If we were to estimate purely on the basis of media reports and general industry buzz, it may seem like every player in the banking sector is neck deep in the adoption of concepts such as open banking and exploring new technologies including Blockchain, Big Data, AI/ML, etc. Yet, the picture on the ground is quite different. Save for a few early adopters and innovators who are working on the above in earnest, most of the banking industry is still in the very early stages of adoption of digital technologies.

This is because while the intent to compete exists, banks often struggle with any transformation efforts as they are weighed down by legacy infrastructure, regulatory and compliance issues coupled with security concerns.

Case

Neal Cross, chief innovation officer at DBS, made a very interesting point at Sibos 2018 when he talked about how most banks in Europe and Australia still see open banking as a technical compliance program rather than a business opportunity. DBS, of course, has made several great strides when it comes to making seamless digital banking a reality for their customers. But by and large, his observation is spot on.

Fortunately, the banking sector is driven by the challenges posed by fintech players who are unleashing new experiences for clients, backed by new-age technology solutions. Even though, the BFSI sector has been an early adopter of IT for technology infrastructure in the Systems of Record era, when it comes to embracing digital transformation, the sector is still grappling with the need for a technology overhaul. The banking business still doesn’t understand the technology well enough to allow them to innovate.

What Banks are Missing and How Technology Companies can Help

In my discussions with customers and partners, I find that most businesses appreciate and acknowledge that technology has the potential to impact their business drastically but there is little clarity on the nature and magnitude of the impact or what they should do to prepare for it.

For instance, there is ample evidence that technologies around predictive analytics and advanced robotics, powered by AI, can massively transform all areas of the banking sector - from compliance to customer experience to backend operations. Investments in Augmented Reality (AR) and Virtual Reality (VR) and overall emphasis on design thinking can transform the banking experience. But banks have little clarity on the exact nature of the solutions that they need to implement or prioritize.

On its part, the technology industry is guilty of not doing a great job of finding the best use cases and tools for business transformation, based on these new technologies. Tech players often take a technology centric or platform centric approach, rather than a business first approach that is focused on alleviating the industry’s pain points. Technology understands the underlying benefits of the new platforms but does not have enough understanding of the use cases for the business.

To be fair, the industry itself is still developing in its thinking. Given the breakneck speed at which technology is evolving and the constant churn in the popularity of new technologies, the tech industry sometimes ends up spreading itself too thin to establish new use cases and evaluate the potential ROI of using new technologies over existing solutions.

Creating Winning Partnerships

There are several things that both sides can do to help bridge this gap. The first is to be customer-centric. Keeping the end customer at the center of any transformation effort is a good way for both banks as well as technology companies to align their approaches. The focus can then remain on solving real customer issues on ground rather than being swayed by the shiniest new technology. For banks too, it may help avoid an iterative approach of simply improving an existing process, rather than questioning if the process adds any real value to the customer.

Secondly, any big technological shift needs to focus on cultural transformation as much as digital transformation. The biggest reason that organizations hesitate to embrace any major upheavals is due to the fear of the unknown. Spending enough time on communication to explain the impact of the technology; not only on the overall strategy, but also on the day-to-day work life of each individual, is important.

Also, the banking sector will benefit immensely from looking at the big picture and considering the future impact, rather than placing undue focus on short-term or ‘Band-aid’ approaches to technology adoption. One great way to do this is by partnering with the technology industry to design the right, future-ready solutions that can help you win.

The technological revolution is already underway and is here to stay. It is in the best interests of both banks and tech companies to work together and find ways to create a winning partnership.

About

Mohit Joshi is President and Head, Banking, Financial Services & Insurance (BFSI), Healthcare and Life Sciences, Infosys.

https://www.linkedin.com/in/themohitjoshipage/

 Source:

 https://www.infosys.com/insights/industry-stories/technologists-vice-versa.html