The past 2.5 years saw a confluence of new consumer and workplace trends – in particular, an accelerated pace of digital adoption – transform the banking industry in India. Banks have been innovating in a turbo mode to offer omni-channel experiences to their customers and build resilient operating models. In a conversation with Srajan Agarwal from Elets News Network (ENN), Sonali Kulkarni, Lead – Financial Services, Accenture in India deep dives into why the cloud is the operating model of the future, what banks must do to get the most out of their data, and the skills they need to build. She also highlights how the upcoming Central Bank Digital Currency can unleash a new set of economic possibilities for India.
How can banks transform their operating models to be future-ready as they adapt to the changing business environment, technologies and regulations?
Evolving consumer behavior, volatile macro-economic conditions and the pandemic have demonstrated just how important it is for banks to build agile, scalable, resilient and variable operating models. Banks should be able to seamlessly work across these variabilised operating models without compromising on customer and employee experience, security, regulatory compliance and while maintaining an optimal cost to serve.
In order to build a future-ready operating model, banks need a transformation strategy that embeds intelligence and digital capabilities across their business models, processes and workforce. Cloud adoption is central to a bank’s operating model along with the scaling of automation, augmenting human talent with technology and a commitment to making data-driven decisions.
Why is cloud adoption vital to banks becoming more data-driven?
There has been rapid growth in the amount of data that banks generate and store today, and a corresponding increase in their demand for computing power. Yet limited data storage and compute power are rendering on-premise data lakes and analytics environments sluggish and expensive. Cloud can help overcome this challenge since it is scalable and offers elastic storage and compute.
Secondly, putting data on the cloud makes it more accessible and allows banks to integrate data from different sources together in real-time, build agile reporting, and leverage analytics and AI to curate insights that deliver effective business outcomes. Decision making is faster and more informed as a result. The right data can help banks hyper-personalise their offerings and roll out the right offer to the right set of clients at the right time, improve customer experience and risk management, reduce costs, and grow revenues.
As banks devise their cloud strategy and build their cloud capabilities, what is the approach they should take?
Firstly, cloud strategy is not just an IT prerogative. Instead, it requires leadership commitment and close alignment with business teams to ensure that the bank’s journey to the cloud is closely aligned to its business strategy and so as to proactively identify business use cases and strategise new business models – such as open banking – that can be supported by cloud adoption. It should factor in the bank’s future aspirations as well as their vulnerabilities and shortcomings.
Banks need to get their cloud foundation right and adopt a platform-led approach with a microservices-based decoupled architecture and a well-defined operating model. Security and compliance are paramount, and in the case of hybrid and multi-cloud deployments, interoperability and data portability are imperative. Lastly, developing cloud and data skills in the workforce is essential. In summary, banks should not treat the cloud as a single, static destination, but as a future operating model and a launchpad for innovation.
How can banks use technology to create omni-channel experiences and user-friendly interfaces for customers?
Since the onset of the pandemic, banks in India have been leveraging video collaboration tools for customer interactions, KYC etc. and have introduced enhanced functionalities on their web and mobile banking apps to facilitate live engagements with customers. The user interface of these portals and apps is being developed using human-centric design principles so as to offer an intuitive experience to customers. Banks are also trying to usher in more sophistication into their chatbots and conversational AI to support assisted customer journeys. The metaverse is yet another opportunity for banks to foster deeper connections through in-person dialogues with the next generation of banking customers.
Given the growing preference for anytime, anywhere banking and self-service channels, we expect banks to increase their investments in AI, natural language processing (NLP), advanced analytics and other technologies to bring variability into their customer service channels and drive more personalised customer experiences.
But truly omnichannel banking requires that all these channels be perfectly synchronised with real-time access to data from a single source, so that customers can seamlessly switch between these channels as per their convenience, without having to provide the same data over and over.
What are the new skill requirements at banks today?
Today, every company is a digital company. Hence, besides conventional skills, banks need to cultivate digital, cloud and data and analytics capabilities through a combination of reskilling their existing workforce and new hiring. Secondly, they need to embrace a more cloud and data-driven culture through a deeper shift in mindset and existing practices.
Lastly, the future of work at banks will be driven in a human + machine model and banks need to coach and upskill their people to adapt accordingly. For instance, the role of contact center staff has evolved to higher-value tasks as people work alongside AI to address customer queries. Similarly, branch banking staff are required to undertake strategic customer advisory roles versus be engaged in tasks such as data entry, passbook updates or verification of KYC details, most of which have now got automated.
What is the potential held by the launch of Central Bank Digital Currency (CBDC) in India, and what role can banks play?
Most other countries adopt a CBDC to develop an agile and robust digital payments system. However, that is not the primary driver in India as our payments infrastructure is already low-cost and widely democratised. But aided by three key differentiating characteristics– identifiability, programmability, and distributed ledgers – CBDC can unleash a new set of economic possibilities for India. It will not only lower our country’s dependence on cash but also help prevent fraud owing to regulated traceability, improve our welfare distribution network by plugging leakages, and facilitate faster cross-border payments. At a macro-level, digital currency can offer policy makers with real-time visibility and insights into the state of the economy and thereby, enable a more precise execution of the monetary policy.
Banks in India already have the critical infrastructure, knowledge and the network required for banking and driving financial inclusion, all of which can be leveraged for the distribution of CBDC if banks are made intermediaries to help end consumers access the Digital Rupee. Similarly, policy makers should consider establishing a Digital Rupee Corporation of India (DRCI) that assimilates expertise from banks and others in the ecosystem to develop the technology, protocols, and infrastructure for a nationwide distributed ledger of financial services powered by the Digital Rupee.