Ever Agile and Always Available – The New Banking Mandate

We all are witness to the evolution of the banking industry. Till about 2000, physical bank branches were the visible, de-facto representation of the banks, which customers most preferred. From 2000 to 2009, ATM’s took over and started co-existing with bank branches, giving a huge push to ease for doing banking any time (may not be anywhere but surely at many places).

Starting 2010 banks started going digital, opening-up avenues and channels of doing anytime banking. We can now access banking services round-the-clock, and indeed from anywhere in the world. According to National Payment Council of India, with UPI, digital transactions in India increased by 188% year-on-year in 2019.

The forthcoming five years, in the post-COVID world, will further change and evolve the way people undertake digital transactions. We are already witnessing and shall continue to witness eKYC, digital cards, Artificial Intelligence-based surveillance, compliances, and of course, more and more options for mobile-based digital payments.

At the same time, this sector is undergoing tough times, with the NPA’s and the resultant capital adequacy and liquidity issues coming in regular academic and media debates. Driven by all these challenges, the sector is witnessing consolidation of various banks, especially in the public sector to create few large- scale banks with global scales, operational efficiencies, and best technological and operating practices.

Today, both public and private sector banks invest in technology tools and platforms to offer agile, reliable, and superior solutions that will boost the customer experience. Many banks are securely migrating their infrastructure to cloud to make the user journey more and more seamless and intuitive, while maintaining the agility, speed, and scalability to launch new business services.

On the other hand, cooperative banks and thousands of smaller banks operating in hinterlands are not able to bring controls and efficiencies in their operations, and scale-up and meet up to the expectations of their much-aware young generation customers. It is simply because they are not able to invest in and adopt the same digital infrastructure which their bigger counterparts possess.

Need for agile banking

All these fast-changing market dynamics bring in the need and importance of an “Ever Agile and Always Available” banking digital infrastructure. For banks, agility generally refers to the constant development of digital banking platforms in response to fast-changing customer demand. And with regulatory changes, diversity of channels, and stiff competition from pure-play digital players, banks look at agility as a way of simplifying and creating more accountability towards customers.

As customer expectations continue to transform, banks move towards being more agile and nimble. They are transforming banking to create an integrated ecosystem for the customers by participating in their journeys. And while banks are being challenged by digital players, they are also drawing inspiration from these companies and adopting their transformation and digital disruption models.

To start with and possibly most importantly, banking institutions need to focus on the core place where their digital infrastructure stays and does all the digital magic, that is, their data center. A data center is not just a brick-and-mortar building, with a huge amount of power, cooling, physical security, and thick fiber connectivity but also all IT infrastructure resources and service layers like Cloud it brings along and delivers on an ‘As-a-Service’ model.

Besides digitalisation, consuming everything on ‘As-a-Service’ model will make sure that banks are not only scaling up or down faster but also maintaining a profitable, cost-efficient business. Banking institutions are gradually moving their workloads to the cloud for lower costs, dynamic availability and scalability of services and low-latency access. The need for highly scalable third-party data center infrastructure built on economies of scale is on the rise due to these factors since public cloud grids run in data centers and not in captive facilities.

But as you know, that is not a real-life scenario. In real life, you need to ensure that maximum juice is extracted from your CAPEX invested hardware before that gets obsolete and you get into a refresh cycle. And when you do get into that cycle, you are faced with your CEO/CFO demanding optimisation of costs and at the same time scaling up of resources to take benefits of newer business avenues or technological advancements. This makes you need to take care of running the business, avoiding any minute of downtime, and migrating from one technological environment to another.

The path to agile banking – ‘Everything-as-a-Service’   

With emerging technologies, onboarding and enhancing user experience has evolved. By harnessing AI and ML, banks can meet compliance and regulatory requirements without compromising on security and spending enormous amounts of money on emerging technologies. Solutions delivered on ‘As-a-Service’ model make these advanced technologies accessible to banks of all sizes, which could earlier be implemented only by a handful of large banks.

• First example is the use of Video KYC-as-a-Service; wherein, at a fraction of the cost, banks can adopt this technology and start onboarding customers sitting in the remotest part of the country, thus increasing their business, improving efficiencies and compliances, and promoting all-inclusive banking.
• Another example is of Reconciliation, which is the most critical process for any bank. Manual reconciliation is tedious and subject to errors. However, with the advent of AI and other tools, this solution is now available as a machine-driven solution. The digital technologies can be used on a pay-as-you-consume model, thus providing speed, scalability, volume, and accuracy with an agfutomated and integrated approach meeting the compliance requirements more securely while keeping costs low and making itself available to banks of all sizes.
• The third example is of Anti-Money Laundering. With automated and AI-powered solutions, banks can do a risk modelling of a prospect, continuously monitor risks, identify suspicious transactions, and money laundering attempts. This solution can be used by various surround services like Payment systems viz. SWIFT, ACH, Mobile Money, Exchange House transactions, Treasury functions, and Demat services. This can be also be tailored to accommodate specific requirements of the different types of organisation in the BFSI domain and be consumed on a pay-as-you-go model.

Banking Compliance-as-a-Service

Yotta has partnered with IDBI Intech to offer the latter’s i-Reconciliation (i-Recon) and i-Anti-Money Laundering (i-AML) applications under ‘Compliance as-a-service umbrella. These services will address the growing challenges of regulatory compliance as mandated by RBI while keeping the operational complexities and costs low for the banks, insurance companies and NBFCs. These services will be available on Yotta Enterprise Cloud, which is highly scalable, secure, and hosted at Yotta NM1 data center.

With digitalisation and an increase in the number of transactions, be it online, via card, or ATMs, consumer protection has become essential and critical. This has led to a rise in the number of regulatory compliances for the banks and the need to meet them most efficiently. With evolving regulatory changes, the BFSI sector needs to address various operational complexities in a time-bound and cost-effective manner. The Compliance-as-a-Service model helps banks to be more agile in responding to evolving regulatory expectations in a cost-effective manner.

i-Recon application will offer an integrated reconciliation platform addressing the challenges of scalability, transaction volume, speed, and accuracy with an automated and integrated approach as required by banks and insurance companies. Similarly, i-AML will help BFSI companies to identify and combat various money laundering risks.

Cloud provides agility, but Hybrid IT Infrastructure is an ideal solution

Most optimum utilisation of resources while maintaining our fullest corporate security is what we associate with Private Cloud. And on-demand, pay-as-you-use and cost efficiencies in a dynamic usage environment is what we associate with Public Cloud.

Hence, an ideal solution is not just Hybrid Cloud, but what I call as Hybrid IT Infrastructure where colocation, hosted private cloud and public cloud co-exist, so you can choose and plan the appropriate time frames to migrate from one environment to another without any downtimes and while keeping lower overall costs, long term scalability and security posture of the organisation under constant consideration.

This ideal solution also calls for overarching and transparent governance and monitoring orchestration layer for you to track, monitor and manage the health of your physical and virtual assets on a real-time basis – with all this available to you on a straightforward subscription-based services model.

Making headway for growth

Banking has come a long way. It is important for the banks to realise that digital transformation isn’t just about offering customers online banking or providing other services digitally. They need much more in terms of 100% availability, long term scalability, and tangible reduction in costs.

Since agility is an essential means of implementing digital transformation, banks would require a massive digital infrastructure that supports their traditional banking services and newer promising services like Video KYC, AML, Reconciliation, and others that can be consumed on an ‘As-a-Service’ model. This, in turn, will help banking institutions focus on addressing customers’ needs rather than just building products and back-end technologies.