FinTechs And Banks Place Digital Transformation On Top Gear
Banks and financial institutions have been the forerunners in the earlier waves of technology adoption in terms of ERP systems, internet back-end, database systems etc. The last few years of change in deeper adoption of mobile telephony via cheaper data and handsets have opened up a lot more opportunities for leveraging data that these firms have collected but never quite put to aggressive use.
Traditional banks would know how much/when exactly should their products be pitched, but are they able to do it as effectively and in an agile manner as the digital natives? If anything slows this down, what is it? Is it the size of the organizations? Culture? Resistance to Change?
These are some of the path-breaking organizations that have driven large-scale digital adoption and transformation over the last two decades and it might be premature to assume that they'll able to match the nimbleness of the new age digital-native fintech.
Hoshie Ghaswalla, CEO BW Businessworld Engage and Minesh Koradia, Director, Banking & Financial Services at WebEngage, co-moderated an engaging session with a few C-Suite Executives to understand where each of the participating companies stand in their digital transformation journey and what they intend to do in the future to sustain in digital banking and other financial operations.
A journey that is always ongoing
One of the most crucial aspects of customer satisfaction in BSFI is providing excellent customer service. Banks, financial institutions, and insurance companies want to constantly ensure that they provide prompt, accurate, and courteous service to their customers. In order to do that digital transformation is a must. In this context, the roundtable discussion first began with understanding each one’s journey. Sharing his views on DSP Mutual Fund’s digital transformation journey, Manish Rathi, Head - Digital Business Growth, says his organization is investing in 2 aspects of transformation. Data and automation are the two inevitable factors that will help DSP sustain the digital revolution, says Rathi. “We have been strengthening our data team to analyse data to bring out meaningful outcomes for our customers. DSP is also looking at automating process as we learn from the data analytics so that we can service our customers at the right time in the most appropriate manner.”
To be nimble and agile is key to remain relevant and in competition, for all financial houses, remarks Gopal Menon, COO & CFO, Axis Mutual Fund. Organisations have to embrace technology and meet the expectations of their customers. According to Menon, a financial company like his, which handles large number of technology and transformational projects, it is essential to have staff with requisite skill sets, appropriate digital tools and well established processes to ensure that things are simple to execute and it is made convenient to the end users. Reaching out to investors and distributors in remote parts of the country, offering them various investment solutions, enabling upsell, cross sell options and facilitating various servicing requests, through digital assets and other touch points, needs to be done seamlessly and without any hiccups. Menon asserts that the leadership tea at Axis Mutual is in sync with the requirements of the digital transformation journey.
Gayatri Iyer, Strategic Growth - Digital Products, ICICI Prudential Mutual Fund, has a new take to the preparedness of digital transformation. While discussing about every company’s goal in executing the transformation she said ICICI Prudential is working on speeding up the servers to keep pace with customer’s fast-paced requirements. The financial house is also researching ways to reduce manual interventions by automating processes.
Manage offline data
Moderating the roundtable, Minesh Koradia, Director, Banking & Financial Services at WebEngage, further asked the participants as to how they intend to integrate, identify the different sources of offline and online data that are available to them. Offline data sources that include physical documents, such as application forms, bank statements, and ID proofs, while online data sources that include transaction data, website interactions, and social media data all require to come together sometime to make banking and financial processes easy.
Royal Sundaram’s Medical Insurance CPO, Nikhil Apte, says that digital technology has enabled insurance companies like his to collect and process data automatically from various sources. During the pandemic-lockdown, his company fulfilled underwriting procedures by making their executives do home visits and capturing the data for eKYC in an App. Once the data is integrated and cleansed, the company invested in technology to analyse it. Analysis involved data mining techniques to uncover patterns, trends, and insights in the data to better business processes. These insights lead the company to make better business decisions, such as identifying high-value customers or detecting fraudulent activities.
However, data analysis and other digital activities require good investment in building the digital infrastructure. Using cloud technology is a good option but data security has to be borne in mind. “In fact, RBI recommends BFSI organizations to leverage cloud, but on one condition,” says Dhiraj Saxena, IDBI’s Chief General Manager and Head – Digital Banking & Emerging Payments. The condition is the confidence in data security and privacy on cloud backed by sound risk management and governance processes. RBI warns organizations to not compromise on data security. Dhiraj further implies that the management authorities of most banks prefer private cloud and generally avoid public cloud for critical systems.
