At the recently-held regional conference in Mumbai, the conversation revolved around three critical themesdigitisation, innovation, and cybersecurityand their roles in the future of India's financial ecosystem
The term ‘digital’ is more than just a catchphrase today; industries and businesses that do not step up their overall digital strategies are likely to find themselves left behind, irrelevant, or even compromised. This is particularly true of core businesses, such as banking, manufacturing, and telecommunications—which have massive user bases and liaise with a large network of service providers. In India alone, the financial ecosystem has seen massive transformation over the last few years, with new technologies, services, and possibilities coming to the fore.
Finding swift solutions
However, if the potential of digital is immense, so are its risks. As businesses shift online, cybersecurity threats, and chances of data misuse and fraud loom large. It is no wonder then that SWIFT India’s regional conference this year focused on three crucial themes. “Digitisation, innovation, and cybersecurity are the three core areas of focus for SWIFT India, and the highlight of today’s event," announced Kiran Shetty, Chief Executive Officer & Regional Head, India & Subcontinents, SWIFT, in his welcome note.
With the aim of enabling harmonised exchange of structured financial information among different fiscal players, SWIFT India has been a trusted partner to banks and financial services on their digitisation journey. The conference, held at The St. Regis, Mumbai, on May 8, brought together thought leaders, dignitaries, and experts from the country’s top banks, regulatory financial services, as well as domain experts from other industries and civic institutions.
With five in-depth panel discussions spread through the day, the agenda revolved around top concerns, challenges, and breakthroughs in the subcontinent’s financial space. To start with, Gottfried Leibbrandt (CEO – SWIFT) introduced the audience to two upcoming innovations from SWIFT itself: first, a payment system that facilitates global payments at a much faster and bigger scale, called gpi, and second, a new customer security program to address current cybersecurity crises through collaboration with banks, regulators and anti-virus software developers. The company also plans to set up new digital tools, with alarms and triggers to detect security threats and data leaks.
Where data can empower
There’s no doubt that data, and its use or misuse thereof, is often the top concern among most businesses today, given the massive volume of online transactions and highly-sensitive patterns of information sharing that drive most processes today. In India, however, which estimates 702 million smartphone users by 2020, this is particularly important, as this widespread proliferation allows for greater efficiency in basic financial services, even in remote areas. “Today, 600 million people in India have linked their unique IDs to their banks, and $17 billion have been transferred using this programme - possibly the world’s largest cash transaction programme," highlighted Nandan Nilekani, co-founder & non-executive chairman, Infosys and recipient of several global awards, as he began his keynote address with an overview of Digital India.
Among other things, Nilekani outlined how each nation must find its own way to secure the privacy and information of its citizens, while also finding the best possible use for the massive volumes of data generated within the country. The Indian model, he believes, is one of ‘data empowerment’, one that will ensure the betterment of citizen lives and livelihoods, rather than just profiting organizations. Interestingly, Nilekani accorded the same approach to digital’s newest buzzword, AI, highlighting that in a country like India, AI must be used to amplify capabilities and reach more people.
Corporate banking’s new lease
There’s no doubt that corporate banking in India is going through a visible flux, and ongoing efforts at digitisation are often throwing up new challenges in an already complex sector. As per a report by the Boston Consulting Group, launched at the event by Saurabh Tripathi, Senior Partner & Asia Pacific Regional Leader Financial Institutions, BCG, around 45% banks are showing decline in profits while nearly 50% corporate banking divisions have return on capital below the hurdle rate. Tripathi, who also moderated the first panel of the day, went on to highlight some of the ways in which corporate banks can refresh their processes by following key emerging practices.
His session on ‘digitisation and the ease of doing business’ included stalwart panelists Rajnish Kumar, Chairman, SBI, Pramit Jhaveri, Chief Executive Officer- India, Citibank, and Usha Ananthasubramanian, MD & CEO, Allahabad Bank. “Leaving everything to technology is not the answer. The idea is to empower people to use and master new tools, and this is possible only through training and practice," asserted Rajnish Kumar, discussing how SBI has completely revamped its training system, with a focus on corporate banking and risk management. He was echoed by both Jhaveri and Ananthasubramanian, who are following stringent risk-management strategies in their organisations, with a focus on training, awareness, and practice.
