Interview IT Leadership

Banks Should Leverage AI, Open APIs, Hybrid Cloud and Blockchain for Better CX

As an impact of a prolonged pandemic that struck a few years ago, financial services companies, took advantage of new technologies and made all-out efforts to accelerate digital transformation to not only keep the business afloat but also upend the level of customer experience. In the post-pandemic world, BFSI companies are more focused on enhancing digital experiences with a constant eye on delivering trust with heightened security.

As a result, many global and Indian BFSI companies have committed to a large budget for both digital acceleration and security. For example, JP Morgan Chase announced a $12bn techs spend for the year 2022 and has earmarked much of that budget for tools and technologies to enable it to extract more value from data. The 2020 Insider Intelligence survey of banking executives found that 66% of respondents believed new technologies like blockchain, artificial intelligence (AI), and the IoT will have the greatest impact on banking services by 2025. 

That said, there are still a lot of challenges to overcome. Customer demands are not static; they are dynamic and changing fast. Disruption from new-age banking and FSI companies is literally unimaginable. Besides this, the regulatory and compliance frameworks are vigilant about the aspects of customer trust and data security thus making innovation in the BFSI industry a moving target.

With this as a backdrop, Smruti Gandhi, Executive Editor, DynamicCIO spoke to Krishna Rajaraman, Chief Technology Officer, Intellect Design Arena Ltd. to discuss technology adoption trends in the banking industry and how Intellect Design Arena, a global financial technology major for banking, insurance, and other financial services, is helping customers in enabling them for creating better experiences.

DynamicCIO (DCIO): How is technology shaping and disrupting financial sector companies?

Krishna Rajaraman (KR): The pandemic accelerated the pace of digital transformation in the financial sector. Banks are now competing to understand their customers deeply to build intimacy as ‘phygital’ (combination of physical and digital) is slowly accepted as the new normal. The industry is launching innovative products that are based on a customer-centric narrative.

This brings us to the idea of “composability”, which is a major differentiator for us at Intellect Design Arena. The finance industry is aspiring to make customer intimacy an all-pervasive concept to win a greater share of the customer’s mind and the wallet is driven by real-time insights backed by accurate data. Cutting-edge technologies like AI and ML have become an integral part of the “open architecture”.

Cloud technology and its extensions have enabled financial institutions to optimise their infrastructure and applications. Thus, the larger ecosystem has been disrupted by technology and is well on its way to supercharge innovation.

DCIO: Digital identities came to the rescue during the lockdown and are now quite pervasive even after the post-Covid time. How do you see that changing the way banking is done?

KR: Digital identity has fastened the push toward tokenization of data. Data can be used in safely without being shared. Digital infrastructure is instrumental in ensuring that financial institutions can verify digital identities without relying on physical interactions or documentation. Numerous financial institutions have embraced the concept of digital identity as a business enablement process to reduce dependency on physical branches for customer onboarding and processing transactions.

Digital identity is also a key ingredient in making cross-border payments seamless, cheap, and ubiquitous. It can play a vital role in improving customer experience and boosting productivity. It can also help banks improve risk management through a transparent KYC (know your customer) process, efficient fraud management, and protection of customer data from cyber threats. It helps in reinforcing compliance and regulatory requirements as well.

DCIO: The banking industry has reaped good benefits from intuitive technologies like AI and Analytics. Do you think these technologies will further enhance the customer’s trust and ease the process complexity?

KR: AI is already playing a key role in contextual banking – an experience that takes into account the intent, situation, language, habits, urgency, and legitimacy (regulatory constraints) behind each transaction. AI can observe, suggest, enhance and enhance customer experiences with the help of strong and intentional analytics that is built on a strong foundation of data. Banks and their customers have started seeking real-time access to data, and strong analytics capability. Banks globally are deploying AI for better business decision-making and being proactive in serving their customers. The use of RPA, for example, aids in disruptive differentiation.

DCIO: Customer-centricity is a lot more than just technology adoption and enablement. How do you assess the concept of Customer Experience in this changing world?

KR: If the industry has to win customer trust, ‘intimacy’ and ‘context’ have to be central to their vision. Design thinking and contextual data-centric techniques will help shape the future of customer experience. To make it more pervasive, across multiple customer touchpoints, design thinking has to be at the core. At Intellect Design Arena, we try to enable our clients for delivering convenience through thoughtfully integrated technologies, which results in improved CX.

DCIO: How does the changing business reality reflect in Intellect’s innovation roadmap?

KR: It’s a very profound question. The recent disruptions have forced us to make a radical shift. From a product company, we aspire to be a platform provider. What does that mean? We shall give our customers a platform that aids them in their business transformation. As one of the leading products companies, with possibly the world’s only next-generation, composable, contextual ‘Fintech Platform’ catering to the retail, transaction banking, and insurance technologies clients in over 97 countries, we have fully imbibed the tenets of “design thinking.” We have always believed in the rigor of R&D and therefore invest approximately ?200-225 crore annually to enhance our technology and platform capabilities. As financial institutions sharpen their focus to segmentize and personalize customer offerings, we are fully geared up to help them build a suitable platform driven by componentization.

DCIO: Finally, what would be those technologies that you feel will disrupt the financial services in the short-to-mid term?

KR: In the changed paradigm, banking is not merely about transactions, it is more about customer experience and only technology can enable the companies in delivering exceptional services at all times.

I place my bets on how AI will be used to further enhance customer service. AI can play a strong role in enhancing security; detecting and preventing fraud. AI is also the foundation for making other technologies such as analytics, RPA, and voice interface work.

Blockchain is yet another technology that helps in removing our dependence on third parties when it comes to loans, credit systems, and even the supply chain. If implemented correctly, it can eliminate the manual tracking of a contract and reconciliation of ledgers. Information and money will be exchanged via smart contracts.

Open APIs are set to transform the banking ecosystem. The offerings, delivery channels, and partnerships, all will change to make way for sharper innovation resulting in a better customer experience.

Adoption of a hybrid cloud will give banks the flexibility and benefits of the cloud while addressing data security, governance, and compliance.

Yet another technology trend, which is still in its nascency is augmented and virtual reality. These two technologies can give bank customers autonomy for at-home banking.

Intellect Open Finance Platform boasts of over 250 Packaged Business Components and over 900 APIs providing 600 user journeys across core banking, lending, credit cards, central banking, payments, liquidity, collections, trade, supply chain finance, treasury, underwriting, and wealth. This allows vertical and integrated offerings enabling them for providing a good mix of functionality and process. Our mission is to provide a comprehensive repertoire of Packaged Business Components; contextual, curated solutions that address the contextual needs of a customer. We constantly strive for enabling the banks to understand, evaluate and cater to their customers’ unique needs.

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