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Banks are accelerating the digital shift with adoption of emerging technologies

From left: Sameer Shetty, president, digital business and transformation, Axis Bank; Deepak Sharma, president and chief digital officer, Kotak Mahindra Bank; V.V. Balaji, head, business technology group, ICICI Bank; Anjani Rathor, chief digital officer, HDFC Bank; and Hemant Dabke, senior director, enterprise sales, UiPath.Premium
From left: Sameer Shetty, president, digital business and transformation, Axis Bank; Deepak Sharma, president and chief digital officer, Kotak Mahindra Bank; V.V. Balaji, head, business technology group, ICICI Bank; Anjani Rathor, chief digital officer, HDFC Bank; and Hemant Dabke, senior director, enterprise sales, UiPath.

Panellists at Mint’s Annual Banking Conclave debate digital technologies, blockchain adoption and fintech integration

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Banks are accelerating the digital shift with the adoption of emerging technologies, said experts at the 14th edition of the Mint Annual Banking Conclave. The panel discussion on “From Core to AI-Powered Cloud: Impact of Digital Transformation on Banks" saw participation from IT decision-makers of leading banks. The panellists included Deepak Sharma, president and chief digital officer, Kotak Mahindra Bank; VV Balaji, head, business technology group; ICICI Bank; Sameer Shetty, president, digital business and transformation, Axis Bank; Anjani Rathor, chief digital officer, HDFC Bank; and Hemant Dabke, senior director, enterprise sales, UiPath. The discussion was moderated by Leslie D’Monte, executive editor, Mint. Edited excerpts:

How are digital technologies influencing banking services?

Sharma: We look at technology from two aspects—one that is already matured and the other that is experimental in nature. We have to also look at the relevance of technology in financial services. For digital technologies, while Industrial IoT use cases are seen in the manufacturing industry, there are no relevant use cases in financial services. Even virtual reality looks far away. However, augmented reality is more immediate. We need to prioritize between the maturity of the technology and its relevance to financial services. In the end, we need to analyze what end-value technology brings to the business and to end-consumers.

Balaji: The banking industry will move along with technological advancements. The advantage Indian banks have over banks of developed countries is we don’t have too much legacy to carry, and that’s why we have migrated to new technologies very fast. As digital technologies become mainstream, banks will be the first ones to adopt them

Shetty: All our customer-facing applications launched last year are on the cloud, and our aspiration is to move 70-75% of other applications to the cloud in 2-3 years. AI is a very loosely defined term. We need to look at how data can provide value addition, and this is where we are using AI in underwriting, fraud detection, marketing, and personalization.

Rathor: We are creating differentiating factors using the technologies. One big differentiator has been the creation of an easy, simple and intuitive customer journey, and this is applicable for personalization, underwriting, fraud and risk control, as well as other functions. Then, in between comes the operations layer, wherein a lot of efficiencies can come in by adopting different technologies. We need to look at how end-to-end processes can be digitized and eliminate processes that are used today but may not be needed with technological advancements.

Dabke: We need to look at how banks are making efficient use of technology. Some banks started their automation journey a few years ago, and there are others that are leap-frogging now. We should look at both journeys in a differentiated manner. Today, automation is the most relevant conversation around the table, and it is not in isolation. Digital technologies such as AI and ML are embedded to make the processes more efficient, provide faster time to market, and serve customers better. The digital journey of all banks is getting accelerated, and it is exciting to see how the next couple of years will emerge, where we as service providers get to participate and become an enabler.

How is the Indian Banks’ Blockchain Infrastructure Co. paving way for blockchain adoption?

Shetty: Blockchain is a very appealing concept and technology. However, it is still very early days. All of us are experimenting, and there are no significant use cases yet. If we can all work together in areas like trade finance, smart contract, home loans, and other secured loans, then interesting use cases of blockchain would certainly emerge.

Sharma: There are public and private blockchains, and IBBIC is sitting somewhere between the two. A set of banks have come together to put this infrastructure in place. There are use cases around trade finance and the supply chain side, and only financial institutions are part of it. But this would require a much larger ecosystem. As a technology, blockchain has a lot of prospects, but the reality and outcome is something that is eluding us. IBBIC is one such attempt to bring tangible value out of blockchain technology.

Balaji: Since the IBBIC has been formed with a common goal, we are hopeful that it will be successful. At ICICI Bank, we have a private blockchain within our network, but we are yet to see significant benefits. There are specific use cases that prove that it is useful as a technology.

Rathor: Blockchain needs a network, and one entity cannot single-handedly make it successful. Different entities have to come together and create a strong foundation. This is when interesting and more number use cases will emerge.

Dabke: Blockchain needs a network, which means a large number of applications and parties have to come together. Automation is going to be at the centre stage for the integration and orchestration of a large number of applications.

How are you dealing with different sets of challenges such as moving core banking system to Cloud, integration with fintechs and the automating processes?

Balaji: In the last couple of years, digital transactions have gone up by leaps and bounds and people have started using digital banking. We believe at some point in time, core systems will hit a ceiling. We all will eventually move to Cloud but now we have just started our cloud journey.

Sharma: Integration with the fintech system is a big challenge. There is no standard template for it. From the B2B side, fintechs bring a different competence. We have had a couple of such institutions, and they understand what it takes to come up with a product or service that can integrate with a bank. Today, we are seeing maturity in B2B. However, in the B2C space, fintechs compete with banks head-on. There are fewer and fewer opportunities for banks to co-create something. Banks are in a much better shape towards adopting cloud.

Rathor: As far as newer technology adoption goes, new risks are going to emerge. Here, we need to work very closely with regulators and other stakeholders and figure out ways to mitigate those risks. From the customer perspective, tech adoption is very important. With a lot of options available, you need to choose a technology that can make an impact and is easily adopted by the customers.

Shetty: Today, integration between banks and fintechs are happening in a better way, as banks have APIs and standard processes in place. It’s not that fintech is a master or have a better understanding of technology. They have a focused approach, and that’s why they are able to build products over time. But these days, banks are able to able to match them in terms of leveraging technology.

Dabke: We still witness a lot of psychological barriers in the adoption of some of the newer technologies, including automation.

The bigger problem that all of them would be facing is on the ecosystem front, like building a robust, internal Centre of Excellence ecosystem and engaging with the larger partner ecosystem to make intelligent choices depending upon the domain skillsets available.

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