As we emerge from lockdown and prepare for economic recovery, the banking sector must prepare to lead from the front by meeting customer demand for innovative on-demand services.
Written by: Gaurav Agarwal
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The global events of 2020 have resulted in significant challenges for the Indian banking sector. Retail banking across the vast and varied geography of this country has always had a large B2C component with a heavy focus on face to face interaction. And while digital payments are picking up steam, India is still largely a cash economy. With the announcement of a nationwide lockdown, the banking sector was faced with an unprecedented challenge—to continue with vital retail banking tasks without compromising the health and safety of their employees or customers. And for the most part, the Indian banking sector rose to the challenge. But is that enough? And what can they do to be better prepared for future disruptions?
There exists a wide range of digital maturity within the sector. For example, we helped a large bank implement a robust cloud infrastructure some time back that helps them centrally manage the infrastructure across 25000+ branches. The bank even went a step further to enable its employees to work from home with a digital workspace solution long before the current situation unfolded. But while this bank was prepared to deal with the unprecedented circumstances of 2020, many others were left scrambling to implement interim emergency measures.
While some quickly digitized back-office operations and pushed net banking services, others looked for ways to minimise personal interaction across branches. As we move forward, this sector must move beyond band-aid solutions and implement a comprehensive strategy for ensuring not just seamless continuity in times of disruption but also new business and operational models. Here are the top 3 areas of focus for Indian banks in the months to come:
Increased cloud adoption:
Cloud is the foundation of digital infrastructure and can offer easy scalability and flexibility banking institutions need to expand and grow to newer regions. Of course, the cloud is not a magic pill to all challenges facing an organisation. Banks need to chart a careful cloud strategy that includes deep dive into the kind of cloud platform best suited to their needs, a comprehensive cost-benefit analysis, and plans for building a robust cloud ecosystem for future growth. Banks with established cloud strategies must work on leveraging the cloud for innovation that is so important as we try to expand banking services to previously unbanked communities spread across the length and breadth of this vast country. Now is also the perfect time to focus on identifying new business models that leverage the power of the cloud.
Security and Compliance: One of the biggest deterrents to digitalisation and cloud adoption in the banking sector is that of security and compliance. As the risk landscape evolves and cyberattacks grow increasingly complex, banks must focus on integrating security into every layer of their digital infrastructure. According to PwC, “the cybersecurity market in India is set to grow from $1.97 billion in 2019 to $3.05 billion by 2022, at a compound annual growth rate (CAGR) of 15.6 percent. The growth rate is nearly 1.5 times the global growth rate of cybersecurity expenditure.”
This projection is validated in my discussions with banks. They are cognizant of the threats to their business and are keen to intrinsically build security into their IT infrastructure and leverage emerging technologies like AI and ML for enhanced protection. Regulatory compliance is another business-critical requirement that will drive technology strategy at banks. As the RBI continues to firm up its cloud compliance regulations, banks in India will need to align their digital transformation strategies accordingly. In the months to come, they will need to comply with not just global regulations but also proposed Indian legislation such as the Personal Data Protection Bill 2019 and a comprehensive digital foundation can help them achieve this.
Business Continuity Planning: The current crisis has shown the world that it is not enough to just plan for disaster recovery. It is essential to have in place a watertight business continuity plan that will allow efficient functioning from anywhere, ensure seamless access to business applications, and maintain employee productivity. Indian banks must prepare for the unexpected with comprehensive business continuity plans that offer a mix of digital workspaces, cloud scalability, intrinsic security and enhanced network capabilities.
A Gartner report in 2019 said that the banking and securities sector was estimated to increase its investments in technology by 9.1 percent in 2020. This is encouraging especially as we embark on the next phase of financial inclusion and banking sector growth. As we emerge from lockdown and prepare for economic recovery, the banking sector must prepare to lead from the front by meeting customer demand for innovative on-demand services. And a sound technology roadmap is the only way forward.
—Gaurav Agarwal is Senior Director – Enterprise Sales, VMware India. The views expressed are personal
First Published: IST