It has been 6 months since IDBI has started implementing AI-based data analytics. Dhiraj admits that the bank is using AI/ML for various purposes which include automating of back-office processes, managing risk and preventing/detecting fraud. Bank is trying to harness the power of AI to elevate the overall customer experience by implementing AI based customer engagement across digital channels. IDBI would be using ML to sell, cross sell and upsell. Also, ML would be used to nudge customers on payment reminders or offer financial help when their bank balance is low.
Collectively all of them believe that the choice to slowly transform is grim. The Gen-Z and millennials are tech-savvy moving towards a more cashless transaction method. Soon, they say, branches and ATMs will be non-existent. In that case moving towards digital banking solutions will be crucial to sustain in the business.
Although marriage has to take place, and there are many marriage counsellors and conduits to get it done, is the process that easy? Minesh Koradia, Director, Banking & Financial Services at WebEngage, moderating further, asks if there are any plug-and-play models that can ease digital banking processes and offer reconciliation? Moving from on-premise to on-cloud or staying hybrid is the greatest challenge for any company in the BFSI sector.
In response to this, Vijay Chandola, Senior Product Manager - Digital Business & Transformation, Axis Bank, says his bank is leveraging cloud to process non-financial requests. “If such requests are processed on cloud, it is easy to implement ever changing design guidelines faster. Moreover, all the companies working with us are made to follow the design guidelines formulated by Axis Bank. This way, we make the designs consistent and have scaled up our abilities to deal with customer interactions on digital platforms.”
Giving a new dimension to these thoughts, Manish Rathi, Head - Digital Business Growth, DSP Mutual Fund, exclaims that that there are far more challenges than what meets the eye. “As we think of investing in standardizing the digital services, we need to keep in mind that we are investing our finances in something that is not the same as investing in customer acquisition.”
Gopal Menon, COO & CFO, Axis Mutual Fund, also believes that it is important to standardize services and digital tools associated with it. When many vendors are involved, this becomes a critical need, he says. Moving to cloud though will be inevitable, it is wise to take it one step at a time, considering the data lake to deal with.
Tackling conversion rates in insurance
Participants in the roundtable did express their concern over using digital medium for selling insurance products. They say that one of the biggest challenges in selling insurance products over digital mediums is building trust with the potential customer. Unlike in-person sales, digital sales lack the human touch, which can make customers sceptical about the authenticity and reliability of the seller and the product. Unless the customer is convinced about the seller and the product it is tough to make a breakthrough. Unlike in-person sales, digital sales lack personalization, and there is a risk that the sales pitch may not resonate with the customer's needs and requirements. This can lead to a low conversion rate.
Royal Sundaram’s Nikhil Apte says to avoid customer drop-off, “We have implemented a hyper-personalized payment gateway to help the customer save time and feel comfortable in getting a seamless experience. As our products need to sell even in Tier 2 and 3 cities, it is important for us to keep the customer in the centre and work on tech-led services around them not forgetting that problem solving for customers is equally important.”
Apte also shared that Royal Sundaram uses Artificial intelligence to automate many of the repetitive tasks involved in underwriting, such as data entry and risk assessment. AI algorithms are also used to learn from data lakes to improve accuracy and speed in underwriting decisions.
Commenting on behalf of lending platforms, Rohan Juneja, MD & CEO, TruCap Finance Limited says his company adopted video-based KYC, during COVID times, while lending to small retail cash and carry businesses in the MSME ecosystem. The company developed a robust backend while keeping its front end simple. They consciously avoided a fancy platform but opted for a platform that is functional.
Almost everybody admitted that BIU is necessary for analysing data and turning it into useful insights for businesses. By using data analytics tools, BIU, they say, can uncover patterns, trends, and insights that can help businesses make better decisions. BIU, according to Rohan Juneja, MD & CEO, TruCap Finance, helps businesses identify areas of improvement and opportunities for growth. By analysing data, BIU can provide businesses with insights on how to improve their performance and optimize their operations.
