Category: General

Following the outbreak of Covid-19, financial institutions across the world are navigating through a volatile economic and regulatory landscape. With 90% of the workforce, functioning from home, risk and compliance operating models are under incredible pressure. Maintaining markets and levels of service at par during this heightened volatility has become a business imperative. However, managed services arrived as a strategic response to these areas where seamless organization & streamlined operations with security are the prime mandates. Covid-19 Fallout on the Financial Sector: The Industry Challenges Primarily, Covid-19 has ensued significant operational, financial, and human capital risks for the BFSI sector. Infographic Source: Deloitte Profitability concerns are at the highest: Among the most potential risks, BFSI is facing today, foremost is around the repayment of loans. With the regular income stream of the consumers, coming at a halt, they are naturally unable to repay the loans. On the other hand, banks are showing resilience with the increased moratorium, staggeringly low-interest rates, and waiving fees to SMEs and consumers. However, the process will eventually boil down to profitability concerns and credit risks for the banks. Escalating Operational Costs for Risk & Compliance Regulation: According to Citigroup, risk and compliance regulation spends account for 10% of the operational expenditures normally. However, the pandemic has doubled up the figure, following a rapid shift towards digital banking Legacy Systems SlowingDown the Process: Resources being often engaged in the manual management of the internal process, have limited availability to address “risk and compliance” risks. Many processes are still adhering to legacy systems, which underpins their shortcomings to address operation process in the Covid-19 scenario. Technical Incompetence Becoming a Barrier: Though AI (Artificial Intelligence) supported new age technology is already in place, building in-house capabilities to run the legacy systems clubbed with technology is still a distant dream. Moreover, it is commercially unviable. Finding people with the necessary technical competence and experience is another hitch down the line. Why Traditional Offshoring is No More Viable to Meet the Current Demands Offshoring trends have been in the financial premises for a decade backbit has, however, evolved significantly in recent times. “Megadeals” for a specific segment of the banking process once dominated the market.  Today, the industry is embracing a multi-sourced ecosystem model, where the traditional system falls short in every possible aspect. Source: Fintechfutures However, the current needs in the financial domain are multidimensional. So far, outsourcing in the financial sector was mostly involved in offering discrete services. Banks were likely to subcontract their tier-1 helpdesk or any non-IT task like data entry or document scanning. With traditional outsourcing to any external provider, banks can address specific business needs. For example, the Know-Your-Customer (KYC) Registry launched by SWIFT, back in 2014, which has addressed the liability of banks’ KYC compliance regulations through cost mutualisation. Secondly, IT and business process outsourcing (ITO and BPO) offerings have converged in recent times. The objective is to offer a synchronised solution in a cost-efficient manner. Today, when the providers are offering full-stack solutions, traditional outsourcing addressing specific is no more a viable option. In the current scenario, when a rapid remote transformation has become a survival strategy, handling client service, risk management, liquidity, and cost pressures in a completely new ecosystem arrived as a challenge. Even if some key areas of the banking process is outsourced to different specialized providers, it involved the risk of exposing your business-sensitive data to several third party entities. Precisely, cost management has been the primary driver of outsourcing decision in the financial domain. It’s still been so. But, financial firms are now looking for the special­ized knowledge suite at scale to solve complex problems alongside cost efficiency. Today, when cybersecurity threats are at their peak and a series of complexities are already on the scene, the use of a traditional, cost-focused BPO stands inarguably suboptimal in this sector. Are Managed Service a Strategic Solution Leveraging the scalable delivery infrastructure of the managed services helps financial institution run business operations seamlessly while serving customers in an uninterrupted ecosystem. The ever-evolving digital disruption has already triggered several opportunities for banks to fuel future growth. Touch beyond the core in a cohesive ecosystem Banking has now emerged way beyond its core operations in every possible manner. Source: McKinsey& Company In the past, banks have relied on making customers aware of relevant products as a path to growth. However, in the evolving digital ecosystem, banks can monitor user behaviour, operational capabilities, reinforce engagement, and capture data that will provide a more complete view of customers’ needs. For example, ICICI Bank has extended into banking adjacencies; by providing services like spending overview, preapproved offers, transaction history, as well as smart tips for spend management. Source: icici banking app image taken on 8.7.2020 Thanks to the capabilities of multi-channel managed services that helps bank bring everything on a  single platform. Extending beyond the core helps banks serve customer demands and convenience, without separately investing in each area. Creating a financial Supermarket leveraging the facilities of a cohesive service provider, a bank can bring a curated mix of internal and third-party offerings. This way, customers can access easy, one-stop access to financial products while address multiple financial needs through a single, integrated channel. At ICICI Bank’s mobile app, customers can explore a plethora of financial products for investments as soon as they log in. Source: icici banking app image taken on 8.7.2020 This way banks can focus on streamlined operations as well as expect the high-return side of the industry. The Key Takeaway Leveraging managed services can help banks and financial institutions to refocus attention where it counts. At the end of the day, deficiency in the process and offerings can hurt the long term sustainability of the firm’s reputation. In fact, the quality and integrity of its internal controls have nothing to do with the services it offers. “Banks have long relied on the dedicated talent for internal controls, but it no more holds significance coming to the current face of

