The role of a technology provider is very strategic when banks plan to overcome technology risk through better integration. The right partner can bring in strong, integrated technology systems that incorporate artificial intelligence and automation, and can flag inconsistent, out-of-pattern transactions to the responsible authorities, says Sunil Mehra, Vice President-Cloud Platform, Oracle India, in conversation with Souvik Goswami of Elets News Network (ENN).
Our banking sector is undergoing an enormous digital transformation. Do you think our public sector banks are ready for the digital age?
Digital transformation is underway in practically every industry sector, and I’d say the banking industry has been an early mover. We work with most of the banks in India both — private and public, small and large. One common observation across all these banks is the intent to transform into digital-first businesses. True, each one might be at varying stages of digital transformation – but the key aspect we should understand is that digital transformation is a journey, not a destination.
Banks, in general, are a lot more aggressive today on digital innovation, partly because of rapidly changing consumer expectations and partly because of new entrants like born-digital FinTech players. From a modernisation perspective, I think some public-sector banks have really pushed the envelope. You’d be surprised to know that some public-sector banks have even surpassed some of the private banks when it comes to the pace and breadth of new technology adoption and innovative customer offerings. One thing that public sector banks are now looking to enhance further is to develop a holistic, digital mindset at their core.
In the wake of recent frauds, especially in public sector bank ecosystem, how important is it now to have a special focus on risk management?
Cyber crimes are on the rise, with fraud syndicates proving to be a step ahead at times. The popular adage, ‘A chain is only as strong as its weakest link’, holds especially true in the context of Indian public-sector banks, given what we’ve witnessed in the last 12 months. Risk management has emerged as a super critical function. However, in the absence of a holistic, integrated risk management strategy, disparate efforts aren’t of much help.
Public sector banks need to move beyond focusing just on operational risk concerning banking systems and procedures; equal weightage must be placed on two other areas: credit risk spanning actions like identity verification via Know Your Customer (KYC) procedures, credit assessment and monitoring, risk assessment of businesses/industries; and technology risk involving future-proof, scalable, interoperable, secure technology.
Sound policy interventions are essential too. The Reserve Bank India (RBI) is mulling more stringent banking practices to pre-empt fraud. For example, the RBI has directed banks to focus more on the function/role of fraud prevention and management and strengthen their risk management policies, as well as review loan applications and borrowings using enhanced credit risk policy procedures. A recent example was its directive mandating banks to integrate their core banking systems with the SWIFT messaging network.
All these steps will certainly help strengthen the risk management fabric of our public-sector banks.
How important is the role of technology providers in mitigating risks?
Overcoming the technology risk can be a challenge for public sector banks, as many banks still operate in silos and their current IT structure is unable to respond to the emerging threats. Disparate systems also pose the difficulty of gaining a single source of truth – one that’s supported by modern security and authentication systems, as these are the key to verifying manual entries across different computer systems. It’s important to have the ability to identify, control and restrict user access by associating rights with roles, and thresholds are critical.
The role of a technology provider is very strategic when banks plan to overcome the technology risk through better integration. The right partner can bring in strong, integrated technology systems that incorporate artificial intelligence and automation, and can flag inconsistent, out-of-pattern transactions to the responsible authorities. A good, strategic partner, therefore, becomes the key to implementing a strong technology platform that will help banks pre-empt compliance breaches, identify threats and prevent incidents. You should look for a partner who can provide expertise on a variety of solutions like automated processes and identity management, authorisation, concurrent auditing in real time, push-based mechanism for realtime alerts and a 360-degree customer centric view.
Where does Oracle stand in terms of empowering banks to manage risk?
Oracle believes better IT integration is the way forward for Indian public sector banks. Our banking industry needs to arrive at a consensus to put in place more effective processes for inter-bank collaboration, more so in the area of customer credit assessment. That’ll be a great, first step to envisage a fraud-proof banking system in India.
With about 70 million cloud users and 33 billion transactions every day, Oracle is the preferred partner to some of the world’s largest banks to successfully run their business. We help banks to integrate the entire financial ecosystem and modernise their IT engine to make them future ready.
Powered by next-generation AI/ML, our latest suite of autonomous cloud services incorporates industry-first autonomous capabilities that will enable customers to rapidly detect and respond to threats. The self-securing nature of these services ensure banks are protected from external attacks and malicious internal users. Security updates are automatically applied while running to protect against cyber attacks; encryption of all data happens automatically as well.
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