia currently, taking them through that process so they'll be able to have an infrastructure that is very efficient to run their own bank, and yet also enable them to specialise in areas in which they provide services to other banks within the community."
Stephens says that demand from Asian banks for new technological solutions is especially strong today - since much spending was delayed by the 1997 financial crisis. "As they've come out of that now, we're seen as a technology provider and a solutions provider that can take them forward. There is a lot of pent up demand now in those countries that were stagnant during the period of the financial crisis. There is a lot of urgency to do things."
