Digital transformation is revolutionizing every industry and the banking sector is no exception to this rule. While technologies such as cloud, machine learning and artificial intelligence had been around for several years, in recent years, there has been an increased focus for bankers to engage with customers at every interaction, from marketing and customer acquisition through on-boarding, product setup, and payments. As a result banking CIOs are increasingly leveraging these technologies to offer a more holistic view of customer financial health and in turn improve their bottomline. In an exclusive interaction with CXOToday, Madhusudan Shekar, Principal Evangelist at Amazon Internet Services Private Limited discusses the role of some of these technologies that are shaping the BFSI, challenges faced by CIOs in this domain and in what ways are companies such as AWS are powering digital banks of the future.
CXOToday: What kind of tech shifts have you noticed in the BSFI sector over the last 2-3 years and how do you see the space shaping up in the near future?
Madhusudan Shekar: Companies from all sectors need to keep transforming their business, and the experience they are delivering to their customers, to remain competitive and it’s no different with the financial services sector.
We are in a consumer-led era, with well-informed, discerning customers expecting greater value from their financial services provider. At the same time, the need for improved security, and compliance with new regulations can increase the costs of offering innovative products and services to consumers. Over the last few years, financial institutions have focused on retiring technical debt, and building on innovation around the cloud and mobility to deliver a new class of products and services. For example, our customer Bajaj Finserv created a portfolio of over 30 products, servicing customers in over 800 towns and cities in India. Today, they can approve a loan in under a minute on their flagship products – all made possible through the power of AWS Cloud.
Additionally, the current environment has resulted in financial services companies of all sizes being laser-focused on the opportunity data is creating. However, leveraging data effectively requires resources that many organizations cannot afford or accommodate – the speed, capacity, and tools to properly collect, store, and analyze data.
Historically, this has meant organizations are missing out on the opportunities to capitalize on data-led decisions for trading, risk management, fraud surveillance and even merger and acquisitions. Big data capabilities make decision making a science, rather than a guessing game, which has the potential to affect the front and back-office functions that position financial services organizations for long-term growth.
HDFC Life for example has leveraged Amazon Web Services (AWS) Cloud to create a new data platform, Atom, to analyze customer expectations and to engage meaningfully with customers on online platforms.
The objective is to simplify the entire customer journey across multiple touch points – right from understanding a life insurance product to purchasing it. By creating the data platform on AWS Cloud, they were able to facilitate an agile and a responsive solution that delivers a frictionless on-boarding experience to their customers.
Now, we see the adoption of cloud growing as more product and services are delivered over mobile phones and smart devices like Amazon Echo. This will create unprecedented access to a massive amounts of data, which will need to be processed using AI and ML algorithms to unlock its potential and deliver new services to customers.
AWS is helping our customers use newer technologies like our artificial intelligence tools – Amazon Lex, Amazon Polly, and Amazon Rekognition – and our Amazon Machine Learning tools and deep learning frameworks to transform legacy systems and introduce further efficiencies and improved performance across the financial services industry. Over the next year and beyond we will continue to work closely with our customers to identify and provide the services, counsel, and expertise that they find most valuable and impactful.
CXOToday: How are banks and other financial entities using emerging technologies such as cloud and AI in their organizations?
Madhusudan Shekar: Cloud has become the new normal as companies of every size are now building and deploying new native cloud applications and looking to migrate as many of their existing applications, as quickly as possible. Currently for enterprises, the question isn’t “if” anymore; it’s really just “how fast can we move?” Specifically for financial institutions, the cloud, AI and Machine Learning technologies help them in several areas, such as compliance, surveillance and fraud detection, document processing, pricing and product recommendations, trading, and customer experience. Products such as Amazon Lex and Amazon Polly can be used to create informational or application bots that provide conversational interfaces through natural language understanding and text to speech conversion. Amazon Rekognition meanwhile allows the opportunity for financial institutions to harness unstructured data and deploy it in use cases such as automated account opening, biometric authentication, financial information extraction, and form auto population. These are just some possibilities – there are so many others.
The compute power and data availability makes it possible to solve problems so innovatively. At Amazon, we have been building AI and ML capability for over 20 years. We are involved in the heavy lifting required to create models, tune the models, scale the inference, test competing algorithms, and move data more easily into applications. Our vision is to ensure the power of machine learning is accessible to every developer, every company irrespective of size, at the same cost structure and scalability.
CXOToday: What are the key challenges that banking CIOs of 2018 are facing and how can they overcome these challenges?
Madhusudan Shekar: CIOs are now responsible for building and managing technology that addresses the needs of both customers and employees. This creates new points of vulnerability and therefore requires implementation of new security tools and practices. At AWS, security is always our top priority, and we provide tools to help companies monitor and action on the threats and vulnerabilities. In addition to the extensive ISV and SaaS security offerings available on AWS Marketplace, we offer enabled audit logs, DDoS protections, configuration monitoring, fine grained role based access controls, free of cost in our services. Overall, we follow a customer-centric and proactive approach in protecting our customers’ security and privacy.
Additionally, regulatory compliance is expanding. There are more controls that need to be put in place while simultaneously innovating at a rapid pace. We believe, some of the specific AI and ML challenges that have been preventing the industry from moving quickly to adopt these technologies more widely are a lack of expertise and talent in AI/ML and lack of cost-effective, easy-to-use and scalable services. Finally, deploying and operating models in production is time-consuming and expensive. That’s where we’ve focused our attention. AWS AI and ML services are designed to be scalable, continuously optimized, and do not require extensive AI/ML expertise.
Hiring and retaining top class talent is another crucial aspect to be addressed. To innovate rapidly, you need to hire technology builders who will use the tools at their disposal to build, with the richness and layering that they require. Finally, there is the consideration of finding the budget to execute the new innovative ideas. CIOs need to rapidly modernize their IT landscape and retire technical debt to release funds from technologies that drain budgets in name of maintenance.
CXOToday: How is AWS helping CIOs in their digital transformation processes?
Madhusudan Shekar: Digital transformation is fundamentally the reinvention of core offerings and processes, or the invention of new ones based on digital technologies. At AWS, we share learnings from Amazon’s best practices – the DNA of a digital business – with our customers. In doing so, we have enabled McDonald’s, Nike, and CapitalOne to change the experience and nature of relationship with their customers. In the case of FINRA and Telenor, we have improved internal processes; and with Phillips, GE, and BMW, we have helped them develop completely new value propositions.
We offer a digital innovation framework upon which customers can develop their vision for a digital business DNA which encompasses their business model, organizational structure, and most importantly, culture. Then, using our working backwards process, customers can iterate and share their digital offerings. To support this rapid iteration, we provide customers with architectural blue prints – best practices on building cloud native architectures. AWS Solution Architects, Professional Services and Customer Support teams enable the customer through this journey. We also offer our best practices and methods on creating multi-disciplinary teams that works collaboratively with the business in an agile fashion.
CXOToday: What would be your tips to the CIOs and tech leaders in the BFSI segment to thrive?
Madhusudan Shekar: To thrive in a digital ecosystem, CIOs need to focus ways to remove barriers to ideation, and innovation, and to be in a position to respond to the business in real time. Technology helps organizations build significant differentiation, so it’s very important to rapidly develop capability and maturity around analytics and machine learning.
Many CIOs today spend a substantial amount of their time and budget on governance, and sustaining legacy systems. It’s time to retire this technology debt, which releases funds, and creates time for innovation. Finally, I would say – identify a key partner in your digital transformation journey and set joint goals of success. Provide room for experimentation and iteration, and govern this jointly with them. Importantly, hire and retain the best technology talent – they are the ones building for you!