. the changing face of the banking sector aided by technological innovations can be seen from various developments in the recent past. the most noteworthy has been the usage of the atm technology. atms started as substitutes for bank branches allowing their customers to withdraw cash anytime and to extend their services wherever it would not be viable to operate a physical branch. the delivery channel revolution can be said to have begun with the atm. the phenomenal success of atms had made the banking sector develop more innovative delivery channels to build on cost and service efficiencies. as a consequence, banks have begun to introduce tele - banking, call centres, internet banking and mobile banking. 6. tele - banking is a good medium for customers to make routine queries and also an efficient tool for banks to cut down on their manpower resources. the call centre is another channel that captured the imagination of banks as well as customers. at these centres, enormous amount of information is at the fingertips of trained customer service representatives. a call centre not only cuts down on costs but also improves customer satisfaction. moreover, it facilitates 24x7 working and offers the “ human touch ” that customers seek. mobile banking can be regarded as “ the delivery channel of the future ”. this is because it offers portability and convenience to the user. it is just like having a bank in the pocket. 7. it would not have been possible for banks to give the full benefits of tele - banking, mobile banking, internet banking, card banking ( multiple delivery channels ) to all its customers without an appropriate banking solution. centralised cbs has been one such development which has revolutionised the banking sector. cbs can be defined as a solution that enables banks to offer a multitude of customer - centric services on a 24x7 basis from a single location, supporting retail as well as corporate banking activities, as well as all possible delivery channels existing and proposed. the centralisation thus makes a “ one - stop ” shop for financial services a reality. using cbs, customers can access their accounts from any branch, anywhere, irrespective of where they have physically opened their accounts. 8. cbs has now stabilised in the banking sector. most branches of commercial banks, including the rrbs, are being progressively brought into the core - banking fold. so far, 79. 4 per cent of the total number of public sector bank branches has adopted cbs. with this remarkable progress in the adoption of the cbs technology, let us pose a few

h r khan : banking, electronic payments and road ahead special address by shri h r khan, deputy governor of the reserve bank of india, at the ficci - iba ( federation of indian chambers of commerce & industry – indian banks ’ association ) conference on “ global banking : paradigm shift ”, mumbai, 25 august 2011. * * * the speaker gratefully acknowledges the assistance provided by shri. g. srinivas, general manager and shri. saswat mahapatra, asst. general manager in the preparation of this address. distinguished ladies and gentlemen i am glad to be in your midst today to share my thoughts on “ banking, electronic payments and the road ahead ”. in fact the subject of my address very well fits the theme of the conference “ global banking : paradigm shift ” and its emphasis on productivity excellence. i am sure the experts whom you would have heard and interacted with over the last two days would have shared their thoughts on the changes and challenges that banking in india and globally is undergoing and has undergone over these last few momentous years, leading as it were to a paradigm shift in the way banks are doing their business and retaining and increasing their customer base. the basic underlying current that runs through this changing landscape is the ever increasing reliance on technology to cater to the needs of customers and process vast number of transactions including payment transactions. in fact as you all are aware, payment and settlement systems form the backbone of any economy. they are the conduits or the arteries for conducting trade, commerce and other forms of economic activities including remittances in any country. an efficient payments system can be envisaged as the lubricant which speeds up the liquidity flow in the economy, thereby creating the necessary impetus and momentum for economic growth. the payments process is a vital aspect of financial intermediation ; it enables the creation and transfer of liquidity among different economic agents. a smooth, well functioning and regulated payments system thus not only ensures efficient utilisation of scarce resources but also eliminates systemic risks. the payments and settlement system is, therefore, a crucial component of the financial infrastructure of any country and more so of a country like ours. the spectacular growth in financial transactions in the country has necessitated certain radical changes in the payments and settlement system, whether it be in the area of wholesale payments or retail payments. while the changes in the wholesale payments are devoted to providing an efficient channel for transmission of monetary policy signals, and for the smooth functioning