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Technology Backbone: BFSI companies build on their early adoption of ICT tools

June 29, 2017

Technology Backbone: BFSI companies buil...


Enterprises in the banking, financial services and insurance (BFSI) industry have been early adopters of information and communication technology (ICT) solutions, which have enabled them to digitise their operations and make them more efficient. The government’s demonetisation move has provided a further impetus to the digitisation initiatives. However, since enterprises in the BFSI space deal with confidential consumer data, ensuring data security while using ICT solutions is of paramount importance. IT heads of leading BFSI enterprises discuss their IT strategies, technology trends, the impact of demonetisation on everyday operations and the level of cybersecurity readiness in the industry...

What are the key IT and telecom solutions deployed by your organisation? How have these helped in improving business performance?

Jos Babu

Our organisation has deployed solutions for voice and SMS services, videoconferencing, electronic KYC services and e-mail services. Further, we use switching solutions for conducting online transfers under the National Payments Corporation of India. We also use cloud solutions of Amazon Web Services, data analytics tools, management information systems and customer relationship management (CRM) solutions.

Samrat Das

The distribution footprint of the financial services industry consists of a central processing hub through which the distribution network is spread across the country with the help of distribution partners. PNB-MetLife’s main hub is in Mumbai; it is connected to over 150 branches of the company and around 10,000 branches of our partners (Punjab National Bank, Bank of Jammu & Kashmir and Karnataka Bank) through a telecom network, which is based on the multiprotocol label switching (MPLS) cloud architecture. This helps us to be integrated throughout the country. The solutions deployed by us enable us to remain connected to our customers and distributors on a 24x7 basis. Our mobility solutions have an adoption rate of 40-50 per cent among our customers. This reduces the transaction processing time and costs as compared to the physical transaction processes used earlier, resulting in greater efficiency.

Aruna Rao

Since all banking functions are automated, a large number of IT solutions are adopted by banks. Internet protocol (IP)-based technology is a key telecom solution used by banks for their contact centres. This is a common technology that is used across the entire Kotak Group. It routes calls across multiple contact centres and has the capability to reroute calls or traffic to alternative centres in case of heavy traffic. The IP-based technology is integrated with a state-of-the-art CRM platform to provide better customer services and an analytics platform to offer customised inputs to each user.

Gururaj Rao

The key IT and telecom solutions deployed by Mahindra Finance include offline data capturing solutions; software support systems; loan management systems; portals for distributors and customers; solutions for support functions such as legal, finance, treasury and human resource; enterprise platforms for CRM; and mobile applications.

These solutions are based on the needs of our customers and help us to enforce business strategies, monitor asset quality and ensure regulatory compliances.

Mohit Rochlani

IndiaFirst Life Insurance uses front-end tools like websites, portals and mobile applications that benefit customers and distributors; policy administration system and CRM solutions that help in administering customer services and operations; and a host of other applications that support functions such as human resource management, finance, legal and compliance and actuarial and pricing issues. Our state-of-the-art infrastructure and information security set-up helps us deliver these solutions to customers, distributors and employees.

What has been the impact of demonetisation and the push towards a cashless economy on your IT needs?

Jos Babu

Demonetisation has had a huge impact on organisations in the BFSI sector. Since our business has grown manyfold, it has compelled us to move ahead technologically by developing solutions that help customers adopt the digital medium for transactions. Our IT needs and procurements have become streamlined now and we have more control over expenditure.

Samrat Das

The government’s demonetisation move has not had a major impact on insurance companies. As per the regulations for insurance companies, the limit on the percentage of cash that can be used for the total portfolio of transactions is already less. Therefore, demonetisation did not have an impact on the insurance sector. However, if we consider the entire ecosystem of banking and other financial services, demonetisation has helped in promoting digital transactions.

Aruna Rao

The government has taken several initiatives to promote the use of digital solutions in the country. To this end, many initiatives have been taken to provide digital payment options to customers. These include the infrastructure set-up by the Unique Identification Authority of India for Aadhaar cards and Aadhaar-based authentication, the framework for immediate payment service and unified payments interface, Aadhaar-enabled payment systems, and the launch of the Bharat QR code.

After demonetisation, many regulatory changes have been made for financial services organisations to leverage the opportunities provided by the digital ecosystem. We at Kotak have leveraged this opportunity by offering the Kotak 811 – India’s first downloadable bank account based on Aadhaar authentication. An account can be opened using our mobile application and does not require any signatures.

