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How Next-Gen Tech Investments Can Help Indian BFSI Institutions Compete At The Global Level-A Business World Article-By Sandeep Singh

The Banking, Financial Services and Insurance (BFSI) sector in Asia is leading the way globally – but what about Indian BFSI institutions & their future? Covid19 has everyone speeding up their innovation and technology upgrades.

By Sandeep Singh-CTO at OnDemand Agility Solutions

Until a short while ago, European & American banks were leading the way in terms of innovation, scale, and business. However, over the last 2 decades, the BFSI sector in Asia has been working towards becoming the game-changer. At present, out of the top 100 largest global banks by asset size, 40 are from Asia mostly from China & Japan- while only 1 Indian bank makes the list. The Banking, Financial Services and Insurance (also known as BFSI) sector in Asia is leading the way globally – but what about Indian BFSI institutions & their future?  Covid19 has everyone speeding up their innovation and technology upgrades.

A developing market for BFSI companies

Asia has proven to be the ground for rapid development for many digital banking companies. WeChat Pay and Alipay from China have been touted as some of the best fintech innovators in Asia. In addition to them, GrabPay by KBank in Thailand, PhonePay and Paytm in India, and Kakao Bank in South Korea are just a few of the names competing with traditional banks. Rakuten, the Japanese e-commerce group, also expanded into insurance, credit cards, and digital banking in 2017. 

India is the home for rising economic activity and a strengthening middle class, presenting a diversified trade ecosystem, which includes huge scope for digital payments & banking. As advanced analytics and digitization increase the opportunities for BFSI innovators in India, only the first movers & technology-focused approach for the Indian market will guarantee future market share and returns. By making the right use of already collected data & better analytics every organization can improve revenue, service offerings & better customer relationships.

Reinventing to prepare for the future

Asia has been the largest market for regional banking for more than 10 years now. With higher smartphone penetration, tech-savviness of customers has grown, and this brings new opportunities to deliver digital innovations and progress. Banks need to move towards digital ecosystems for not just acquiring new customers, but also to interact with them daily. This will require new approaches to relationship management, branding, and overall technology architecture. Indian companies do not have the complex web of legacy software which often slows down the European & American banks from adopting newer technologies and architectures, something Indian banks should definitely invest further into.

Extensive digitization has already helped leaders in Asia to cut their operating costs by up to 40% in services and sales, support, as well as back-office operations. A full redesign will further help them achieve rapid productivity & revenue gains

Reducing capital, increasing gains

One of the most powerful resources that BFSI companies, especially those operating for several decades have, is Data. Leveraging the latest technologies, tools and advanced capabilities today can help them leverage this data towards better operations & profits. Advanced data analytics, AI, and robotic processes have shown promising results in strategic growth, SME lending, wealth management and even transaction banking. These businesses together have a USD 100 billion revenue potential in Asian markets alone.  

For instance, regulators across many countries are cautious about the rise of consumer debt in the market. Indian BFSI companies can use sophisticated risk modeling to find the most qualified consumers for their consumer lending products and minimize risks. Banks & fintech companies have already created regulator approved risk-analysis engines that are not only speeding up loan approvals but also making it easier for those without a credit history to be included in the system, something which is of utmost importance in the Indian market where there are millions of first time banking clients every year.

HDFC bank for example has a ‘Milk-to-Money’ program that it runs. Under this program, they track the daily ATM deposits of dairy farmers to create a credit line for them. Most of them are new to the digital banking infrastructures, and this helps establish a credit profile for them to provide a sustainable credit to milk farmers.

What could BFSI companies focus on?

Today the banking sector is constantly fighting off competition from FinTech’s, Cryptocurrencies and tough reporting standards from regulators. They need to compete on not just customer experience, but also overall productivity and speed. Modular platforms are the need of the hour- for they allow developers to account for interoperability and continuous integration. Advanced data analytics makes use of data as a core asset of the enterprise. From sales to services and risk management- employees across the enterprise can excel in a data-driven environment with the right approach.

Talent management and human resources are also slated for a complete overhaul by 2030, and BFSI companies need to create a reputation for driving technological innovation to attract the best talent. Success in this transition requires everyone in the enterprise to work towards helping existing and new employees develop skills for the new culture.