What do financial services industries need to bank on next?

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Balaji Raghavan, Segment Head of Banking and Financial Services for TCS  Australia and New Zealand answers key questions senior leaders are asking about what financial institutions should be doing, thinking and asking during this time.

Posted: July 2020
Banking, financial services and insurance industries form the backbone of the macro economies in Australia and New Zealand. Now more than ever, as they accelerate digital transformations in line with global shifts in consumer behaviors, there are common themes emerging on the path forward. Answers to key questions being asked within these industries are based on “touchless”, “trust” and “total digital” offerings, explains Balaji Raghavan, Segment Head of Banking and Financial Services for TCS Australia and New Zealand.

Q: What are leaders in banking, financial services and insurance industries thinking, asking and doing?

Many companies already had digital transformation initiatives planned or in progress before the pandemic, but within a short space of time as the world was confronted with the virus, what changed was the speed in action. Ever since we have seen an acceleration of all things digital within these companies. There has been a focus on what I call the three “Ts” – “Touchless”, “Trust” and “Total Digital”.

Touchless has been a necessity. Anything which is routed over touch is “friction”, and so the whole customer experience at a particular point of interaction is being reimagined.

Trust - and anything that has a lot to do with identity with trust-based systems and services being delivered by banks and financial institutions - is at the top of the agenda, especially in a climate of cybersecurity risk.

Total digital, or truly digital, is the increased interest in digitising the full end-to-end business process. That’s not just the consumer-facing points, but a lot of middle office and back office processes and systems. Planning and talking about end-to-end digitisation has been on many boardroom agendas, but there is no doubt COVID-19 has forced people to get moving a lot quicker.

The questions my team and I are getting include: 

Q: How do I re-imagine my customer on-boarding process?

The issue clients are raising comes from the reality that we can no longer imagine somebody walking into a branch and filling in a Home Loan application and having a face-to-face conversation with the relationship manager or branch manager.

We know that's not going to be possible in a post-COVID-19 world when for a long time up until just months ago was it was common practice. Branchless banking is set to become a mainstream way of engaging with customers. Investments towards such initiatives are likely to increase.  

Q: How do I reach my customers and engage them to fully support them as they deal with their own challenges?

Australian banks have been proactive on this front. Engaging through Digital channels is increasing with investments in Data Analytics allowing for personalised interactions. For the customers who are not yet comfortable with Digital Channels, there are new modes of engagement. There is a good example of a way to answer this coming out of India and driven by the Government, which over the past decade has invested significantly in financial inclusion programs that see banking correspondents walk into remote areas to support senior citizens and those who need help.

This is basically a doorstep banking type of service where TCS has built the technology backbone that underpins solutions for government agencies and the banking and financial institutions in India. We see that similar technology solutions would be very useful in the context of branchless banking or remote banking capabilities in Australia and New Zealand. We are bringing in those capabilities and solutions from across the world to our clients.

Q: We know we need to act now, but business conditions are extremely tough so how do we ensure we get the return on investment in technologies?

Traditionally, the barriers to introducing new technologies for a company have been budgets and a perceived complexity of integration. If you look at the current state of the Australian economy from a macro picture, obviously the short to medium term is going to be quite challenging with downbeat forecasts around the GDP growth and increasing unemployment rates. We don't know when we're going to come out of this pandemic scenario from an economic or health perspective.

Banks are the backbone for the macro economy and they will have significant financial constraints, with respect to their own business performance, including on the revenue front.

The entire BFSI (Banking, Financial Services and Insurance) industry is at the cusp of a major inflection point right now. Most banks are re-prioritising investments. They are looking at simplification - both technology simplification and business process simplification - to take cost out of their existing operations and redirect them to initiatives around digital transformation and re-imagining customer experience.

This is going to play out over the coming year, it's going to be intelligent investments. And whoever does that better in terms of taking cost out and reinvesting it into digitisation initiatives are probably going to be the winners in the medium to long term. 

Q: What are my best cloud and cybersecurity solutions?

In the past few months some of the major questions from clients have been about cloud and cybersecurity. In recent times, the cloud story has become mainstream, so more and more organisations are embracing cloud. Accelerated reduction of the Data Center footprint is a top priority from both a resiliency perspective and a Total Cost of Ownership perspective. You have already seen major Australian banks announce partnerships with Public Cloud providers.

On Cyber Security, the government agencies are pushing the banks to do more across prevention, detection and responding to growing Cyber threats and banks are responding quickly with focused investments.

Q: What lessons can you share and highlight from the recent months of disruption that we can carry forward?

An important aspect for most banks comes through the immediate experience after the outbreak of the pandemic where security and resilience were top of the mind.

If you look at the number of customer interactions that were coming in through the traditional channels like contact centres – whether it be for hardship-related queries or other traditional forms of engagement - the big questions were: “how do I enable my huge back office”, “how do I enable my middle office to work from home” and “how can I support the hundreds and thousands of customer interactions and forms which are coming into my back office” - because you can only add so much of talent at a point in time.

We saw that many banks went and hired staff from Qantas and Flight Centre and a number of other travel and hospitality and airline organisations to beef up their back office and middle office in a complex time for the workforce. But very quickly the organisations have understood that the long-term answer to such dynamic changes in volumes is the ability to deploy smart technology. And that is driving the investments into total digitisation initiative. 

Q: What can I do straight away to simplify my operations with technology?

