Embracing Technology: Need of the Hour in BFSI
The increased complexity of IT systems and the presence of inter-linked (not-integrated) legacy systems is common in financial services, which many times becomes a challenge when the business wants to experiment new strategies with a quick time-to-market. In some cases, the functionality and business controls of age-old proven systems gets overshadowed by the new technologies where ease of use takes priority by the end users, this also has its long-term disadvantages. However the smart technology leaders hit a balance between proven legacy controls and new generation smart and user-friendly interface by designing hybrid business solutions. Such solutions help in keeping the business rules and stability intact, at the same time addresses the need of rapidly changing customer-facing applications. Over the years, the brain developed in terms of banking is present in the core banking (legacy) systems, but interface has been experimented with, time and again. Unlike some of the other industries that are embracing the dynamic technology changes, banking industry was a bit apprehensive and careful to become a part of this transformation due to the nature of business, though this industry is also seen adapting this transformation lately. For example, earlier if someone had to withdraw money from bank, they visited ATMs. But now banks have revamped digital banking giving transaction access completely to the user to execute any transaction without compromising the customers’ security by introducing multi-layer authentications.
Proliferating adoption of web and mobile applications in the banking industry has made the industry prone to advanced cyber attacks. With the evolution of new technologies, carrying documents and other tools have been done away with. Thus, security in financial sector has taken the front seat. Banking sector is a highly regulated sector wherein a software is hosted in the data center. The industry has to go through certain RBI guidelines and norms that are taken care in terms of data security in banks. So whenever an application is built on mobile, PC, desktops, organizations have to be very sure to take stringent measures of vulnerability assessment of applications before implementation.
Moreover, the data centers also have to meet all the guidelines of not only RBI but also of international regulating bodies for banking. And these are the areas where hackers are trying to step ahead but companies are definitely catching up fast. There is no end to security protection as this is a continuously evolving area.
In order to provide flexibility and agility, banks are aggressively adapting public cloud services. In addition, financial institutes are in the need of private cloud services even more as they have to deal with vital information of the client. Also response time on cloud is faster. With the emergence of FinTech firms, banks are also exploring the possibility of using AI to improve efficiency and customer experience. The advent of AI has become a game changer. Presently, AI is exponentially being accepted across financial services industry and financial institutes are investing in AI platform leading to customers’ satisfaction. Consequently there has been increase in their customer base. When queries are being raised, chatbots extends support to the customers. Furthermore, bank having known customer’s requirements would immediately provide suggestions for services thereby saving time.
As banks have been facing challenges in meeting customer expectations, they need to emphasize on three aspects
1) the changing digital platforms and hence creating numerous interfaces,
2) AI which has become vital to acquire customers at fingertips, and
3) the power of analytics. These three aspects deal with how to use vast relevant data that needs to be crunched, to identify what type of customer we want to deal with- their social standing, their paying capacity (telephonic or electric bill); allis considered while acquiring a new customer, relevant for companies. For example an insurance company is subsidizing a fitness wrist band (a calorie wrist band) for people who generally go for jogging. Purpose to subsidize is that the company will know if the person is healthy and the insurance company will further subsidize the insurance for the person and hence will receive a preferential rate. This is what the power of analytics, AI and Machine Learning, which is not just a step but a leap in building a new digitally transformed world.