Gururaj Rao

While Mahindra Finance offers a gamut of payment channels for its borrowers and investors, a significant portion of the loan repayments in the rural and semi-urban areas is received in cash. However, after demonetisation, we have been receiving more payments through our website and other digital channels. To this end, the company has introduced various payment channels such as immediate payment service, e-wallets and card payments. We are also creating awareness regarding the digital modes of payment among our rural customers.

Mohit Rochlani

Demonetisation has had a positive impact not only on the digital payment ecosystem, which now offers multiple options to customers in the form of the unified payment interface and payments banks, but also on the overall customer experience by digitising other processes as well. However, from the IT perspective, it is for organisations to see how fast these mechanisms are adopted in the current landscape and how the IT architecture can integrate multiple options for delivering a better customer experience.

What is the scope of big data analytics, cloud and internet of things (IoT) in the BFSI industry? What are your plans for deploying these technologies?

Jos Babu

Big data, cloud and IoT are technologies not of the future but of the present. Organisations that accept this fact will survive in the long run. Our organisation is already using cloud technologies, and we have tested and implemented big data analytics in our research and development lab. We are also in the process of implementing IoT solutions for improving the efficiency of our business-to-business division.

Samrat Das

Big data and cloud are very relevant technologies for the financial services industry. Big data is an accessory for the whole world of analytics where you try and go beyond organic data and search for inorganic data in the virtual ecosystem. As a life insurance company, we need to predict the probability of death. For this, we need data and analytics tools for conducting the analysis. Therefore, big data analytics does play a very important role in a life insurance company. Like other insurance companies, we also have a critical strategy and execution mechanism for leveraging big data for our core business. One of the key benefits of cloud for a life insurance company is that it helps in the variabilisation of cost. IT cost by its nature is a fixed cost. However, cloud enables organisations  to predict if there is a need to either scale up or scale down costs. We have also adopted cloud technology. However, since we deal with customer data, which is very sensitive and private, we do not want any vulnerability around it. Therefore, while designing our cloud adoption strategy, we make sure that the privacy of data is maintained. Life insurance companies in India are at a nascent stage of leveraging IoT technology to gain a competitive advantage. However, there are some organisations in the health insurance space that have already started leveraging IoT technology through wearables and other devices to find out relevant statistical information.

Aruna Rao

The scope of these technologies is wide enough to revolutionise IT departments in the BFSI sector. At Kotak, we are actively leveraging big data analytics and cloud technologies. We are also considering the deployment of IoT technology to ensure adherence to security and privacy norms.

Gururaj Rao

Big data analytics is essential for organisations to leverage unstructured data and derive business outcomes such as formulating new target customer segments, designing products, managing asset quality and achieving customer satisfaction. Therefore, big data analytics can become a source of external data registration for our customers and cloud technology can be used to develop a scalable infrastructure for experimenting with latest solutions on a service basis. However, IoT may currently not be very relevant for our business.

Mohit Rochlani

Although big data analytics and cloud technologies are responsible for bringing about changes across the BFSI industry, it is still a challenge to leverage these technologies. As far as cloud technology is concerned, IndiaFirst Life Insurance has already moved a portion of its IT infrastructure to the cloud. The organisation is also undertaking investments in cloud-based applications, which will help curtail capital investments. Further, we are trying to leverage IoT to deliver cutting-edge solutions.

What are the key challenges faced while implementing new technologies?

Jos Babu

Some of the key challenges faced by organisations are the need for a competent workforce, and high turnaround time for implementing new technologies and high costs. Since a technologically sound workforce is often available in the country, the first issue is gradually getting resolved. However, the high total project cost remains a challenge.

Samrat Das

There are some organisations that are early adopters of technology, there are others that prefer to adopt it slowly and then there are those that are ignorant about emerging technologies. However, most organisations today want to adopt the latest technologies. Therefore, technology adoption is an evolution and it is wrong to consider it as a challenge.

Aruna Rao

Emerging technologies like chatbots, big data and machine learning have the potential to transform customer experience. However, the key challenge is to recruit new staff and reskill existing employees in line with new technologies. Meanwhile, because of the direct integration of technologies with external systems and cloud implementation, the governance mechanism of these technologies also needs to be reviewed.

Gururaj Rao

The key challenges are as follows:

• The probability of the success or failure of the new technology.

• Security risks pertaining to the use of new technology.

• Long-term viability of the technology.

• Customers’ acceptance of the technology.

• Cost of replacing the existing technology (applications/devices) in the system.

