Aruna Rao, Group CTO, Kotak Mahindra Bank and Group Companies, gives a glimpse into the changes shaping the banking ecosystem.
In a recent interview with a media outlet, Uday Kotak, Managing Director of Kotak Mahindra Bank said, “My science fiction view of banking is that you will see a complete blurring of financial services and technology, and banks of the future will have to work at a quarter of their current cost models.”
This is the business challenge that IT has to step up to. We see several technology firms offering financial services and we see banks offering lifestyle products on their mobile and net banking platforms. New age digital products need to be conceived and designed by multiskilled teams that understand business as well as technology. This transformation needs to put the customer in the middle, with a focus on innovation and customer experience.
Enhance productivity and optimise costs
For decades IT has improved productivity of operations staff through technology used to automate business process, OCR and MICR recognition for cheque processing, business rule engines for direction of workflows, etc. However, in recent years, a new set of technologies has emerged to take productivity to the next level. Robotic Process Automation (RPA) is one such technology. Any repetitive activity that does not need decision-making can benefit from this technology. At Kotak, we have seen turnaround times going down from 3 days to 3 minutes in some customer facing operations using RPA. The results have been equally good for internal IT support operations. The RPA automation of 25 processes has resulted in the save of 5 FTE. RPA can be combined with Machine Language/Artificial Intelligence to automate more sophisticated needs like fraud detection operations in cheque processing. With availability of trained talent declining and manpower costs increasing, these technologies will get further leveraged.
Bring about process improvements
We have already discussed productivity improvements using RPA, OCR, etc, which bring about some process improvements. However, emerging technologies enable us to re-imagine the process itself, rather than just automate them. Mechanisms such as biometrics-based authentication rather than paper-based authentication can entirely change the process. Consider the process of changing an address or mobile number registered with your bank. To change that you have to show some identity proof, to confirm that it is indeed you who is authorising this change. The process used to require a customer to visit the bank and sign a form to verify the identity. Now, biometric authentication can be used for authorisation, easing the whole process for the customer.
Drive innovations in products and services
In recent months and years, there has been a lot of discussion and emphasis put on ‘digital transformation’. This implies a one-time process to transform into a new way of working. However, Gartner has started to use the term ‘Continuous Next’ when talking about digital innovation. In other words, there has to be a continuous testing of new ideas and extending the borders of what is possible and what the customer would expect.
While the product teams have to ideate on the innovation, IT has to prepare for this by laying the foundation infrastructure and methodology. On the application side, the process of developing apps has to be more agile with DevOps imbedded into it. The architecture needs to evolve to facilitate rapid changes through microservices. On the infrastructure side, the cloud native hosting and deployments with containers and kubernetes become important.
Deliver superior customer/stakeholder experience
There has been an explosion of new technologies from Analytics, Natural Language Processing (NLP) to Cloud. In addition, in our country, the India Stack technologies provide a whole range of infrastructure and facilities, using biometrics, QR codes, etc. The real critical success factor is how they are applied and leveraged to improve customer experience and deliver business value. For example, one of the technologies we leveraged in 2018 is NLP. Keya the first AI-powered voicebot in the banking sector was built using NLP. Developed on a library of millions of phone banking conversations, Keya services customers in English and Hindi and facilitates the resolution of customer queries in a single interaction. Keya will also soon be available on the mobile to enrich 811 and other customer journeys. It uses NLP and AI to deliver a much improved customer experience. Over time this could be further integrated with data analytics to provide more custom tailored voicebot responses, and with RPA to actually execute an order provided to the voicebot. Both creativity and execution excellence will be required to continuously delight the customer.