Priyanka Singh, Chief Impact & Marketing Officer, Chief Impact & Marketing Officer, Dhanvarsha Finvest, opines that for an increased reach digital mediums have enabled lending businesses to reach a broader customer base beyond their traditional geographic markets. The human element though very important is supported by digital channels where lenders can attract potential borrowers also follow-up with them on a day-to-day basis. “The use of digital mediums has enabled lending businesses like ours to streamline loan processing and approval processes, making them faster and more efficient,” says Singh. Also, “Digital mediums have enabled lenders to provide a better customer experience by simplifying the loan application process, providing personalized offers, and enabling easy access to information on loan products and rates.”
WebEngage’s Minesh Koradia, assures that digital mediums have enabled lending businesses to reduce operational costs by automating various processes, such as loan origination, underwriting, and servicing. This has allowed lenders to offer more competitive loan rates to borrowers and to generate higher profits.
Anand Bhatia, CMO, Fino Payments Bank Ltd, believes simplicity and cutting down on ambiguity is very important to keep customers happy. Consumers use heuristics or thumb rules or shortcuts to decide on what to buy and from whom to buy. The four broad thumb rules are:
Only when the customers are convinced about a clear and clean process they take better decisions, the conversion rate can visibly go higher.
Priyanka Singh too opines the same. She says a transparent process that cuts down on financial terms and jargons is very essential for companies to project on their webpages or documents that require customers to understand the terms and conditions. Customers cannot be expected to know the financial terms’ meanings even though the language may be in Hindi or any local lingo. “Solving the problem of information asymmetry is going to be the biggest task on hand for BSFI companies. Only if this is cracked, we can go that extra mile to see good conversion rates,” explicitly remarks Singh.
Harnessing Machine Learning tools
Koradia in the last phase of discussion emphasized on Machine learning (ML). The technology is being increasingly used in the BFSI sector to automate and optimize various processes. ML-powered chatbots and virtual assistants are becoming popular in the BFSI sector. They can handle customer inquiries, provide customer support, and perform simple tasks such as account balance inquiries and transaction requests. Koradia was interested to know how ML was exploited by the participating companies. As BIU (Business Intelligence Unit) is an important component in data analysis helping businesses to make informed decisions based on data insights, the question on this was also thrown open for comments.
Almost everybody admitted that BIU is necessary for analysing data and turning it into useful insights for businesses. By using data analytics tools, BIU, they say, can uncover patterns, trends, and insights that can help businesses make better decisions. BIU, according to Rohan Juneja, MD & CEO, TruCap Finance, helps businesses identify areas of improvement and opportunities for growth. By analysing data, BIU can provide businesses with insights on how to improve their performance and optimize their operations.
It has been 6 months since IDBI has started implementing ML-based data analytics. Saxena admits that the bank is exploiting push notifications to its customers and is analysing the data that is generated from the response to notifications and thereon. IDBI is also using ML to sell, cross sell, upsell. Also, ML is used to nudge customers on payment reminders or offer financial help when their bank balance is low.
In conclusion, both predictive and prescriptive technologies will become important to integrate into the BFSI operations. Partnerships with external data scientists having different skill sets in combination with in-house data scientists will be key for futuristic viable business models. It’s a constant work in progress and digital transformation will have various hurdles to cross and various goals to achieve, ultimately aiming to meet customer expectations and customer/user experiences. Finally, it's important to ensure that the data quality is maintained over time, which involves implementing data governance policies and procedures, conducting regular data audits, and using data quality tools to monitor and improve data quality to maintain trust among service providers and service receivers.
Quotes
Functional not fancy
Rohan Juneja, MD & CEO, TruCap Finance Limited says his five-year-old organization is about 40% through with digital transformation. So far technologies have been deployed to assess the borrowers and streamline the lending processes so that the customers are at ease. “As a lending organization, digital transformation has TruCap to offer loans to a larger pool of borrowers, including those who may have been previously underserved due to their location or lack of credit history. To scale up our digital transformation initiatives we are looking at using Machine Learning technology to facilitate better communication between our executives and borrowers, allowing for quicker and more efficient responses to inquiries and concerns. We are looking at developing functional and not fancy applications to bridge the gaps between us as lenders and our customers as borrowers.” Juneja also says that his organization is constantly trying to upgrade its technology to make collections also easy for the employees.
Accomplishing North star metric
Vijay Chandola, Senior Product Manager - Digital Business & Transformation, Axis Bank, says the company's north star metric is to increase the digital adoption to boost the value consumers gain from Axis' banking products and services. "In a month we receive about a million service requests from the digital channels and resolving every customer issue is critical. Digital adoption should help the bank further the number of service requests to more than a million. We also want to ensure that there is end-to-end service delivery for every customer to meet the satisfaction and user experience goals.”
