back Back

Infosys Finacle expects full-stack modernisation of digital engines at banks

By Priyanka Pani

September 17, 2020

Share

The COVID-19 pandemic has impacted various businesses in different ways. While some have become absolutely redundant, a few others have witnessed hyper growth. One such segment is IT companies providing digital solutions to banks. IBS Intelligence spoke with  Venkatramana Gosavi, Senior Vice President and Global Head of Sales, Infosys Finacle to understand Finacle’s strategy to help banks during the pandemic particularly.

Finacle has been focusing to help banks build new business designs that bridges the divide between the digital and physical worlds and embed banking into their lifestyles and business processes seamlessly and help them in their true digital transformation. The company is helping power digital-only banks through following ways:

Supporting a Bank-in-a-bank strategy where incumbent players are setting up distinct digital entities.

Helping FinTechs offer banking services

Helping Non-financial institution to offer banking products such as India Post, multiple tel-cos who are launching banking services, and even an insurance company

Edited Exerpts:

COVID-19 has accelerated the efforts of banks, globally, to go digital and are seeking technological solutions. How has Finacle’s role changed? What has been the demand for digital solutions recently?

With Covid 19, there is no longer a need to push the case for a digital-only proposition, which has in a matter of weeks become the definition of next-normal banking. Earlier, traditional banks digitised to overcome challenges and keep up with competition; going forward, they are focused on being digital by design.

Banks evolving their digital-only propositions are paying attention to preparing their entire people, product, process and technology landscape for the next-normal. This means enabling people for remote working.   digitising products from end-to-end, or from origination to closure; transforming processes to run straight through with no manual intervention or hand-off; and employing technologies that can digitise the bank fast and scale it even faster.

They are acting quickly to transform their entire landscape. We are seeing increased focus on comprehensive digitisation of incumbent businesses through the full stack modernisation of digital engines, engagement and experiences systems, with focus on:

Digital Channels, Client Onboarding, Customer Service- Banks are increasingly feeling the need to invest in technology platforms that can onboard new customers quickly and efficiently. Further, those customers who have been onboarded recently on the digital platform – especially first-time digital users – will need support which must be planned for. Banks experienced a massive spike in call volume and wait times of hours immediately as local government ordered a shutdown. They are counting on digitisation to handle such surges in volume in these difficult times.

Focus on Digital Payments – The coronavirus has been a mixed bag for the banking industry. Lower confidence and income mean fewer purchases (and payments) on the one hand, but on the other, the fear of infection is driving rapid adoption of “clean” contactless payments. Customers view digital payment types as fast, cheap and easy to execute. Besides higher adoption, we also expect to see a broad framework of standards to evolve for high volume commercial digital payments.

Reimagined branch banking – With the same rationale, we expect branch banking processes, such a teller operation, which involve physical paper, currency, cards etc. to adapt to new guidelines and safeguards, if not actually a drop in volume. Branch banking may get less personal – With the socially distanced conditions expected to persist for longer, banks are expected to relook at branch banking services to:

Make branches virtual

Enable ‘Work from Home’ for branch staff

Create smart and autonomous branches

Introduce ‘Doorstep Banking’

Make ‘zero queue’ a reality

Cybersecurity is a big concern for banks as cyber threats are on the rise. How has Finacle been effective to resolve this issue?

As banking ecosystems expand to incorporate more partners and services and as the number of digital touch-points proliferate, the threat landscape for digital banking will only broaden. As security increasingly becomes top of mind for digital banking customers, a bank’s digital security credentials will become an important component of customer trust as well as competitive differentiation.

The biggest challenge for banks will be to deploy robust threat protection technologies and strategies without compromising customers’ digital banking experience. This means that the industry will have to focus on innovation to achieve the right balance between the two. Many banks are already exploring new technologies and possibilities to achieve that balance. Halifax UK, for instance, is experimenting with electronic wristbands that use a customer’s unique heart rate to authenticate digital transactions. Barclays is also expected to roll out a voice-biometrics system to its 12 million retail customers that will not only enhance security but also cut identity verification time from 90 seconds to less than 10. In Brazil, Banco Bradesco Cartoes is introducing fingerprint-based biometric authentication at its ATMs. Emerging technologies like Blockchain could also help revolutionize the security of digital transactions.