Technology – right place, right time
In fact, across panels and discussions, it seemed clear that while technology itself was a huge player in the Indian banking and financial scene, it was not a blanket solution to all problems plaguing the sector. In a session titled ‘Operational risks and cyber risks: fallouts of technology advancements in banking’ Nandkumar Saravade, CEO, Reserve Bank Information Technology Private Limited (ReBIT) asserted while investing in cybersecurity solutions is crucial, one must also ensure that the investments are being made in the right place and at the right time. Cyber attacks are imminent – a question of not ‘if’ but ‘when’. Often, the risk of focusing only on high-end innovations may mean overlooking basic hygiene, weighed in Saravade, which can mitigate core, recurrent threats.
So, how does SWIFT India plan to partner with banks in their ongoing battle against cybercriminals? Stefano Ciminelli, Deputy CISO, SWIFT outlines a few steps, including taking responsibility for risks, sharing information on tackling new threats, and constantly updating and improving on own products. Nearly everyone agreed that despite its risks, information sharing and active collaboration among concerned and institutions are definitely the way forward. “Maximum collaboration happens when there is a real and imminent breach," mentioned Vedashree; however, by enlisting experts from not just IT but across sectors and domains and leveraging their learnings in different situations, the industry can create a more wholesome approach towards collaborating against cyber risks.
Digitisation in the securities market
It is easy to confuse the requirement of ‘digitisation’ with that of a singular trend like blockchain or AI. The key lies in knowing what technology to leverage at specific points so as to benefit the organisation’s focus areas. This point was reinforced in the day’s panel around the fintech revolution in the securities market. Moderated by Philippe Dirckx, Managing Director, Markets & Initiatives, Asia Pacific, SWIFT, the day’s session on the fintech revolution included representatives from the Bombay Stock Exchange, NSCCL, and HDFC Securities Limited. “No single technology can be the mother of all solutions", asserts Sriram Krishnan.
“The entire infrastructure needs an overhaul to support the massive growth in users and facilities", mentioned panellist Vikram Kothari, Managing Director and Chief Executive Officer, NSCCL. As technology evolves, so do the quality of operations, and fintech players are now an essential part of this movement. However, pricing must be kept in mind. Here, Ashish Chauhan weighed in on areas where investments are most needed, beginning with investing in open systems and infrastructures. “Indian markets are hugely cost-sensitive," he cautioned.
Impact on trade and payments
A panel on ‘innovation and trade digitisation’ moderated by Prateek Roongta, Partner & Director, BCG opened up yet another aspect of digital transformation, particularly its impact on trade finance. “Technology has a very important role to play in the digitisation of trade finance," highlighted Roongta as he goes on to indicate a few ‘standout’ opportunities for innovation in the field through intelligent automation and digitisation, finding emerging solutions (like harnessing big data, blockchain, etc), and leveraging industry disruptors (like IoT and additive manufacturing).
Practically speaking, however, most legacy businesses like banks find it challenging to integrate new-age technologies in their corporate strategy, pointed out Mrutyunjay Mahapatra, Deputy Managing Director & CIO, SBI and part of the panel. Knowing when and how to apply innovation, having a roadmap, and persistently taking action on the same are some of the ways banks can tackle upcoming hurdles, he added.
Alain Raes, Chief Executive, APAC & EMEA, SWIFT, believes that the “biggest solutions in global trade finance are likely to come in parts". He hints back at SWIFT’s upcoming gpi payments platform as one such tool to facilitate complex payments across the value chain.
Facilitating cross-border collaboration
A key data point that emerged over the course of the panel discussions was in the field of inter-regional trade, which, in SAARC nations today is less than 5% of their total trade. Compared to Europe (60%) and East Asia (35%), the figures are dismal, began Eddie Haddad, Managing Director, APAC, SWIFT. This opened the conversation around “efficient interoperability" and the ease of trade and cross-border payments being the way of the future. Panelists included KD Ranasinghe, Deputy Governor, Central Bank of Sri Lanka, and Arfan Ali, Managing Director, Bank Asia, Bangladesh, among others.
Monitoring and regulating payment systems is an important step towards effective interregional trade. Ranasinghe stressed on the importance of forward-looking policies from a national level which fosters inter-region trade and exchanges, while Mohan Tanksale, Ex- CMD, Central Bank of India, added that SAARC nations should share best practices amongst themselves and leverage on their existing common interests and motivations. “The willingness to participate in regional cooperation is very important," weighed in Ali. Banks can take up the mantle here, he says, by working with their counterparts in other nations.
Ultimately, innovations in payment are going to be important for the security as well as economies in business. The idea is to look at the bigger picture, rather than making small but ultimately inconsequential changes without a long-term goal. “Digitisation is not just about installing new systems; it needs a wider institutional framework, including surveillance, data protection, and legal guidelines," signed off Ranasinghe.