Federal Bank: Turning Digital Aspirations into Tangible Outcomes

Disruption comes in waves and criss-crosses, with cyclical recessions altering the business landscape. Businesses that see disruption as a pivot for growth are the ones that are manifesting greater operational efficiencies and customer experience. Banks today are at the forefront of embracing the next level of digital technologies and early movers are reaping the benefits.

Take the case of Federal Bank, one of the few early movers who had the foresight to say that we are a 'Digital at the Fore, Human at the Core' organization. In line with that commitment over the years, the bank had steadily progressed into a truly digital bank in every sense. Behind this impressive digital at-scale evolution of the bank lies a steadfast vision driven by a strategic blend of people, processes, technologies, and a collaborative partnership approach. Curious to know how this bank has tamed the digital disruption to its advantage?

Let's hear from Babu Thomas, Head of the IT Department, Federal Bank. "There are three core areas we focus diligently: on customer preferences, technology, and regulatory changes. Let me unpack each of these. Customer preferences are constantly changing, and we need to address that continually. And technology changes perpetually, and we need to adapt strategically. Finally, the regulatory regime is vital, and we need to be mindful of the changes and align our overall strategy meeting it."

Failure stats are always alarming, and as we all know, there is a high risk of digital transformation failures across industries. What makes digital transformation more friction-free is the need for a reliable digital transformation partner who can enable the correct sync with business priorities and digital. Here is where a collaborative approach makes for digital success.

Reflecting on this, Shailja Singh, Director of Technology Sales, Enterprise, IBM India & South Asia, agrees that the rapid pace of digital adoption by banks calls for a very well-meshed strategy fostering a holistic digital ecosystem. She says, "The term VUCA (Volatility, Uncertainty, complexity, ambiguity) aptly applies to the banking sector.

Banks today, in addition to a range of new technology challenges they face, also need to be mindful of country specific regulatory compliance laws of the land. With the rapid escalation of AI, aspect like data privacy, and its governance is increasingly coming under scrutiny of the regulators to better protect consumer interests. This backdrop only underscores the criticality of a digital tech ecosystem that evolves with the market dynamics.

How has technology been a shapeshifter?

Federal Bank is one of India's enterprises with long-standing relationships with IBM. Let's look at how did it stays relevant in the ever-changing times. Says Babu, "We aim to offer friction-free services; of course, we do face frictions, but we should have the leverage to iron those out quickly; that's where digital comes into play. I will again stress the key point, the bank exists for the customer, and they are at the centre of our digital universe, and all our efforts are aimed at serving their needs. “From the start of our core banking journey, we have been with IBM, and I will attribute our ability to be relevant to our constant emphasis on data and analytics, which has given us the ability to understand the customers and curate best-in-class experiences for them."

As we pan the horizon, the time is now to sunset legacy thinking, mindsets, and technologies for greater alignmentfor the future. We are seeing the dawn of a new era with 'Generative AI,' IBM is on the frontline of enabling its customers to integrate AI as a strategic business enabler, complementing the pre-existing IT infrastructure and other tech trends.

Says Shailja, "In addition to AI, we are seeing the elevation of a host of trends like Quantum Computing, Blockchain, Cryptography, Biometrics, 5G, and Edge Computing among others. We are looking at enabling these technologies and much more to specific verticals to benefit the clients and its customers. But the most important change we shall see is generative AI and interesting times are ahead."

Adds Babu, "I agree that banks have to reinvent with the changing market dynamics. For instance, today, we complement as well as compete with FinTechs. Each has its customer personas and needs, and it's not a question of this or that. Banks will have their true purpose, which will remain and cannot be challenged by FinTechs. But that said, we cannot be complacent and must continually invent for tomorrow and beyond."

Empowering your digital core with Generative AI

AI feeds on an ecosystem. So, if the source data is good, the outcome will be better. So, it is vital to leverage AI to seamlessly blend into your data and usher in more significant insights. To that end, IBM's watsonx is the latest offering from IBM. As per IBM, it is its enterprise-ready AI and data platform designed to multiply the impact of AI across the business. The medium comprises three powerful products: the watsonx.ai studio for new foundation models, generative AI, and machine learning, the watsonx.datafit-for-purpose data store, built on an open lakehouse architecture; and the watsonx.governance toolkit to accelerate responsible, transparent and explainable AI workflows. 

Says Shailja, "watsonx is indeed ground-breaking. It helps enterprises look at data outcomes in numerous ways yet grounded in all aspects like governance, compliance, etc. Foundation models power generative AI. And these foundation models use vast expanse of neural networks and watsonx helps enterprises scale AI across the business."

With all these tech advancements. Banks are also taking new ways of managing threats and fortifying themselves with best-in-class threat management technologies that make for banking with trust. Babu says, " We emphasise security and make sure that our audits are in tune with the constantly evolving threat landscape and has proactive solutions and strategies for secured banking."

Shailja also points out, "That with rapidly altering threat landscape, cyber security, and data privacy has become the topmost priority to banks and given these challenges, an Application Performance Management (APM) tool is vital, and IBM has solutions that reduce risk and maximize the uptime of mission-critical operations.”

The ESG imperative

Today, aggressive conversations on Environmental, Social, and Governance (ESG) exist. How are banks approaching it? Says Babu, “Digitization or digitalization activities directly benefit the environment. We have a separate department that looks into it”.

Adds Shailja, "ESG initiatives are significant, and most banks are doing it. The data centre is the epicenter of banking operations, and it is imperative to make data centers sustainable and socially responsible. IBM is a champion in green computing, and we do take ESG very seriously and champion that with our clients as well."

Banking due to its inherent nature of its business has been an early adopter of cutting edge technologies. Organisations like Federal Bank stand in testimony to how seamlessly aligning IT with business can manifest into tangible business outcomes.