Mohit Rochlani

Some of the challenges are identifying the right set of technologies, developing relevant software and changing management practices to leverage the opportunities offered by the implementation of new technologies. Besides, identifying the correct partner to implement these technologies becomes a challenge to ensure that the solution is delivered as per expectations.

What are your views on the cybersecurity readiness amongst BFSI companies in India? How do you ensure the security of your customers’ data?

Jos Babu

Many reports have recently emerged on the security issues associated with digital transactions in the BFSI sector. To this end, organisations need to take a strong stand to ensure that there is no breach of data. Our organisation has its own methods of tracking down a data breach in advance to protect our customers’ data. More than the companies, customers should be vigilant about cyberfrauds. Therefore, there is a need to educate customers about maintaining the security of their personal data.

Samrat Das

Cybersecurity readiness can be divided into two broad categories. One category involves the awareness of the enterprise as a whole. The second deals with technology readiness or robustness around the current level of awareness, which has increased significantly over the past few years. This is because of the recent cyberattacks that took place in the industry, such the WannaCry ransomware attack. Awareness is the first step towards ensuring that organisations become more sensitive about protecting customer data.

For a global company like MetLife, cybersecurity is an essential part of our operations. We have multiple levels of technology checks ranging from the topmost layer of firewall to the lowest level of our database to ensure cybersecurity. The correct cybersecurity strategy for any organisation is to be aware of the latest technologies and adopt suitable measures. Further, the insurance sector regulator has put in place many mandates to ensure that organisations adhere to cybersecurity laws and adopt suitable technologies.

Aruna Rao

There is a high level of awareness on cybersecurity in the BFSI sector. According to the Reserve Bank of India’s recent guidelines regarding a cybersecurity policy, all banks should review their systems, set up appropriate response centres and ensure compliance with the guidelines. Over the years, several technologies have emerged for monitoring and detecting potential security breaches. These technologies include advanced persistent threat prevention, fraud risk management systems and data leakage prevention. These are currently being used by the BFSI sector. However, with the increase in the sophistication of cybercrime, there is a constant need to stay vigilant. To this end, cybersecurity forums provide opportunities to security professionals to connect and share information on the issue.

Gururaj Rao

The increased usage of online processes and technologies results in service disruption and loss of data. Therefore, cybersecurity is very critical especially for the BFSI sector. To this end, Mahindra Finance has a dedicated security team to handle the information security needs of the organisation. We have implemented various security solutions at the network, perimeter and application levels. Role-based access control and cryptographic controls have been implemented to prevent any compromise of customer and business information.

Mohit Rochlani

The BFSI industry has geared up to improve the security paradigm. The Insurance Regulatory and Development Authority also recently came up with information security guidelines. Information security is a top priority for IndiaFirst Life Insurance. We have been investing in this domain to develop strong capabilities for building a multi-tier security model across end-points, network, infrastructure, etc.

Going forward, what are the key IT and telecom trends that the BFSI industry is likely to witness?

Jos Babu

Artificial intelligence (AI) is an emerging trend that the BFSI industry would soon witness. Therefore, we may see AI-integrated transactions taking place in the near future. This will enable us to analyse the spending and saving pattern of customers. AI would also help customers to analyse their spending and saving pattern to better manage their expenditure.

Samrat Das

The two emerging technologies that are going to play a key role in the life insurance sector are AI and blockchain. These will dramatically change the way in which the BFSI industry operates.

Aruna Rao

The industry has witnessed the emergence of new technologies like robotics, internet of things (IoT), machine learning, AI and big data in recent times. Going forward, the trend will be to combine these technologies to transform customer experience. Some of these trends would be:

• Massive amount of data generated from IT systems and IOT will be used by analytic systems and algorithms to provide autonomous business models.

• Use of security systems for monitoring rather than blocking digital interactions.

• Use of service-oriented architecture for applications and software defined networking will become an essential foundation for adopting new technologies.

• Evolution of computing hardware architecture such as field programmable gate array to enable rapid computing.

• Evolution of open standards to allow the exchange of data between IoT and connected systems for facilitating rapid integration.

Gururaj Rao

The BFSI industry would witness the emergence of new technologies such as blockchain, AI and wearables. Further, the use of cloud computing, big data analytics and mobility is expected to increase. The speech-based user interface also holds enormous potential.

Mohit Rochlani

Digital solutions, analytics and process automation are the areas where the majority of investments in the industry are being channelised. Going forward, automation, AI and blockchain technologies will prove to be game changers for the industry.


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