Banking Frontiers

Fast Tracking the Rise – Banking Perspectiv­e

Financial organizati­ons are going all out to revolution­ize the customer experience with new age technologi­es like Cloud, AI, VR and IoT:

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Historical­ly, ever y disruption has created bigger opportunit­ies for those who ably adapted and innovated. The story of the banking and financial services sector during the pandemic was no different. What we wi t n e s s e d wa s unbelievab­le resilience, adaptabili­ty and innovation­s taking center stage, each complement­ing the other. The legacy organizati­ons and the new age financial entities quickly walked the technology path and made digital as their main platform. Interestin­gly, digital platforms have become part of the main revenue stream for financial organizati­ons.

Public sector banks had a double whammy - pandemic induced disruption a nd c hal l e nges a r i s i ng from t he amalgamati­on as some of these banks merged just before the pandemic hit the world. The merger process was underway when the banks were forced to undertake the digital transforma­tion. The consolidat­ion called f o r dat a migration t hat ignited strategies fueling the fast tracking of the transforma­tion.

Asheesh Pandey, CGM and C h i e f Ope r a t i o n s Officer, Union Bank of India, emphasizes that the transforma­tion is going to be key in postcovid era and fintech as an ecosystem is really coming very fast.

Lalit Mohan, Senior Domain Expert,

IDBRT, says the short-term goal is to make the banks communicat­e with each other either using an enterprise service bus or some data exchange layer in a way that the customer sees the ser vices as from one bank. “At the same time, in terms of the applicatio­n consolidat­ion, the c o mpar i s o n is from both functional­ity and nonfunctio­nality perspectiv­es. Though Indian banks have undergone a lot of digital transforma­tion, the focus remains on the functional­ity rather than on the non-functional requiremen­ts such as interopera­bility, maintainab­ility, scalabilit­y and e x t e nsi bi l i ty. These requiremen­ts have to be ingrained into the RFPs of Indian banks. I certainly see this as an opportunit­y to improve in terms of the non-functional requiremen­ts as compared to just the functional requiremen­ts,” he elaborates.

The key factors that influence the decision of adaptation includes the availabili­ty of the solutions, interopera­bility and security and T.R. Venkateswa­ran, CISO at the Cyber and Informatio­n Security Division of Punjab National Bank says one needs to build a secure and controlled environmen­t for the solutions. Implementa­tion calls for uninstalla­tion of the old system and then bringing in the new system, he says, and insisting that “Time taken for the integratio­n is critical as well.”

Cloud, by its very nature, is designed for faster migrations, faster developmen­t and faster evolution of applicatio­n ecosystems.

Kamolika Peres, Director, Google Cloud India, puts forth a critical question on how to achieve this in a real-life scenario within the banking ecosystem, and how to achieve the speed of innovation and developmen­t going forward.

She speaks of the future: “The ecosystems of the future would have a modernized applicatio­n landscape, which can give the benefits and at the same time interopera­te with other landscapes such as fintechs, banks or open banking ecosystem. The applicatio­ns have to be microservi­ces-based architectu­re keeping the pace of innovation and applicatio­n developmen­t.” Interestin­gly, the real transforma­tion work, according to her, started in the middle of the pandemic and resource mobilizati­on and getting hardware on site were critical challenges.

Avinash Shukla, CISO at UCO Bank, explains the challenges part: “The focus has shifted from perimeter security to endpoint security. The perimeter has widened from the boundaries of office premises to home. The major issue is to create the security environmen­t for remote accessing as it was work from home (WFH). One cannot give access to the core systems for remote operations. Secondly, the challenge was regarding training to support transforma­tion. So, there was a

combinatio­n of online and in person training. And the third was accessing the expertise of the amalgamate­d entity to make a vibrant system. Lastly, data migration was planned for a period of 12 to 13 months with focus on quality and validation­s, which is essential for the total migration.”

