Oracle has been busy the last few months and very recently launched a package of 1,500 ready-to-use APIs for payments, retail and corporate banking. We spoke to the man behind that push – Chet Kamat, senior vice president, financial services, Oracle.

Chet Kamat has vision, as you would expect of a man at the helm of one of banking’s tech powerhouses. Recently he has been busy launching Oracle Banking’s new range of APIs. They  provide banks with a huge prebuilt repository of more than 1,500 REST APIs which are based on Oracle’s experience of servicing over 600 banks across 140 countries over two decades. That is a rich background to have available for innovation. But Chet is a man who thrives on learning new things, personally and professionally.

“The early mover advantage is critical for success for banks in the open banking era,” Kamat said when they launched the API package: “Oracle Banking APIs is designed to bring acceleration, and help banks gain competitive advantage in the market.”

I was interested in hearing how Oracle is finding the process of bank digitisation. How are the banks dealing with the tasks  – are they grasping the nettle or looking upon the task as one to enjoy I asked him: “Quite often, digitisation is envisaged primarily as a nice user interface, a mobile app or making banking services available online. These are actually just elements of digitisation or, to be more specific, of digital transformation. Digital transformation is a continuous journey of reengineering a bank using digital technologies and networks to remove customer friction and improve customer experience and value. It involves questioning the status quo as to why should an outcome for a customer take days or even hours when it can be done instantly and then reengineering the relevant channels, business processes, data requirements and supporting technologies across the enterprise to build a new customer experience and doing so better, faster and more efficiently.”

I wondered if many banks realised what the stakes were, and indeed what he thought the stakes were at this stage of the digitisation process? He said: “As the banking industry witnesses the rapid evolution of digital convergence and connectivity coupled with the rise of several non-traditional entrants in the financial services space, digital transformation itself is no longer just “optional” for a bank. In fact, 85% of banks across the globe cite the implementation of a digital transformation program as a business priority for 2018.”

Kamat said: “More often than not however, digital transformation initiatives in the banking industry tend to take the easier path with an ad-hoc focus on selective elements of digital transformation. Many banks selectively upgrade the front office while maintaining a status quo on back-office processes and systems or vice versa, instead of adopting the more robust and effective enterprise-wide approach. Research from IDC reveals that 39% of banks have an emphasis on front office when it comes to digital transformation, and 20% have an emphasis on the back-office, while only 28% have an enterprise-wide focus on digital transformation.”

“It is evident that while there are some banks that are grasping the nettle by adopting an enterprise-wide approach to digital transformation there are many who are just not doing enough or not doing it effectively.”

Since that is obviously what is happening what is it that marks out the digital front-runners I asked him?  Kamat replies: “Based on our extensive engagements with hundreds of banks around the world, we at Oracle can identify certain common threads which help banks become digital banking leaders. I can list them.

“Digital leaders almost always are centered on the customer and often have a maniacal focus on adding value to the customer and helping them derive the maximum gains and the most beneficial outcomes.”

“Digital leaders are also masters at managing and leveraging data and analytics to build actionable insights, make better decisions and establish competitive advantages.”

“Digital leaders also typically have agile and flexible technology architectures and solutions that help them adapt faster and efficiently to market and business changes and opportunities. A case in point is Lien Viet Post Bank, one of Vietnam’s top 10 private banks which invested in an agile core architecture and solution that enabled them to quickly and efficiently roll out next generation banking services to more than 10,000 post offices in Vietnam. It’s an example of agility, innovation and speed driving growth – at a remarkable scale and efficiency.”

He believes that the new partnerships and a ‘we’re are all in this together’ attitude is altogether the correct one to use. “Additionally, digital leaders also increasingly participate in mutually beneficial partnerships and collaborations which help them leverage inherent strengths, effectively overcome weaknesses and drive competitive advantages. For example, Yes Bank in India has launched several APIs which it offers commercially to fintechs, startups, and enterprises. By opening up its data and services, Yes Bank has created new revenue streams and offers innovation and value to partners and customers” Kamat said.

I wondered how Oracle is shaping the bank’s digital strategies – and what were its  recommendations for success? He says: “Oracle has a long history of partnering with hundreds of banks of all sizes across multiple geographies. Apart from the comprehensive portfolio of offerings that we have available to help any bank anywhere become a digital leader, we recommend four broad areas that banks must focus on for success in a digital and connected world. They are:

“One. Data and Insights: Digital and data go hand in hand. Banks are uniquely rich in data full of context—both structured and unstructured—and this is distinct from consumer data alone. Digital leaders are able to view and leverage this data as an asset, monetise the data securely, and drastically improve insights and critical business decision making. Additionally, they are increasingly leveraging advanced technologies like artificial intelligence and machine learning to uncover unseen and untapped patterns of human, operational, and system activities which deliver significant benefits and help to establish significant competitive advantages.”

