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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.
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 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.