CTOs –The key factor defining success in BFSI

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CTORapid innovations in the banking sector today require better risk governance and solid strategies, especially in terms of technology – the key factor behind any financial institution’s rise. These changing trends have flagged off the need to appoint CTOs across the BFSI industry. Rashi Aditi Ghosh of Elets News Network (ENN) explores how CTOs are helping to reinvent the financial institutions while broadening their horizon in the technology landscape.

Technology transforming BFSI industry in India

The banking industry is in the midst of an Information Technology revolution and banks are now becoming a one-stop supermarket. The focus is shifting to Class banking, even in mass banking, with the introduction of value-added and customised products.

Technology transforms the bank branch into a business building’s lobby that omits the requirement to hire manpower for manual operations. The branches are run on the concept of 24X7 working, made possible through the use of telebanking, ATMs, internet banking, mobile banking and e-banking. These technology driven delivery channels are being used to reach out to maximum number of customers at lower cost and in the most efficient manner.

CTOs – playing armour’s role in banks CTOConsidering their key role, the technology officers play a very critical role by putting both the banks and the customers in a win-win situation. The effective implementation of right technologies has enabled technology officers to bring multiplier effect on growth and development of banks.

Defining the role of CTOs, V G Kannan, Chief Executive, Indian Banks’ Association once said, “The role of Chief Technology Officers (CTOs) has become critical in the Banking, Financial Services and Insurance (BFSI) industry. Technology interface is bringing robust changes in the financial institutions.”

Financial institutions are investing in tech-driven innovations for redefining their services. Technologies focused on big data, behavioural and predictive analytics, blockchain, and others impacting multiple areas in BFSI from authentication to transaction management.

Explaining the need to appoint CTOs for technology advancement and efficiency, Shiv Kumar Bhasin, Chief Technology Officer, State Bank of India, said, “A CTO is significant in deciding technology theme or vision of the banking industry.”

“I believe that to transform the banking industry, appointing CTOs and completing their goal setting is very important. CTOs can help in setting up the bank as an open platform that can help consumers in enabling better banking options loaded with innovations,” he said.

Citing the need to hire CTOs in alignment with the rapid tech-driven changes, the Reserve Bank of India (RBI) last year urged the banks to appoint qualified chiefs to head the critical finance and technology functions. It came out with minimum qualifications for CTOs. “Rapid innovations in banking and technology call for better risk governance in the areas of finance and technology,” the bank said in a notification.

“A CTO in banks’ management structure would play a crucial role in strengthening and sustaining the banks’ risk governance framework,” it added.

A CTO should be an engineering graduate, or hold a Masters in Computer Applications (MCA) or equivalent qualification with a 15-year experience in banking information technology-related projects, the RBI stated.

The notification said the candidate’s experience should include work on IT policy and planning, financial networks and applications, financial information systems, cyber security technologies and payment technologies.

Explaining the role of CTOs in the BFSI sector, Byju Joseph, Chief Technology Officer- Future Generali India Life Insurance said, “The recent breakthrough in the power of digitalisation and technology within the BFSI sector has compelled one to reimaging the role of a Chief Technology Officer in an organisation. Being architects of comprehensive digital infrastructures in an organisation, CTOs today are working towards ensuring better access of essential services for their customers on digital platforms.”

“At Future Generali India Life Insurance Company, we are working towards increasingly becoming a technology-led financial service company, rather than just an insurance company with a technology division. We believe in fostering relationships to nurture a culture that balances business mandates with digital initiatives. All our services are now designed to be cloud aware. Furthermore, we have adopted a more ‘inclusive’ approach where instead of worrying about fintech start-ups, we are actively building bridges to leverage interdependent ecosystems of partners, suppliers, distributors and consumers,” he added.

With advancement in technology growing at a faster pace every day, and decision-making becoming increasingly dependent on multiple large sources of data, the role of a CTO has evolved significantly with a heavy focus on innovation and adaptation to the competitive landscape of today.

CTO of an organisation is becoming increasingly critical to an organisation’s long-term success. Further, in a digital era that adds multiple layers of complexity to the effective management of data security, it is imperative for a CTO to make the right decisions to ensure that the organisation remains competitive and protected in today’s and tomorrow’s world,” said V Srinivasan, Founder Chairman, eMudhra.

eMudhra works with financial institutions around the world to ensure they choose the right technologies and deploy them in ways to reducing operating cost and driving new revenue.

Changing business needs

With digital transformation impacting businesses like never before, technology has become a critical source of sustained competitive edge. The BFSI industry, especially the lending industry, is witnessing a similar disruption where technology is creating new possibilities to attain scale, drive op-ex efficiencies and enhance customer experience across the value chain.

CTO’s role has become intrinsic to organisations embracing technology. In addition to decisions pertaining to choice of technology, the CTO today plays a pivotal role in incubating new business lines and reinventing/ innovating business processes. From being a peripheral role, the CTO has moved to the top of the table in the process of reinvention for the BFSI (including the lending) sector,” said Vaibhav Sanghavi, Chief Technology Officer, Clix Capital Services Pvt Limited which offers unique financing solutions to help people meet their financial needs.

 It is evident that the Financial Institutions which use the right technology will gain a competitive edge over peers. As the main differentiating factor will be customer experience. A rapid innovation in technology calls for CTOs to play the strategic role in the BFSI Sector.

“In any financial institution, CTOs will be expected to wear multiple hats – ensuring Risk Governance and moving away from a support role to Strategic Partnership role. In this highly under penetrated market, technology will be the prime driver in reaching out to the customers, in much faster and cheaper way.  CTOs’ role will be there to transform businesses from conventional to convenience mode. In addition CTOs will need to keep up the pace up Digital Adoption and drive technology led Innovation,” said Amit Vadera, Assistant Vice President, TeamLease Services- India’s leading recruitment and online job portal.

BFSI is all about volume, scale and computations. In all these aspects, technology plays a critical role as an enabler. A CTO must be fully aware of the business opportunities/challenges and come up with solutions to achieve business goals.

“With the way tech is evolving, the CTO in addition must also don the role of a business partner in using latest/advanced tech to innovate new business models and help the business grow. A business enabled CTO is an asset and pure tech CTO’s could become a liability,” said Senthil Natarajan, Chief Executive Officer, OpenTap.

OpenTap is a disruptive AltFin startup in India. They enable access to short term credit for the vast under banked population.

As a theme convenience, 24×7 accessibility, security and low cost are the bedrock of the current wave of new product development across sectors including BFSI. Customers’ expectations and the interfaces to service them are rapidly changing.

Fintech companies are often at the forefront of creating new products, interfaces and delivery channels. They are leveraging all available technologies to reach out to customers which were inaccessible earlier.

Low cost of digital delivery allows acquiring customers are low cost. Further, technologies available today have automated most of the repetitive and predictable workloads, this increases customer delight as the services quality is now less variable both in terms of time and quality.

FINTECH CTOs are leveraging cloud-hosted specialised services, rapid application development techniques to quickly create solutions for their customers. GBs of data generated per day is processed through self-learning AI models to personalise user experience and solutions,” said Virender Bisht, CTO and Co-Founder, NiYO-a start-up that works with the employer to carve out the employee’s cost-to-company (CTC).

Financial institutions in India are undergoing massive transformation and investing in technology at a larger extent. This investment needs to be governed keeping potential risks under surveillance.

Playing a significant role in this regard, CTOs are acting as a catalyst for business development of the financial institution by aligning technology in line with the business goals in multiple ways.

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