Banks seek greater cost efficiencies by pooling ICT resources

To help improve service quality and efficiency in the information and communications technology (ICT) field, the country's banks are making plans to share ATM technology and selected data warehouses.

The banks are currently discussing arrangements that would allow both small and large banks to collaborate in the ICT field in the coming years.

It is hoped a blueprint for the program will be completed before the Asia Pacific Conference and Exhibition on Banking Technology (Apconex) 2006, which will be held by the Federation of Private Domestic Banks in Jakarta from May 9 through May 11.

"We really need better banking technology arrangements. Banks can't go on procuring IT on their own because the cost is prohibitive," said APCONEX steering committee chairman Jos Luhukay on Tuesday, adding that ATM and similar technologies were costly for banks in a developing country like Indonesia.

The high cost of banking technology, he said, has resulted in a great discrepancy in terms of cost efficiency between small and large banks.

Banks with small customer bases suffer from high ATM transaction costs, while the ATM cost per transaction of the larger banks is very low.

"The price of an ATM here is the same as in the United States, but the transaction values are different," said Jos, who is also the president of Bank Lippo.

He therefore believes Indonesia's banks would be better off pooling their resources in the technological field.

"We would then need an independent institution to oversee implementation," he said, adding that issues such as the institution's legal basis and structure would be discussed during the conference.

Surveyor International Data Corporation reported recently that Indonesia's total spending on ICT last year reached US$2.28 billion, of which 45 percent, or $1.02 billion, emanated from the banking sector.

Jos forecast that the figure this year would increase by 15 percent to $1.17 billion. "This spending needs to be directed at ensuring an effective and efficient national banking technology structure," he said.

The chairman of the Apconex 2006 organizing committee, Eko Indrajit, said the conference would be attended by 700 bankers, consultants, banking sector regulators, academics and ICT providers.

Source:

The Jakarta Post, Jakarta