By virtue of its intrinsic character software development involves complexities in terms of system analysis and system design. Once this complex processes are simplified by division of the complex whole through proper system analysis into blocks and modules for handling, programming is a routine task carried out by a batch of programmers. While this is so, if we observe the functions, organisational structure and business policies of commercial banks, we find that the data structure and data flow to be handled and computerised are really baffling.

Banking and finance are inter-connected activities and are not carried out in isolation independently by different institutions. We have seen in the earlier web pages the momentous and systematic planning & implementation of measures by RBI intended towards reaping the benefit of computerisation by banking & Financial System as a whole.

It makes insignificant effect if a few branches of a bank are to be computerised without creating connectivity of different branches and the Head office/administrative offices and service offices. If one bank alone is computerised in the banking system, the benefits are at best marginal. Computerisation has to be accepted as a necessary technology for survival by the entire segment of finance, commerce and banking to be of real benefit and usher in marvelous results. As we have studied the diverse efforts of RBI for the benefit of the banking and financial system as a whole, we will now look to the efforts needed at individual banks or institutions.

Commercial banks have to handle data in a secured manner protecting on the one hand the integrity of the data handled/ transmitted and equally safeguarding against the risks of tampering and fraudulent interruptions by criminals & unscrupulous persons. They have to maintain as a legal obligation the secrecy of customers' business and personal information. Since a large number of persons at different geographical centres attend to Data Input, a system of accountability has to be enforced, for the accuracy and integrity of each individual entry/transaction at both the operational & supervisory levels.

A commercial bank consists of several branches geographically spread over a vast area and handling multitude of business transactions; Regional, zonal offices and head office exercise control functions and also attend to major investment and business policy decisions. They issue periodic directions to the branches for compliance. The branches deal amongst themselves and with other institutions for several kinds of agency transactions. They submit business proposals, control returns and compliance reports for audit observations to controlling offices and thus regularly interact with the administrative and head offices.

The branches also deal with other banks located at different geographical destinations within the country. They have to deal with branches of banks located overseas for transacting services relating to imports and exports.

The branches are of different kinds, small, medium, large and very large, as also location-wise as rural, semi-urban, urban and metropolitan. These handle different types of business-mix. There are also specialised branches handling only foreign exchange business (financing imports & exports, foreign remittances etc.), branches exclusively handling financing of small industries, of corporate customers etc.

Similarly the branches deal with distinct types of customers, but broadly these customers can be classified as individuals (personal banking) and commercial (banking for business customers). Personal banking involve servicing deposit accounts of different categories, and retail banking relating to credit delivery (Home loans, loans for purchase of consumer durable, vehicles, advance against shares & securities, life policies etc. and provision of services like safe deposit lockers, buying selling securities, investment in mutual funds etc.) to individual customers. Business/corporate customers need different types of credit facilities, remittances of funds, collection of receivables, issue of letters of credit, guarantees etc.

The Regional/Zonal offices, as also head office have to maintain large databases consisting of information on diverse topics. They may have to maintain inventory of employees/officers, process pay roll, reconcile inter-branch transactions, scrutinise/audit MIS return and advise follow-up measures.

Head office of the bank has to handle investment transactions, monitor SLR and CRR, as also Asset-Liability Management, centralisation and finalisation of accounts, statutory responsibilities etc.

These diverse functions and processes of the bank have to be computerised in an integrated and synchronised manner, so that the data fed at one point percolates and activates all subsequent chain of related process/stages automatically at the place of the transaction and at all other connected points and is available at points, where a reference to it is essential.

100% computerisation when possible and worth while, is commendable. But small rural offices need not be connected. Even in bigger branches only frequented and repeated process may be computerised. If a branch normally handles only two guarantees being Issued per month, it may not advisable to maintain a package for this. It is more prudent to manually carry out such small processes. In short computerisation should be considered from the point of cost vs. benefit analysis.

Remote branches which are not connected with other offices may carry on with stand-alone system and forward data to regional office through computer floppies. The integration of the data of these offices with the total system will be carried out at the Regional offices.

Basically the package should provide for the following features though these may be designed individually by way of separate packages for different purposes/places.

1. Mutual integration or Data synchronisation - Each transaction will be inputted only once at the point of preparation of the voucher. All subsequent processes like maintaining cash book, posting personal ledgers, preparing day book, posting in general Ledger and subsidiary general Ledgers will be automated.

2. Distinct package for each function, so that different branches can configure software systems according to their specific needs.

3. Data Integrity - It should be ensured that the accuracy of the data maintained is beyond question.

4. Access control - Only authorised persons will be allowed to access particular data at each point. This process is automated through User IDs and Passwords.

5. Total security of data, and protection while transmission over the line. Scope for Unauthorised tampering of data or access to data while in transmission to be eliminated.

6. It should be possible for each data entry to be identified in terms of the operator who inputted the same and the supervisor, who checked and approved the same. In particular it is very important in respect of debit or credit entries made to customers' accounts.

Another important consideration is ensuring a smooth transition from manual to computerised process at to be carried out at several distributed centres handling & involving huge data-flow and stored databases. The Indian example was to computerise exhaustively at head office and administrative offices at the initial stage, and to start computerisation of branches selectively on stand-along machines, along with training the operating staff properly. At the beginning it is customary to operate on parallel process for a few weeks, when both manual and electronic systems will be maintained.

Start with building an in-house infrastructure at the Corporate level of the Bank. Create a department or Division for planning/executing computerisation of operations and allied matters under charge of a qualified System Manager. Also creating the training infrastructure for training batches of staff in the use of computer applications. After creating the infrastructure at the head office, the process should be repeated at the Zonal Offices.

Bigger banks operating in All-India level have considered it prudent to start their R & D Centre in addition to creating training institution.

Start planning computerisation of key operations attended at head office and zonal offices. Simultaneously arrange for membership of SWIFT and INFINET and extend the facility to key branches in the first instance. Bring pay roll processing and inter-branch reconciliation under computerisation, followed by consolidation of financial accounts on the basis of weekly statements from the branches. Regional office/zonal office will process the statements received from the branches under their jurisdiction and these would be further consolidated at Head Office.

While entrusting the contracts to leading IT Firms, negotiate for joint ownership of IPR rights for the products. This will enable the bank to get copies of the system analysis and system design reports and also a copy of the source code. The bank will be in a position for minor updation of the programs whenever needed, without reference to the IT Company. The contract with the IT Company should include provision for getting an user manual and also a maintenance manual, along with the other literature. All these documents should be placed in fire-proof safes.

The next stage is to acquire the hardware needed. By the time INFINET facility is secured link head office with Zonal offices/Regional offices and large/very large branches. Computerisation of individual departments/divisions of Head office, Zonal and regional offices can be taken, along with introduction of stand alone machines for computerisation of key operations at select branches, that attract considerable daily turn-over. At this stage the training infrastructure should be strengthened and further decentralised.

Inter-connect key branches through bank's independent Network mutually and with regional, Zonal and Head offices. Branch computerisation is key to the success of electronic banking and it is to be planned meticulously. The following functions of the branch needs to be computerised in distinct packages, with mutual synchronisation.

Now you come to the important stage of full computerisation of the branches with automated links with Head office. The bank by this time has gained good experience in the working of the systems at Head office, Zonal office and Regional office. Steps to be followed in this direction are discussed in the next page