Banks need to offer customers unique, convenient experiences tailored to today’s fast-moving, digital lifestyles. Banks can do this by investing in technology that lets the branch bridge the physical and digital worlds — creating a seamless and integrated “phygital” experience, says T V Ramana Murthy, GM-IT, Bank of Maharashtra, in conversation with Elets News Network (ENN).
Several new technologies such as Artificial Intelligence, Blockchain and Cloud are gaining popularity across the banking sector. How do you perceive these implementations?
With the world being digitised and customers expecting better and faster service, time has come for the banks to adopt innovation and handle some of the processes over to the technologies like Artificial Intelligence (AI), Blockchain and Cloud to keep up with the changes. Banks can improve sales by employing a combination of AI technologies, such as machine learning and predictive analytics, to recommend personalised, contextual products and services to individual customers.
Besides generating revenue, banks could also leverage AI to price their products, such as mortgages and personal loans, more effectively and fairly by personalising interest rates based on a customer’s credit score and risk profile.
AI-based solutions for KYC/AML adherence, fraud detection and regulatory compliance can analyse transaction data in real-time to identify suspicious patterns of activity. Machines can learn continuously from past performance to reduce false positives and negatives. During the risk assessment, banks can leverage artificial intelligence to analyse historical transactions and calculate risk exposure at a transaction level.
Blockchain, as a technology, is quite powerful. It holds the potential of being applicable in a large number of use-cases. It’s a data structure that allows storing data in a decentralised manner. The speciality of this technology is that it provides high data security as a virtue of the way it is implemented. Implementing Blockchain technology in the banking sector can solve multiple challenges by facilitating faster, secure, and more transparent transactions. The biggest advantages of Blockchain for the banking industry are Fraud Prevention, Forex Volatility, Resilience in the banking sector, reduced time for processing etc.
Thus, this technology holds the potential to address several limitations of the current banking processes by streamlining, simplifying, modernising, and enhancing the traditional soiled design of banks.
Cloud computing is an internet-based model for delivering information technology (IT) services. It employs a network of remote servers that enable IT resources to be centrally pooled, rapidly provisioned and quickly redeployed. Cloud computing offers an asset-light and low-cost operating model to banks by offering the option of outsourcing a number of non-core activities.
Some of the major banks in India are already collaborating with technology companies for implementing cloud computing in their system. The sector is expected to witness an increase as pressure to maintain profitability increases on Indian banks amid increasing capital provisioning requirements of Basel III and Indian Accounting Standards. However, data privacy remains a concern and many banks prefer private clouds over public clouds for data storage.
Digital banking is significant but the majority of the Indian populace resides in rural areas with extreme challenges. What measures are ensured by your bank for bridging this gap?
The biggest challenge for digital banking in rural areas is erratic internet connectivity, fear and habits of relying on cash for transactions. The task to digitise rural India might be challenging, but not impossible. However, the increased smartphone adoption, reductions in the prices of telecom data use and favourable regulatory policies have created the baseline infrastructure required for a leapfrog growth in digital payments. Bank offered easy-to-use payment products and interoperable payment platforms such as Unified Payments Interface (UPI), BharatQR, Aadhaar Enabled Payment System, among others digital banking services such as National Electronic Fund Transfer, Real Time Gross Settlement, Debit and Credit Cards, Mobile Banking, Inter Bank Mobile Payment System etc., Bank engaged Business Correspondents (BCs) for providing banking services at locations other than a bank branch/ATM particularly in rural areas.
BCs enable a bank to provide its limited range of banking services at low cost. They hence are instrumental in promoting financial inclusion and digital banking. Other measures include creating awareness among people on importance of digital banking services, reaching out to the schools and colleges where the students can understand it easily and convey it to their family members like making payment of electricity bills, transferring funds and different kinds of online payments and thereby helpful in implementing the digitalisation to rural banking.
Phygital banking is getting a lot of attention across the industry. How vital is its role?
Most of the banks started their digital transformation journeys by migrating customers to digital, rightsising their branch networks and investing in new capabilities. However, many of these banks have yet to realise the full benefits of these transformations. Banks need to offer customers unique, convenient experiences tailored to today’s fast-moving, digital lifestyles. Banks can do this by investing in technology that lets the branch bridge the physical and digital worlds — creating a seamless and integrated “phygital” experience. For banks, creating a truly phygital experience means building a connected customer and employee experience that brings physical and digital channels together. Rather than invest in “shiny objects” or point solutions, banks should focus on technologies that can achieve the goals such as enhanced customer experience, enhanced employee experience, increased efficiencies and cost savings etc.
Through a phygital transformation, banks can lower costs by reducing real estate expenses and more efficiently leveraging their employees. Further, investing in phygital helps banks optimise their distribution networks, reduce cost-to-serve, increase revenue and improve customer engagement.
Which technologies have you deployed for controlling Non Performing Assets?
Following technologies are in place to curb the menace of NPAs:
- Mobility application for Branches/Zones/Head Office to assist in daily monitoring of NPA
- Internal web-based applications for credit monitoring/recovery of NPA, potential NPAs for current month, fresh slippages for current month, SMA0 , SMA1, SMA2, Stock statement expiry cases, working capital limit expiring in next 30 days, turnover comparison on working capital etc.
- Due date alerts to borrowers for renewal of documents & insurance
- Early Warning System to help in identification of financial stressed account in its current portfolio, generation of warnings during loan application and evaluation
- Various internal dashboards on details of progress in NPA Recovery, Sectoral Analysis of Stressed Accounts 6. Online One Time Settlement (OTS) portal
- SMS to borrowers for EMI reminders
What innovations have you planned for the year ahead?
Some of the innovations planned for 2019 are:
Continuous optimisation of Cyber Security Operations Centre (CSOC) with state of the art technologies in order to further strengthen the Cyber Security Posture.
Reducing manual work by implementing Robotics Process Automation (RPA), so that human employees can focus on more complex banking operations work, human interaction, and decision-making by way of automation of certain processes wherein repetitive and labour-intensive tasks are involved. Additionally, exploring the implementation of Blockchain solutions, Mobility Device Management Solutions etc.