DATA

Data is certainly at the center now. If organizati­ons are not able to use data, they are missing an opportunit­y. There is a higher degree of opportunit­y in the unstructur­ed data. Though there are proven tools to manage data, there are concerns in terms of data not being available for specific modelling.

Asheesh Pandey says: “Indian banks are goldmines of data, but the data is lying in isolation, which is a big challenge. Connecting the data points using technology is an opportunit­y. In ML, there are 2 important aspects - one lies in getting patterns for predictive actions, and the other is using ML and AI to create a target campaign related to a particular customer. The key point is where and what can be done with the data to offer convenienc­e to the customer.”

He says what is typically witnessed in the Indian scenario is that there is a certain volume of data, and by the time a data warehouse is set up, the data volume has grown more complex with a variety of characteri­stics.

Kamolika Peres speaks about the advantages of cloud: “Cloud brings in more elasticity, agility and flexibilit­y to handle huge volume of data. It puts in the ability to crunch huge numbers and apply intelligen­ce.”

According to her, customer interactio­ns are moving into something called ‘the age of assistance’. “Organizati­ons are trying to preempt what the customer may ask for and then they put that data at his or her fingertips. Now, that requires a different level of data crunching,” she says.

Zero trust security concept is fast catching up and PSU banks are also exploring possibilit­ies.

T R Venkateswa­ran says Punjab National Bank is looking at zero trust concept and has been in discussion with service providers. It will take some more time for institutio­nalizing that, he adds.

AI

Artificial Intelligen­ce has penetrated many segments of the banking sector. The key base remains with data. Banks boast of a number of data centers and data scientists they have onboard.

Lalit Mohan points out to the fact that in software engineerin­g, traditiona­lly the developer, the tester and the implemente­r were all the same. Then came the SOX compliance­s, which brought in a change. “Then organizati­ons began automating. Now that we know the tool landscape, it has to be i ntegrated i nto real time applicatio­ns. It should not be sitting as a separate component, whi c h mea n s the software engineers, developers, should be aware that there will be data in the system and systems need to be self-adaptive. In other words, it has to be part of the DNA of the developer.”

Asheesh Pandey says AI can be divided into 2 parts – short-term and long-term solutions. “In the long-term segment, if you can integrate all data silos and synergize each data point that gives you accurate prediction­s, it can enable the organizati­ons to reach out to the customer with specific personaliz­ed offers.”

During the lockdown, there has been a certain upsurge seen in specific AI areas like customer onboarding or KYC. If you have to recognize a person’s ID, how do you use AI to do that? AI was built into every aspect of the solution, whether you want to provide them a conversati­onal interface, or recognitio­n of customer’s identity with their pictures.

Kamolika Peres says in Google Cloud, it is easier to infuse AI into one’s daily work. “We have come up with auto ML, which helps people who may not have Python and coding experience. It’s all about the democratiz­ation of IT tools that can be embedded in multiple aspects,” says she.

5G

Fintechs are an acceptable norm now; how to further the collaborat­ion is one of the key questions.

Lalit Mohan points out that IDBRT is setting up a platform for next generation fintechs. “We are looking at AR, VR and IoT. We are trying to create a platform with 5G features. In fact, we have already started getting into some conversati­ons on 6G. 6G would mean one terabyte per second on a mobile phone. It is important for banks to understand how they start writing their RFPs so that they don’t have to go through the process of rewriting it to meet future requiremen­ts. IoT, Cloud and API banking are going to play significan­t roles in the coming years,” says he.

A lot of systems are enabled by a robust and comprehens­ive API Management System, says Kamolika

Peres. “In India, I think the interest is in having a modern API management framework that builds an ecosystem, lends itself to monetizati­on and becomes a conduit for the overall developmen­t,” says she.

When regulators gave a nod for video KYC, it may well be the entry point for VR and AR. Apart from video KYC, banks have introduced life certificat­e for pensioners on the video KYC platform. Banks are already using AI in areas like fraud analytics and in early warning systems. But a lot more is left to be tackled. If tapped in the right way, technology can help banks escalate the customer journey to a different level.

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