“Point two: Agility and Flexibility: Digital leaders have agility and flexibility interwoven into their digital transformation. They typically implement technology and solution architectures that are flexible and agile. They leverage plug-and-play platforms and APIs to deliver effective, efficient and consistent experiences at speed and scale to both customers and employees. Additionally, apart from technology and solutions, digital leaders also adopt agility and flexibility into their organisational culture where business and technology planning and execution are agile and iterative with much faster decision making and time to market.”

“Point three: Collaboration: Digital disruption is entering a phase of connected ecosystems where multiple firms such as fintechs, banks and other digital firms can share data and build innovative services to bring unprecedented value to the customer. And digital leaders are increasingly participating in these ecosystems through collaborations with partner firms in mutually beneficial relationships. They are able to leverage their more comprehensive service portfolios, deep customer relationships, and data in return for access to the latest technologies. They also gain access to much larger networks and customer touch points that span different value chains where they can offer relevant financial services and scale their business efficiently. In fact, McKinsey in a recent report states banks that successfully orchestrate a basic ecosystem strategy could raise their ROE to about 9 to 10 percent.”)

I asked whether the CEOs of banks are in tune with the digital agendas of their tech staff? He says: “Based on our experience, the most successful digital transformations are those where the responsibility of driving the transformation agendas is a strong and collective focus from the entire C-suite leadership of the bank and not just the conventional leaders. In fact, according to Altimeter research, digital transformation is led 34% of the time by the CMO. On the contrary, the CIO and CTO, who are the expected leaders, only led the effort in 19% of companies, while the CEO led in 27%.”

Kamat says: “While these figures cut across industries, it reinforces our point of view that the concern is not so much of CEOs being more in tune with the digital agendas of tech staff, but more whether there is collective C-suite ownership of digital transformation to ensure an integrated enterprise-wide approach across functions and even lines of business. Digital transformation is ultimately about reengineering every aspect of the bank around digital technology with a focus on delivery unprecedented value to the customer.”

He rammed his point home: “It is absolutely imperative for CEOs and other C-suite members to understand the importance of digital transformation and not treat it like another project. And its success requires the entire C-suite to own and lead it, front and centre.”

I asked him what were the most important components of a digital bank? “There is no secret recipe that goes into making a successful digital bank” he replied. “It is the age old components – people, process, technology and the right planning and execution – that make a successful digital bank.”

“People. This is often the most overlooked component of successful digital transformation. To be successful, there must be a cultural shift in people and organisational behaviour. It requires a change in how a bank attracts and empowers the right talent both from within the enterprise and from outside. Additionally, successful transformation also entails leveraging of inputs from other stakeholders, like customers and partners, and potentially changing the status quo in terms of the way things are done.”

“Process is a key component. Effective organisational structures, management systems and governance frameworks that are tweaked regularly are also essential to the success of a digital bank. Also, as mentioned earlier, collective C-suite and management ownership of digital transformation are needed to ensure an enterprise-wide approach that spans organisational siloes and functions is important.

“Then there is technology. As always, the right technology architecture and solution landscape is an important component of a successful digital bank. Modern, interoperable and scalable solutions can help drive the required customer centricity, mastery of data, agility and flexibility and the ability to efficiently collaborate – key aspects that help drive successful digital transformation and digital leadership. Again, working with the right technology partners can help a bank significantly in this area.”

Just how important is Omnichannel I asked? Was it more than a buzzword? “The numbers are very clear. McKinsey research reveals that in some regions up to 65% of customers now interact with their banks via multiple channels.”

“Therefore, ensuring an omni-channel experience for customers will no longer be a differentiator but instead will be a minimum requirement. Increasingly the question will also shift to how a bank can leverage digital and omnichannel experiences to differentiate themselves from traditional competitors, fintechs, and provide true value to customers. A bank will need to take omnichannel to the next level by optimising experiences and integrating real time data across all channels to deliver innovation, customer value and outdo competition.”

Kamat said: “Additionally, as banks increasingly collaborate and partner in interconnected ecosystems that span value chains, successful digital leaders will also need to drive an omni-touch point and omni-value chain strategy where banks will embed relevant banking services across multiple value chains within the business lifecycle of enterprises as well as day-to day life of retail consumers.”

Kamat finished our interview with a warning for the future: “Partnerships are the new drivers for all banks and fintechs of the future. Partnerships are the new disruption.”

We should examine that statement carefully. It comes from a man who is always learning. Out of that learning process came his love of photography. The photograph of the Leopard on this page was taken by him. The Leopard was hunting for its lunch. Chet may have been close but he wasn’t about to become prey. As he said – Leopard and photographer in a perfect partnership.

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by Alex Hamilton
Alex is Senior Reporter at IBS Intelligence, follow him on Twitter or contact him at: alexanderh@ibsintelligence.com
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