Union Bank to invest Rs1,000 crore to upgrade IT infrastructure
Premium- The bank plans to source half of its business from digital channels by 2025
Public sector lender Union Bank of India will invest ₹1,000 crore in upgrading its information technology (IT) platforms in the current financial year, as it looks to generate revenues from digital channels and save costs, executive director Nitesh Ranjan said on Wednesday.
The bank plans to source half of its business from digital channels by 2025.
“We are making a lot of investment in this area," said Ranjan.
He added that the bank has collaborated with more than two dozen fintechs empanelled with the bank. “It is definitely a win-win situation for banks and fintechs. We are sure that by doing this we will be able to attract more customers, generate digital revenues and optimize costs," he said.
According to Ranjan, a large part of this investment will take place in the current financial year, while a small portion has been made in FY22.
The bank, he said, is looking to move away from the “monolithic technology structures to open, modular and micro services architecture in the IT systems". Through this, the bank will be able to collaborate with the fintechs in a more seamless manner, he said.
“A large part of the ₹1,000 crore investment will be into building this new architecture. On top of this we will build the digital lending platform and some part of this investment will go there," Ranjan said.
On Wednesday, the state-owned bank launched its super app named UnionNxt and said that the main thrust through its digital initiatives is to empower customers with smarter ways of banking across all segments. The bank also launched its digital transformation project.
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The Reserve Bank of Indi (RBI) has been nudging banks to invest in IT infrastructure given how indispensable e-banking services have become. “We cannot put thousands or lakhs of customers who are using digital banking into any kind of difficulty for hours together and especially when we are ourselves giving so much emphasis on digital banking. The public confidence in digital banking needs to be maintained," RBI governor Shaktikanta Das had said in December 2020. Das had said that in order to remain competitive in the coming years, banks and other financial institutions will have to ensure robustness of their IT systems.
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