The State Bank of India is in the process of transforming its operations through technology adoption; while partly digitisation has already been achieved, the Bank is making all-out efforts to fully digitise its operations, Shiv Kumar Bhasin, Chief Technology Officer, SBI, in an interaction with Poulami Chakraborty of Elets News Network (ENN)
What role does a CTO play towards the business development of a financial institution?
As CTO, I handle the Technology wing in the State Bank of India, whose job is to stay focused towards and work on innovations like digitisation, re-engineering and transformation areas. Under these heads, we are carrying out various programmes, which lead to transformation of the Core Banking System (CBS), going into the various new digital channels – be it a variable device, social media banking, the wallets or newer technologies. These are the basic functioning that a bank performs. We are using innumerable variety of innovative frameworks, most of which are the market leaders. A lot of transformation has also been brought about in the product platform, like in the foreign office, we migrated from our old version of core banking platform to the latest version last year in record time. Simultaneously, we also started the trade finance platform, for which, sufficient functionality was not available in the existing platform.
SBI has two business units — National Banking Group (NBG) and International Banking Group (IBG). Last year, NBG MD Krishna Kumar decided to go for the trade finance platform, and around 25 per cent of the revenue of the Bank should be coming in the next five years through international banking. The percentage currently is much lower, but it has witnessed improvement in comparison to the last year. Keeping in mind the revenue growth, we wanted a diversified platform, which can host many international products suiting the global market places as well as cater to the trade corridors across the globe. This way, some of our Indian customers having businesses abroad and those in India would be served. Our customers are our king and SBI has been successfully working in this space for the past few decades, winning over new customers every passing day.
How do you perceive the tech implementation in the mainstream Indian financial institutions?
Technology adoption in banks is significantly high. It used to be a huge challenge a few years back, but now Indian public sector banks (PSBs) have learnt that if they have to survive in this competitive market, they have to embrace technology, also because it helps cuts the overall operation costs. The cost-to-income ratio can be brought down below 40 per cent using technology. We have a clear message from the SBI Chairperson that the cost-to-income ratio over a period of three years should be brought below 40 per cent, which is the global benchmark. Most profitable banks are running the cost-to-income ratio at around 40 per cent or below. That’s where we have a lot of drive to adopt digital technology.
Besides the adoption among the financial institutions, it is important that these technology lessons on banking and financial services are also equally imparted to the end-users, so that they can make optimum utilisation of these facilities. SBI will always act as a professional in knowledge-driven banking to increase awareness among users.
What challenges do you see in offering the best-inclass experience to the customers through technology adaption?
When we look at offering the world-class services, the key challenge is that our domestic processes are still paperbased, while in the international banking, the drive is to go for digital, i.e. paperless. That’s where we are bringing this multi-entity deployment of Misys platform, so that we can have our back-office trade operations in all the 26 countries consolidated in India. Currently, all trade finance operations are in the specific countries. But very soon, we will have a very small footprint or very small shop in foreign countries, with a Centralised Processing Centre doing the complete back-office operations in India. India being a cheaper location, many western banks are setting up their operation centres here, while we still continue to hold our operation centres in those countries.
Our operations and processes can be made paperless as well. We will try and meet all the regulatory requirements to go paperless. We will also ask the customers to meet the necessary requirements on the Misys Trade Portal itself, so that they don’t need to visit branches. And then, Indian teams will be serving the global customers from trade finance centres. This is where exactly we want to enhance the customer experience and streamline the processes, having a same product across all these countries deployed in a multi-entity fashion. The first step we took during this rollout was that we unified the business processes largely across the country. If the business processes are aligned, remaining things will start falling in place. So, unless there are specific regulatory requirements in some countries, the trade finance process have been unified and same processes are executed across the countries.
What is the concept of ‘Digital Financial Superstore’ all about?
We are in the process of setting up a Digital Financial Superstore, where all the corporate banking products would be hosted, customer acquisition would happen online and the corporate banking products could be bought from the Superstore. That will be a very big game changer for the industry. It is not just the front-end but backend process would also be paperless, aligned with that product, and customer acquisition could be straight through the process.
What role small FinTech companies could play in the Banking sector?
There is a major role for the nimble-footed or small FinTechs and companies like Encore Theme in the banking industry. Having a lateral thinking and coming up with a wide range of products is an advantage. We have an opportunity to explore new products of channel application and business support application instead of being just a reseller of old products. It can automate the back-office operation and customer experience. That brings a huge opportunity for companies if they carry out innovative thinking based across their domestic and international experience. They understand the pain points of the industry, so they should focus on this area as an opportunity for them.