Banks will continue their calibrated journeys on moving workloads to cloud: Mahesh Ramamoorthy, CIO, YES BANK
What does the future of banking look like and how are you aligning your tech goals looking at the fast-changing market dynamics?
In today’s world, technology adoption is imperative for the sustenance of any business strategy execution. For example, what used to be traditional, branch-based banking, or DSA-based banking, has now evolved to become do-it-yourself, digital journeys with an eye for providing frictionless on-boarding and customer service journeys that deliver instant fulfillment of service expectation.
Banks are looking at multiple opportunities to engage with partners. By partners, I refer to entities/fintechs in the B2C segment who specialize in verticalization of services to solve important problem statements. Such partnerships enable banks to expand their acquisition / distribution footprint, enhance opportunity to provide customers with a wide array of services (beyond banking) and connect the dots for financial and non-financial needs across the life / business spectrum.
Towards this endeavor, we are re-looking at our digital journeys, especially those that deliver customer experiences with the customer being at the center of the engagement. So, from the customer experience perspective, the focus is to enhance our digital capabilities and to deliver on all these expectations about knowing your data and creating intelligence out of it.While we have the knowledge of our data, we are on the path of creating the intelligence using tools such as AI and make it work and useful for both internal purposes as well as external customers.
Apart from this, we have made continued efforts to upgrade our API-enabled ecosystem. Today, banks have started evolving from being traditional, brick-and-mortar to enabling digital engagement through API enabled integrations with companies, B2C partners, and corporates. We have been leaders in the API space and will continue to overdrive, however its now imperative we package and productize our offerings to meet business imperatives. Our focus will be on packaging the API / Microservices as products that meet/solve business challenges/gaps and expand our interactions to drive growth.
Technology enabled risk management is an area of focus too. The acceleration of digitization is elevating risks and the traditional risk engines have gaps to tackle emerging scenarios. Hence, the bank has continued investing across upgrading skills of people, evolve the process and revamp technology solutions.
Another key transformation is around people and talent. The focus is on enhancing the knowledge and using the pillars of basics of banking to make it more interactive while cross-skilling and up-skilling the talent.
What should be a bank’s digital transformation story be like?
Bank should chart its own journey of transformation basis an understanding of the market evolution, business strategy, evolving business models, ability to effectively change and ability to actively manage risks in a fast changing environment.
As an example, a bank despite being a leader in payments ecosystem is looking to expand its retail franchise. For this, it is investing in enhancing its digital capabilities that create enriched experiences supported by intelligent product positioning through appropriate mining of data that is generated. This approach is expected to fuel a balanced growth to deliver increased levels of profitability. The bank will need to actively engage in meaningful partnerships across sectors that seek to expand its sourcing and distribution capabilities.
It’s important that the bank defines its purpose through these journeys and drives its trajectory of strategy execution towards meeting its purpose. In my opinion, technology will be the enabler that propels the bank to fulfill its strategy execution. It is critical for banks to measure the value being generated from the multifold investments made in its growth journey.
What are the pillars of your digital strategy that are helping you achieve the targets or goals that you have set for yourself?
At YES BANK, we have many assets. Our focus now is on creating experiences. Looking at our renewed business strategy, we are focusing on three areas.
The first pillar is how we drive digital penetration using experiences that are either new or existing to the bank customers – be it through mobile, internet, branch or partners.
The second pillar towards driving the experiences is to ensure that we have an understanding of the data that needs to be packaged to deliver the knowledge, and build the right levels of intelligence, the engagement engines (internal for business and external for customer viz. channels), like a contact center, a branch or a relationship manager. Data enabled digital and digitization journey is critical to drive multi-fold growth.
The third pillar is to drive a continued transformation program in key areas viz. API life cycle managements. While we do have APIs, however, to make sure these APIs are valued enough to create those journey, we need to package it well. This is about productisation.
These are the three major pillars that we are looking at. Additionally, it’s also about nurturing the right talent backed by an inclusive culture. The critical aspects is to train and upskill people so that they can use technology to better serve the customers in a better way along with providing an environment to innovate and support each other through the process.
Any unique offerings being worked upon to tap or attract the retail customers?
