Banks are accelerating the digital shift with the adoption of emerging technologies
How are digital technologies influencing banking services?
Sharma: We look at the technology from two aspects: one which is already mature and one which is experimental in nature. We also need to consider the relevance of technology in financial services. For digital technologies, while industrial IoT use cases are observed in manufacturing industry, there are no relevant use cases in financial services. Even virtual reality seems far away. However, augmented reality is more immediate. We need to prioritize the maturity of the technology and its relevance to financial services. Ultimately, we need to analyze what end-value technology brings to the business and to end consumers.
Balaji: The banking sector will evolve with technological advancements. The advantage of Indian banks over banks in developed countries is that we don’t have too much of a legacy to carry, and that’s why we migrated very quickly to new technologies. As digital technologies become mainstream, banks will be the first to adopt them
Shetty: All of our customer-facing apps launched last year are in the cloud, and our aspiration is to move 70-75% of other apps to the cloud within 2-3 years. AI is a very loosely defined term. We need to look at how data can add value, and this is where we use AI in underwriting, fraud detection, marketing, and personalization.
Rathor: We create differentiators using technology. A big differentiator has been the creation of an easy, simple and intuitive customer journey, and this applies to personalization, underwriting, fraud and risk control, as well as other functions. Then in between is the operations layer, where a lot of savings can be made by adopting different technologies. We need to look at how end-to-end processes can be digitized and eliminate processes that are used today but might not be needed with advancements in technology.
Dabke: We need to look at how banks are using technology effectively. Some banks started their automation journey a few years ago, and there are others that are taking a leap forward now. We should consider the two paths in a differentiated way. Automation is the most relevant conversation around the table today, and it’s not isolated. Digital technologies such as AI and ML are integrated to make processes more efficient, speed time to market and better serve customers. The digital journey for all banks is accelerating and it is exciting to see how the next two years will emerge, where we as service providers can participate and become a catalyst.
How is the Indian Banks Blockchain Infrastructure Co. leading the way for blockchain adoption?
Shetty: Blockchain is a very attractive concept and technology. However, it is still very early days. We’re all experimenting, and there aren’t any meaningful use cases yet. If we could all work together in areas such as trade finance, smart contracts, home loans, and other secured loans, interesting blockchain use cases would certainly emerge.
Sharma: There are public and private blockchains, and IBBIC falls somewhere in between. A set of banks have come together to set up this infrastructure. There are use cases around trade finance and the supply chain side, and only financial institutions are a part of them. But that would require a much larger ecosystem. As a technology, blockchain has a lot of prospects, but the reality and the outcome elude us. IBBIC is one such attempt to bring tangible value to blockchain technology.
Balaji: Since IBBIC was formed with a common goal, we hope it will be successful. At ICICI Bank, we have a private blockchain within our network, but we haven’t seen any significant benefits yet. There are specific use cases that prove its usefulness as a technology.
Rathor: Blockchain needs a network, and one entity alone cannot be successful. Different entities need to come together and create a solid foundation. This is when more and more interesting use cases will emerge.
Dabke: Blockchain needs a network, which means a lot of applications and parties have to come together. Automation will be at the center of the integration and orchestration of a large number of applications.
How do you deal with different sets of challenges such as migrating from central banking system to cloud, integrating with fintechs and automating processes?
Balaji: Over the past couple of years, digital transactions have grown by leaps and bounds and people have started to use digital banking services. We believe that at some point the core systems will hit a cap. We’ll all go to the Cloud eventually, but now we’ve just started our journey to the Cloud.
Sharma: Integration with the fintech system is a big challenge. There is no standard model for this. On the B2B side, fintechs bring a different skill set. We’ve had a few of these institutions, and they understand what it takes to have a product or service that can integrate with a bank. Today we see maturity in B2B. However, in the B2C space, fintechs compete head-on with banks. Banks have fewer and fewer opportunities to co-create something. Banks are in a much better position to embrace the cloud.
Rathor: When it comes to the adoption of new technologies, new risks will emerge. Here we need to work closely with regulators and other stakeholders and find ways to mitigate these risks. From the customer’s point of view, the adoption of technology is very important. With so many options available, you need to choose a technology that can make an impact and is easily adopted by customers.
Shetty: Today, the integration between banks and fintechs is getting better and better, as banks have implemented standard APIs and processes. It’s not that fintech is a master or has a better understanding of the technology. They have a focused approach, and that’s why they are able to create products over time. But nowadays, banks are able to match them in terms of the use of technology.
Dabke: We are still seeing many psychological barriers in the adoption of some of the newer technologies, including automation.
The biggest problem they would all face is with the ecosystem, like building a robust internal center of excellence ecosystem and engaging with the larger partner ecosystem to make smart choices based on available skills. in the field.
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