Financial leaders across the world are at the juncture of a pivotal moment, where many of them have embraced remote functioning as an instant response to the Covid-19 pandemic. The biggest lender in India, SBI has also rolled out its “Work from anywhere” policy in an attempt to drive down the operational costs, alongside retaining productivity & work-life balance for staff members amidst the pandemic. According to the bank’s Chairperson, Rajneesh Kumar “Productivity tools and technology are already in place to perform administrative work remotely”. However, in spite of this paradigm shift in the organizational structure, financial leaders are still dubious about its longterm sustainability. As a pandemic response, it might be an available option for customer satisfaction and corporate survival, but its profound implication on the operational structure will shape up the BFSI workforce in the coming years. According to Deloitte, customer-centricity will be fortifying the core of banking in 2020. This article is an interesting take on how the remote transition in BFSI segment is shaping up. What are the challenges on the horizon and how adopting technical measures can help banks to fit in the new suite. The Roadblocks for the Remote Structure The remote transition has been breathtakingly rapid. In organizations like JPMorgan Chase, for example, about 200,000 staff members are now working from home. This certainly puts the complex IT infrastructure at stake, with customer security as a prime concern. Alongside, it can also hit hard the productivity level due to the following reasons: Collaboration Issues: With a remote workforce totally in place, collaboration issues are going to be a frequent concern. Staffs using their wired as well as WiFi networks to support Zoom Calls and Microsoft Team Meetings put incredible pressure on the network as well as on employee productivity.  Connection crashes: Frequent access issues and connectivity crashes following an incredible pressure on the network are becoming a potential risk for the remote operational model. Renowned names like Capital One have also reported connection outages, following a steady increase in online banking operations. Cybersecurity attacks: With everything in Cloud, cybersecurity threat always looms behind. Malicious attacks are reportedly spiked up by 38% following the Covid-19 conundrum. Raconteur says financial institutions are most likely to get the bash of phishing and cybersecurity threats. Critical Compliance gaps: Protecting and governing financial data of the customers is the top priority for banks restructuring their workforce. However, many organizations are still falling short of deploying effective network policies to stay compliant with the policies of data access, storage and transmission. Deploying Key Network Solutions Can Mitigate Fault Lines A synergy between risk, security and productivity is indeed critical with such an abrupt transition. Even an arms-length arrangement won’t pay returns in the long run. However, banks can consider deploying key network solutions across the legacy infrastructure to stimulate the recently remote operations. It will help banks survive the transition afflictions at this moment, hopefully in the future too. Customer Service Management: Digital banking is already a norm and Covid19 has just played the catalyst, according to Mckinsey. As a result, supporting users with enhanced digital experience is more of a business imperative. This has made restructuring of public-facing applications mandatory so that customers (both tech-savvy and novices) can get seamless service with ease of access and communication.  Risk mitigation: With critical information being shifted away from local servers to hybrid and multi-cloud environment, deploying agile and adaptive cloud security is extremely crucial. It will satisfy regulatory demands on one hand, and streamline digital access on the other.  Employee monitoring: Remote employees need to access critical customer data from time to time to live up to customer expectation. But, in the process employee accounts are exposed to security threats. However, investing in infrastructure assets like authentication tool and VPNs seem to be a viable option. Moreover, VPNs naturally obscure secured collaboration, thus collapsing hacker efforts. The Road Ahead: Enhanced Customer Experience with digital-first model No doubt, a complete remote orientation seems pretty much a challenge for the banks. But, for the customers, a digital banking ecosystem is surely going to give a hyper-enhanced and personalised experience. Attributes like the ease of accessibility, multiple banking and financial functionalities under one umbrella, enhanced transparency, and insightful data are most likely to redefine the customer experience. In fact, the total transaction value in Digital Payments is projected to US$69,168m in 2020. The Takeaway: Adapting to the New Normal “No doubt, securing a balance between risk and productivity is somewhat critical, especially at a time when many bank staff are working from home. However, remote functioning demands a robust and reliable solution”, says Abhishek Rungta, the CEO of Indus Net Technologies. At INT, we create automated platforms to help banks run the day to day operations seamlessly, which further aids in decision making and disbursing financing without shifting their core IT infrastructure. Do check out our study on “Remote Work”