Banking in India has unanticipatedly gone online at an accelerated pace in the last few years. While the ease of access provided by the banking apps and online portals today has sorted out a lot of the inconveniences that came with needing to visit a branch for services, the scenario still isn’t at a point where you hear a customer say that they used a banking app and everything was easy. And yet, that’s not the case with Uber in taxi hailing, Amazon in eCommerce, or Zomato in food delivery.
The advent of UPI has meant that real-time transactions are as easy as the services delivered by above mentioned non-banking entities, if not better. Besides, the apparent demand for ease of access to financial services has encouraged the new-age fintech to come up with ways to deliver financial services and the banks are still working on catching up.
“Money isn’t an uninteresting topic. You can actually sit and plan with your spouse and family about money and spend hours doing that. But when it comes to using a mobile banking app and engaging with the banking application, it's not always engaging or interesting,” says Charu Mathur, Head – Digital Banking & Strategy (Existing Business) at IndusInd Bank.
Mathur says that it's a rare thing to hear that a banking app was easy and engaging for a customer. But that doesn’t deter her and the team at IndusInd Bank from pursuing the human-centred thought process, learning from the feedback and building products for customers with empathy.
“This is something that I really inculcate in my team and push them for,” she says.
Unlocking Value By Leveraging Tech
Enabling the movement of money or transfer of funds on their banking apps is only part of the puzzle to drive engagement for banks. They are now looking to understand their customer’s unique situations and preferences to provide tailor-made banking products and services. This involves understanding the customer's unique circumstances and preferences and then configuring products and services accordingly. And that’s where IBM’s tech expertise comes in.
While the banks work on creating customer personas to understand them better, IBM helps enable it by bringing into the picture artificial intelligence (AI). “We help banks leverage AI and automation to create the kind of experience for the users where they feel that banks really understand them and their needs,” says Geeta Gurnani, IBM Technology CTO & Technical Sales Leader, India/South Asia.
A McKinsey report estimates that AI technologies can possibly unlock USD 1 trillion of incremental value for banks, annually. It says that AI technologies can help boost revenues through increased personalisation of services to customers (and employees); lower costs through efficiencies generated by higher automation, reduced errors rates, and better resource utilisation; and uncover new and previously unrealised opportunities based on an improved ability to process and generate insights from vast troves of data, across more than 25 use cases.
An Open Ecosystem
Fluidity and customer-centric services are the flavour of the season in banking which is being enabled by banks, fintechs and other financial institutions. Gone are the days when banks delivered services without any third-party associations.
Today, banking is open as data is shared across networks instead of focusing on centralisation. This way customers are able to share their financial data with other financial institutions. Bank Application Programming Interfaces (APIs) allow the assessment of customer transactions and accounts to determine financial service options by tapping into data available across financial institutions.
But what does this do? Open banking could enable the data to identify financial services and products that are better suited for a customer. These could range from providing them with options on savings accounts that earn higher interest rates, to even helping lenders assess a customer’s financial situation to offer profitable loan terms. IBM’s API platform helps banks connect within departments and even the ecosystem as they pursue cross-selling and up-selling of their services.
“Increasingly, we see that banking is not happening on a banking mobile app. It's actually happening on some other app,” says Mathur.
She gives the instance of a customer buying a television and ends up converting the purchase into an EMI. This means that banking has happened on a platform, which is not really a bank platform. Nevertheless, the customer created a loan with a bank.
“The world of embedded finance and ecosystem is an exciting thing which is now unfolding and the use cases are going to accelerate,” the IndusInd Bank Head of Digital Banking & Strategy (Existing Business) adds.
Challenge Of Heterogenous Environment
While innovation stays on the expressway in Open Banking which allows customers to avail a whole gamut of products and services, it also opens up the attack surface to cyber adversaries. Banks can no longer hide their applications behind perimeter firewalls as every FinTech, RegTech or any other partner brings its own all-important technology and infrastructure.
“Today, banks need to build a very resilient and secure infrastructure. With so much digitisation and so many services being offered in the open ecosystem, security is a prime concern. So, we also help banks secure their infrastructure,” explains Gurnani.
With data at the centre to deliver such promise via Open Banking, heterogenous environments also bring forth compliance-related challenges. To address this, IBM helps banks in India meet various compliance parameters with regard to data and technology.
“It’s important to keep the environment very secure and protected so that customers feel the same level of trust with the bank on a partner or ecosystem app, as they do when they avail a product from one of our branches or bank’s own app,” says Mathur.
But adapting to heterogenous environments can be challenging. While the banks have a lot of choices to pick from, the mix-and-match to deliver the best services for the customers can prove to be difficult. And IBM bridges the gap by helping them build the right hybrid cloud plan.
“We are helping banks deeply around hybrid cloud strategy. This helps them manage heterogeneous environments, which could be either private cloud, public cloud, or on-premise infrastructure. It helps them run the whole show,” explains Gurnani.
A strong hybrid cloud strategy is pivotal for banks in the era of open banking. It provides them the flexibility and scalability needed to keep up with the ever-changing demands of their customers. In addition, it is quintessentially helping them comply with specific regulatory requirements, while still maintaining control over their data and applications.
Master Strokes is a series produced by BW Businessworld and Presented by IBM India. This series will present the efforts and accomplishments of technology leaders across sectors on how they use and continue to leverage technology to bring about business transformation creating a positive impact on their organisation.