Most organisations have replicated paper forms into online forms, implemented OCR, digitised content management, implemented Robotic Process Automation over the last few years. The benefits from these initiatives have been realised in the short term and incremental benefits are far and few.

Total digitisation involves reimagining the customer journey using Human-Centric Design, re-engineering the underlying business process using process optimisation techniques, consolidating and rationalising the application portfolio, moving infrastructure to cloud to enable high availability, resilience and usage of Data Analytics, AI and ML for data driven customer experience.

While this sounds like a lot to do, it’s important to drive integrated funding and program delivery across a number of individual initiatives. A classic example is where a compliance initiative and a Data Analytics initiative could have strong convergence. This creates a multiplier effect. We’re creating a customer experience-led and digital technology-enabled solution that doesn’t necessarily focus on solving an isolated problem, but looks at an end-to-end total digital solution. 

As resiliency and security concerns are more reasonably managed and addressed by organisations we will find more investments in total digitisation.

Q: Do the technologies exist for everything we need to do?

In the space we work in, the most important aspects for a company may be things like “how quickly can I disperse a loan” and “how quickly can I onboard a customer”. And with today's technology there are several industry “proof points”, especially in emerging markets like India where someone can get a loan within an hour, or even in a couple of minutes, depending on the size of the loan.

So, technology is now available, and it is becoming mainstream. That means for TCS, as a service provider, our mission is to help banking and financial institutions to embrace these technologies and help both the company and customers get the benefits. 

Q: How do we innovate and how do we best invest in innovation?

The way the banks in Australia have approached innovation has been in three ways.

One is that they have significantly increased their own internal R&D (Research and Development) spend. Almost every single large bank in Australia has their own innovation labs and innovation ecosystems. They will hire the best and brightest from across the world to run these labs and innovation programs. There is definitely an increased interest in owning new edge technologies and harnessing these, and banks see it as a core differentiator in the marketplace.

The second is through collaboration. Interestingly, Fintechs were initially seen as competitors, but now they are seen more as collaborators. I think this is because banks now clearly understand that their biggest assets are their clients and they have trust with these “capital customers” that they have earned over a long period of time. It is something the Fintechs do not have.

The Fintechs are agile and innovative, but as we have seen in context of COVID-19 more so, Fintechs are also struggling for capital infusion and sustainability of their own initiatives. This has seen more parties willing to collaborate with banking and financial services institutions, and also with large companies like TCS, because we run our own Co-Innovation Network (COIN) of close to 3000 startups across the world.

Banks and financial institutions are asking TCS (through COIN) which are those likely startups with their new technologies that make sense to work with in the Australian and New Zealand markets. While we are helping major banks scan the market for Fintechs that can add value we are also helping the Fintechs incubate these technologies through our partnering program, and bringing products to life in the context of a particular business process, or a digital initiative.

Another important aspect to be mentioned is the economic interface, and the contribution of leading Australian universities, especially in the areas of AI and ML and cybersecurity, has also increased.

It's a three-way participation, with banks and financial institutions at the center of it with academic collaboration with universities, locally and globally being a key pillar to that, and also the broader partnership and partnering opportunities through organisations like TCS, which will help in tapping into the Fintech market.

People will no doubt have seen big banks have all launched their own startup initiatives. 

Q: What smart technologies do I need to deploy to be able to handle huge volumes of inquiry?

The best answer to this type of question is again the real-life example of what happened during COVID-19. There is no better case study. To simplify, there are three ways to explain it in context of what happened during COVID-19.

One of the most immediate needs was, “how can we enable secure borderless workspaces for middle office and back office staff so they can securely connect from their homes and support customers” - that was number one priority.

The second was, “how can I use data, Machine Learning and AI to smartly intervene in those business processes”, so for example like hardship management, and put in smart virtual assistants like chatbots in the contact centre to assist with a number of queries that were coming through. To be able to offload most of the synchronous interactions, using technology, the company could then free up middle office and back office staff - and also contact center staff - to prioritise the customer introductions.

The third was to look at digitalisation tools that could quickly set parameters and reconfigure applications to support the new government stimulus packages and also the change in a bank's own internal policies towards the customers.

Many of these solutions were rolled out in say 48 to 72 hours so that responses back to the customer were ensured as timely and helpful. It shows the power of agility through smart reconfiguration of technology, and the good thing is this that these technologies were available to our clients with partners like TCS.

This period has been incredibly challenging for all businesses and their staff and customers. And technology, through intelligent implementation, has never been better used or more useful. 

Q: What should we be doing within our company to strengthen digital capabilities within our business leadership?

Australian and New Zealand executives have developed a great sense of appreciation for technology, especially, if you look at the leading banks in this region. The choice of the technology hires, and even some of the business executives, is seeing new appointees come with a very strong technology background. And more and more you can see a technology harmonisation at the board level. My advice would be very supportive of this. Technology is going to be driving growth transformation for these organisations and that realisation is becoming quite prominent when you look at some of the announcements about appointments from the major banks.

In any discussion around a question about technology expertise at board and senior level, I would support it with a view that having a technology background enables having the right kind of conversations at the board level because no business process in banking and financial services today can be disassociated from technology.

Re-imagination and strategy is more technology driven than process driven these days so the ability to have intelligent conversations on deployment of technology and prioritisation of spend, especially in a post COVID-19 era, is going to be extremely critical. And I think the Australian banks have done well in beefing up that capability at both the management level and at the board level over the last couple of years.