Technology to Significantly Transform the Digital Native Experiences of Financial Services Consumers

Technology has played a crucial role in enhancing operational efficiency and transforming products offered in the BFSI industry. With rapid digital adoption amongst the masses, industry players are now focusing on adding the ‘wow’ factor to the digital experience. Mr. Jaideep Dhok, SVP & General Manager – Banking, Financial Services & Insurance at Persistent Systems, shares his thoughts on how BFSI space is leveraging technologies like Metaverse to bring in the digital first or digital native experiences for their consumers.

  1. How do you think the future of banking looks like, especially with the advent of things like Metaverse? Do you think this will transform digital CX drastically?

Metaverse is definitely a technology to watch out for in the financial services industry. Whilst there is a good amount of focus already being employed in digitization of financial services consumer experiences and operations, Metaverse can add value by personalizing those interactions further. For instance, you (meaning your avatar) walk into your bank branch (virtual avatar of it) and meet a familiar person across the counter in his/her digital avatar and converse as you would do in real life for banking transactions. Even bank employees from various functions can interact with each other in Metaverse and the whole experience would be very different and digitally native. Customer service, especially for senior citizens who prefer face-to-face interaction but can’t visit the branch can benefit from this experience. Traditionally, in-person interactions are totally different than digital experience over the likes of web or mobile channel. The Metaverse brings a great fusion of the two.

It certainly sounds exciting, but there a few challenges. Customer will need a VR headset to opt for Metaverse related services. Adoption is another challenge as it is uncomfortable to use a VR headset for a longer time. Additionally, security issues can be a roadblock in terms of safely divulging information through the avatar and where does that information go and reside. Most importantly, one will need a very fresh perspective and start from scratch to think of customer experience in Metaverse and work backwards from there. In the hindsight, virtual avatars or robots at reception have low acceptance overall till date. In short, this technology is at a nascent stage, and we need to wait and watch on how it progresses.

Having said that, there are avenues to improve the digital experiences for the end consumers across the spectrum in financial services. Although there is an element of “Digital” in a lot of common interactions, especially in the retail consumer space of banking and insurance, we will see a lot more adoption of “digital first” or even “digital only” going forward. Replicating the same in the corporate banking space is still a long way to go.

  1. Which technologies are transforming the BFSI space right now and what trends do you foresee going forward?

One of major thrust areas we see is around cloud. Banks were one of the late adopters in terms of moving to cloud, natively. However, we are seeing rapid pickup from the industry. There are issues of data residency at a country level, but the regulators in general are getting increasingly supportive of that, provided the data resides in the respective countries. Cloud will allow the financial services organizations to cut cost and scale rapidly. However, the key lies in the smart adoption and implementation of cloud and really leverage the native capabilities. A mere lift and shift will only compound the problem in future.

Automation is another area that has now really penetrated the lengths and breadths of BFSI organizations, and we see this trend continue. Automation tools (BPM, OCR, RPA, Rule Engine) are being implemented end to end, right from customer journeys to back-office journeys and hybrids.

Data has always been the epicenter of BFSI. With advent of AI/ML, it has now got a new dimension.

  1. How is data and analytics shaping the future of banking?

Traditionally, financial services analytics included the areas of customer segmentation, credit risk management, fraud detection, etc. apart from usual reporting. All these areas now have additional power of Artificial Intelligence (AI) and Machine Learning (ML).  First one viz. customer segmentation is becoming an art. Most banks offered similar products in the brick-and-mortar world, same will mostly be the case for the coming years in the digital world. What can differentiate banks from one another is how precisely they can segment their customers and as a result, offer targeted products and services. Of course, to do this, you need a very nimble core and a strong foundation of Application Programming Interface (API) first approach that allows a faster go-to-market strategy.  Predicting “Next Best Action” is an emerging trend and we need to see its success rate improving drastically. In the areas of fraud detection and credit risk (more specifically guessing probability of default), we are hoping that the ‘prediction’ part works to a great extent. Data has been touted as the game changer in this. Although, on a practical level, the story is not yet very encouraging. Further improvements in the AI and ML models will hopefully change that.

  1. What kind of demand and changes are you seeing in the payments space? What kind of technologies are transforming it?

Payment is one the most dynamic areas in financial services across the board. Digital payments became a necessity for anybody and everybody due to the COVID-19 pandemic. India is a good example of that. With the help of a great payment infrastructure ready, digital transactions leapfrogged to unprecedented levels very quickly in India. In the coming years, payments happening in real-time will be the norm, whereas batch processing will take a significant backseat. Data, cloud, and APIs will continue to dominate this transformation going forward.

Crypto is another hot area in this space. Technology is the main driver for it, but there has been some volatility from business model perspective. One will love it or hate it, but won’t be able to ignore it as it continues to evolve.

Leave a Response