via video. 1. 3 the development of internet services, which is an extensive, low - cost and convenient financial network, has facilitated banking services to customers, anywhere and anytime. along with internet and web - based services, a need for changing core banking architecture has emerged. the introduction of new core banking systems by some banks and their links with the improved telecommunication network has enabled banking transactions to be done on - line, in contrast to the batch - processing mode used earlier. the integration of e - trading with internet banking and banks ’ websites is also a notable feature. these it advancements have enabled banks to gradually replace manual work by automated procedures with on - line real time processing. 2. adoption of it by banks in sri lanka 2. 1 the banking sector in sri lanka has undergone a rapid transformation with the adoption of it - based banking solutions. the widespread usage of it in sri lanka ’ s banking sector began only in the late 1980s with the introduction of the first atm by hsbc bank in 1986. the introduction of atms and automated processes has reduced the cost per transaction significantly, as staff overhead costs have decreased. 2. 2 initially, the banks adopted systems developed in - house or used vendor provided systems on a decentralized basis, thus transforming manual systems to automated processes. however, most of the core - banking systems provided by different vendors were ad hoc solutions and on piecemeal basis, i. e. separate modules and technology platforms for key operations such as deposit mobilization and lending, trade finance, treasury operations, and more recently card transactions. those who opted to implement new core - banking systems together with other sub systems and integrations may have made relatively large investments with sustainable gains to compensate costs. the arrival of new foreign and private banks with state - of - the - art technology - based services pushed other banks in sri lanka to move towards the latest technologies so as to retain their customer base and meet competition. the increasing competition in sri lanka ’ s banking industry has widened the scope of the it infrastructure development to meet diversified demands made by numerous users. today, customers of some banks enjoy services through internet banking, telebanking, mobile telephone banking and visa / master credit and debit card facilities. the growing competition and expectations have also increased awareness amongst banks of the role and importance of technology in banking. 3. worldwide outsourcing and service improvements 3. 1 an even more recent area in which the advancement of ict facilities has had a significant impact is in the

infrastructure or shared technology, customers will continue to have limited or no benefits with no reduction in transaction costs. this is not to suggest that propriety systems and bespoke solutions should be discarded altogether. but, it is important to realize that many more benefits can be achieved and the same can be passed on to customers with integrated core banking solutions. 9. 3 design a customer - centric business vision 9. 3. 1 to begin with, banks should have a clear vision for future business directions and operating models and they should align it processes accordingly. with respect to core banking solutions, they should use flexible, robust and future - oriented it architecture based on a customer - centric approach. the benefits of such a transformation would result in : ( i ) significant and sustainable reduction in total cost of it systems ; ( ii ) consistent customer information across core channels ; ( iii ) dramatic shortening of time to market new and innovative products without new coding ; ( iv ) straight - through processing capability with improved service standards and a reduction of risks due to greater automation ; ( v ) increased scalability and cost reductions due to speedy and more efficient systems being freed for additional capacity ; ( vi ) integration due to open communication standards with new applications ; and ( vii ) ability for expansion as and when needed. a product - centric strategy, however, is vulnerable due to changing tastes of customers and the types of commodity, whereas a customer - centric strategy would allow the bank to differentiate itself on dimensions that are harder to replicate. in other words, customer - centric it enhancement will enable superior customer service and understanding to meet specific needs. customer layers as well as preferences too can change, but there will always be a new set of customers to replace each layer. 9. 4 shared or common it platforms and close coordination 9. 4. 1 banks cannot engage in a significant it transformation by themselves or in a very short time. they need partners with long experience and proven track records who can help set businesses and it targets and lay out roadmaps. banks can phase this type of industrialization in several ways by streamlining existing systems through unification. for example, 3 or 4 core collection systems can be integrated into one and rolled out to other areas. a gradual approach would work best, reduce risk and enable incorporation of known future trends and customer requirements. a customer - centric approach would help to reduce transaction costs to them through pooled or shared platforms. to avoid inordinate fears of using common platforms