Building trust and governance in co-operative banks can be greatly strengthened by introducing technology and adopting it systematically in a phase-wise manner, which increases efficiency and quick service to customers. It also brings the required transparency and compliance with the regulator.
Trust in banking is a two-way concept. Customers must trust the bank to manage their deposits effectively, and banks must trust their customers (borrowers in particular) who bank with them for financial assistance and business growth. The trusted relationship between both customer and bank provides security, reliability, and flexibility to both in attaining the set goals.
In a co-operative banking scenario, governance is member centric. The Board is accountable to members, i.e., to set policies and make decisions advantageous to members and, at the same time, comply with the regulator. The democratic set-up in managing the bank plays a vital role. The primary objective of a co-operative bank is to cater to the economic, social, and cultural needs of its members. Transparent policies and processes need to be designed where members are informed at every operational step in decision-making.
Core banking software modernisation, migrating from distributed networks to live CBS linked to all branches through a single server or data centre with the most modern (updated) software, improves smooth and time-consuming operations, allowing customers to operate from any branch of their bank, thereby increasing loyalty and flexible usage by customers.
Newly introduced apps by software solution providers, which automate KYC updation through UIDAI collaboration, account-opening processes, fingertip term-deposit accessibility, round-the-clock banking, loan-application processes through online mode, and offline mode disbursal of loans after completing the required documentation in no time, come as a helping hand to a needy borrower.
Nowadays, making use of the latest secure and well-maintained technology, such as cloud computing, assures managing customer data more securely, maintaining customer information and secrecy, thereby providing speedy and accessible service.
While implementing all the latest information systems and apps, banks must follow the cybersecurity instructions and guidelines issued by the regulator, such as data storage (DC), data retrieval in emergencies (DR), controls over stored data (restricted accessibility), and, most importantly, disaster-recovery backups. These will increase the protection of customer data and reduce probable cyber-attacks.
With the help of technology, customer service and business are enhanced. At the same time, governance mechanisms, i.e., strategy, scrutiny, support, monitoring, and the involved elements of good governance such as people, process, purpose, and performance, can also be effectively taken care of by adopting the latest technology. Strategies can be formulated and altered by using data and results.
Scrutiny can be undertaken in a very effective manner to analyse whether the process is as per the strategy and is moving in the desired direction.
Support to the process can be enhanced by technology adoption and can guide the people involved in the process in a smooth and efficient manner.
People in governance include all those from top to bottom, i.e., board members, employees, customers, and shareholders. A competent leader appointed by the Board, and perfect execution by employees through clearly describing roles and responsibilities, ensures the customers’ interests are protected.
Process speaks of the rules, bye-laws, systems, and procedures that create a way to arrive at decisions supported by accountability and risk-taking capacity. Clearly defined processes carve a path for making efficient decisions which will be regulator compliant.
Performance is the indicator of the progress the bank is making in moving towards its goals. Performance can be increased with the help of technology adoption and optimum utilisation of available data and resources.
The purpose of the bank is usually set by the Board, i.e., a vision statement to achieve the mission set forth through timely decision-making and usage of manpower and technology to achieve long-term goals.
The process paving the way for decision-making must be balanced and smooth in implementing the decisions derived through the process.
In a co-operative bank, members and the Board of Directors share equal responsibility for daily operations and continuation of business with constant growth. As the primary goal of a co-operative bank is to serve its members, those who avail services and benefits from the institution are also involved in governance through representation, setting goals, defining roles, ensuring transparency and accountability in decision-making, and implementing all the above for the well-being of the bank and its members.
Technology adoption helps in generating compliance reports for audits such as audit trails, exceptional transactions, triggered transaction limits, STRs, and CTRs. The real-time data required for decision-making by the Board acts as a main ingredient for ethical and prudent decisions focused on policy and strategy.
To adopt technology, it requires human resources and financial investment. Staff members are to be trained by attending training programmes and upgraded with technology. A competent, professional workforce capable of managing digital initiation is a cornerstone of good governance.
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