The rapid adoption of cloud computing, particularly the use of the public cloud, will have enormous implications for banking security. Public cloud providers have evolved security beyond what any individual bank can achieve, but their defenses are only at the level of infrastructure. We therefore expect that in 2020, banks will focus on building resilience through employee education, by maturing their cloud competence, and by acquiring new tools for managing cloud security.

With customers transacting increasingly on a variety of digital banking channels, strengthening online identification and authentication will remain a top priority for the industry. The password is passé; current and future digital identity management will employ a combination of biometrics led multi-factor security. An emerging trend is leveraging behavioral analytics – tracking how each user works a keyboard or mouse, for instance – to verify that he or she is genuine.

Moreover, with large number of external users and devices accessing organizational systems, banks would need to change their human-centric, reactive security philosophy to a proactive, machine-led approach where systems monitor user behavior to decide who should be allowed access and automatically adapt the level of security to the level of attack. With Finacle, the security architecture protects infrastructure, data, and application layers. Our offerings have security capabilities at an application level including identity and access management, user role management, limits, and exception management.

We predict that 2020 will also mark the beginnings of a new approach to security. Instead of reactively layering or bolting on one security solution after another, banks will take a privacy-by-design approach where privacy is part of the foundation on which all systems are built. This implies a fundamental change in security thinking that may challenge traditional banks but is already at work in some progressive financial institutions.

How is the competition from open/neo banks panning out?

Globally, traditional banks were planning for digital transformation slowly. And challenger banks, which offered digital banking from day one, were limited in just offering deposit products. COVID-19 is forcing banks to go digital faster than their original plans. It has also challenged challenger banks to offer full-fledged banking services. They must get into SMB banking, financing, overdraft and letter of credit type services.

Traditional banks have a lot of strength around their domain, processes, knowledge, and experience. But they have challenges around technology. Challenger banks, on the other hand, have the technology advantage but don’t have the domain experience to come out with new products. This is where fintechs will come in and help both entities.

In the next-normal, two scenarios will emerge; one for each type of bank. Traditional institutions with a brick and mortar setup will look to build a digital-only proposition from scratch, likely as a separate subsidiary or legal entity. As the number of remote workers goes up, incumbent banks will start dipping into the gig economy for part-time and short-term employees (even in their branches), just like we predicted in our 2020 Banking Trends Report. The middle and back offices may turn fully remote, given that the concept of the office as a physical place is fast unraveling. All these developments will force traditional banks to turn digital-only, or at least digital-predominantly.

On the other hand, neo/challenger banks that were born digital will try to expand their limited offerings to a complete products and services menu, because they will now have to serve all, and not just digital-native, customers. Where challenger banks forced traditional institutions to digitize to remain competitive in the past, in the next-normal, digitized incumbents will drive their new rivals to become full-fledged providers to match their scale of offerings.

 

 

Previous Article

September 17, 2020

Purewrist launches mass market contactless wearable in US

Read More
Next Article

September 18, 2020

NCR partners with Microsoft; turing data into meaningful insights

Read More






IBSi FinTech Journal

  • Most trusted FinTech journal since 1991
  • Digital monthly issue
  • 60+ pages of research, analysis, interviews, opinions, and rankings
  • Global coverage
Subscribe Now

Other Related News

October 29, 2024

Afin Bank and Thought Machine launch digital bank for Africans in the UK

Read More

October 22, 2024

Tuum partners with Google Cloud to deliver core banking in EMEA

Read More

October 17, 2024

Stress and Mortgages: Are UK Banks Failing Homebuyers?

Read More

Related Reports

Sales League Table Report 2024
Know More
Global Digital Banking Vendor & Landscape Report Q3 2024
Know More
NextGen WealthTech: The Trends To Shape The Future Q4 2023
Know More
IBSi Spectrum Report: Supply Chain Finance Platforms Q4 2023
Know More
Treasury & Capital Markets Systems Report Q1 2024
Know More