Dynamic and still to settle into patterns
Anand Bhatia, CMO, Fino Payments Bank Ltd, says, “Fino is one of the largest private banks with a phygital presence. Digital transformation is truly a journey for us as we keep the focus very customer-centric. There will constantly be a mix of services through physical as well as digital modes. To make both these interactions seamless we will constantly rely on technology to ease process and experiences. Fino will be able to enhance the impact of technology by marrying it with insights into consumer behaviour. This helps even where data is unstructured and definitive patterns are still to emerge. When structured data is available, we can harness it to develop more specific services. This is why I say we are in a very dynamic and still to settle phase in digital adoption as our goal posts keep shifting in the transformation journey. Fino wants to work on solutions that allow consumers to increasingly use our digital assets and be far more autonomous.”
Empowering the customer
Commenting about the digital transformation journey, Gayatri Iyer, Strategic Growth - Digital Products, ICICI Prudential Mutual Fund, says, “In our digital transformation journey, we are taking baby steps but we aspire big. We know that this is a marathon and not a sprint, and in this run, we intend to make our customers journey simple and intuitive. We are also finding ways to fix the bandwidth issues. We want to do 10 different tasks at one time but end up being restricted to doing just 3 or 4. So, we want to make use of technology to prioritize tasks with prime focus on customer empowerment.”
Obsessed with quality customer experience
Obsessed with delivering optimum customer experience, Manish Rathi, Head - Digital Business Growth, DSP Mutual Fund, says, “We have identified key areas where technology can be deployed. DSP Mutual is investing its efforts in automation while ensuring there is enough manual intervention in establishing a robust infrastructure. The intention is to use technology to fulfil all customer needs; understand their pain areas; be there at the right place, at the right time, with the right communication. Currently, we are in the right direction, ensuring that all our goals in this transformation are accomplished. Overcoming the challenges enroute this journey will be our priority to increase automation and target uber customer experience.”
Delivering Omni-channel experience
Sharing his thoughts on IDBI Bank’s digital transformation journey, Dhiraj Saxena, Chief General Manager and Head – Digital Banking & Emerging Payments, says, “In the past year, we have progressed remarkably in the digital transformation processes. We are in the process of identifying all manual processes that can be digitized. Keeping the customer in mind, IDBI Bank intends to create end-to-end banking services that involves both self-service as well as assistive service features. Our broad intention is to deliver a seamless omni-channel experience to customers so that their banking experience is incredible. We are constantly overcoming resource-based challenges, i.e., acquiring the right skills for the digitization and also establishing the right digital infrastructure. IDBI Bank is rolling out various customer-first digital initiatives month on month and we are gearing up for the sustained transformative journey using innovative technologies.”
Transitioning yet being traditional
Being a traditional insurance company with traditional working models, unassumingly Royal Sundaram General Insurance Co. Ltd, has digitally transformed to boost customer experience, says, Nikhil Apte, Chief Product Officer - Product Factory (Health Insurance). “All our 4 buckets of medical insurance services are undergoing digital transformation. Pre-Covid as well as post-Covid we have been transitioning our services with digital interventions. Today we are about 80% complete with the transformation. The challenge that we are facing is to map the customer satisfaction score. Royal Sundaram is also looking at avenues to capture customer’s attention. We are also compelled to match customer experiences that are offered by other digital platforms.”
Catering to the not so digitally-savvy
With an aim to bridge the purpose of reality and digital wellbeing of their niche clientele, Yash Bhargava, Vice President - Head- Marketing and Communication, Waterfield Advisors Private Limited, says their digital transformation journey cannot be defined as an absolute one. “As we manage assets of many family run businesses, we deal with a mixed customer age group. Some of them are not very digitally savvy, while many others are comfortable with digital financial services. So, we adopt technology with prudence. Waterfield is aware of the impact caused by digital transformation, but an organization like ours needs to deliver based on customer’s comfort. We are constantly exploring digital mediums to engage with customers who are not so digitally savvy. Waterfield is also constantly exploring ways to tackle the data deluge encountered by the company. Our single most objective of digital transformation is to leverage technology that can enable a competitive edge over other similar service providers in the industry.”