While we know our USP, we are also vigilante and understand the customer’s needs. We want the customers to see us as a brand of trust. As a customer of YES BANK, we want them to log on to our channels and be able to get all services that they need to manage their life journeys. We want to create a ‘marketplace’ wherein apart from financial services, customers can book cabs or buy insurances (through API integration with leading aggregators), and avail a whole host of services. These are the areas where we can add value because a lot of the large institutions have blind spots in this space. The personal and hyper-personalization touch is missing and we can play a huge role here. Towards our goal to achieve this, we are putting a lot of weight behind analytics and trying to bring everything together.
In your bid to become a ‘marketplace’, are you looking for fintech partnerships? Or do you see them as competition?
In a marketplace, as an individual or as a corporate, you will seek to get all your services under one roof. And at the heart of everything is managing the experiences effectively. To enable us be there, we are partnering with fintechs. We don’t see them as competition. We rather see them as extensions to a business.
A fintech can play a role that a bank cannot. Most of the fintechs operate in a niche band, which is vertical; whereas, a bank has the ability to offer a wide range of payment and financial products. Fintechs do offer lifestyle products. I believe that the more we collaborate, we will be able to offer enriched experiences for the Bank and our customers too. The reason is that our ecosystem is fairly conducive, and we have sort of a dedicated focus on how we deepen our relationships with the fintechs.
Finally, it comes down to co-creating a value proposition. And when you co-create those value propositions, it is about how you co-exist in that ecosystem.
From a technology standpoint, today the whole world is talking about going the hybrid, multi-cloud way. Are we going to see the banking industry choosing this path as well?
My personal view is that the banks as regulated entities will continuously evaluate their cloud adoption initiatives. We are driven by trust of the customer and hence, are custodians of critical customer information. This drives critical focus around availability (sustainability), confidentiality (security) and integrity (trust) of the information we hold.
Cloud journeys are required to be assessed from multiple impacts that include financial viability, application capabilities, environment sustainability, service provider maturity. The constant and accelerated evolution across these do force banks to sieve through their technology stacks and ecosystems before making prudent decisions.
Banks will continue their calibrated journeys on moving workloads to cloud in the short and medium term before embarking upon large scale transition/adoption of cloud.
We are at an early stage of cloud adoption. Our focus is to build critical competencies (people / tooling / technology / financial viability), however, through our transformation programme, we do hope to enhance our adoption over the forseeable future.
Do you believe that for banks to remain resilient and maintain operational efficiency, they should strategically look at data centres so that they continue innovating without facing any downtime?
Any financial institution, like a bank, has to provide the highest level of service to its customers. The data centre is a very niche service, and managing it is quite a task for entities like banks. Today, as compute demand increases multifold, you need to partner for such specialised services and derive the optimal benefits being offered. Banks will rely on data centres to host their critical assets. Co-location with the right levels of security, control, and environment that is being made available.
Large institutions may build their own data centres with the help of data centre service providers. Besides, a lot of data center service providers are moving to the private cloud journeys. And this is where it becomes a logical extension for banks to work with these service providers as an alternate to cloud service providers. Moreover, data centre service providers are also offering a lot of value-added services in terms of observability, data storage, and logs. Banks don’t need to invest in these areas if their infrastructure is managed by a specialised service provider.
Any particular reason/s that YES Bank decided to co-locate to a Tier IV data centre ?
To meet our key expectations around sustainability, availability, and security, we have evaluated our target operating model and one of our key foundations, is to engage with strong data center players to host our most critical assets. Towards fulfillment of these objectives, we have moved to state-of-the-art data centers with appropriate redundancies.
Banking services have undergone a sea change in the recent times – all thanks to the underpinning technologies. Any particular technology or technologies that you are betting big on?
Using the layer of artificial intelligence on top of the data and the journeys – this is one area that I don’t think we’ve really worked on but I am very keen to understand.
Digital currencies just got launched and how do you make these digital currencies the way forward. You won’t be surprised to hear that in the next 5-7 years, there’s no physical currency in the offing. Everything is digital. The build out to this approach will be important, with blockchain, AI, and data underpinning it.
There are a lot of things happening on the risk side for an organisation like a bank. As everything gets digitised, how does risk look at it differently? Risk means information security, operational risks, and market risks – all of that put together. How do you adapt to this change?
You have to look at how you secure yourself in these areas and at the same time, think differently. I think this is another area that I’m very keen on devoting a lot more time to because you can do a front-end escape, but if the back end is weak, you will end up having its own set of problems.