Connected India is Vital for the BFSI Sector Growth - Rajdeep Saha, Protiviti India

By Rajdeep Saha, Managing Director, Financial Services – Technology Consulting Practice, Protiviti India

The technology trends across customer and data interactions have been disrupted by the pandemic and the new normal, and like in many other sectors we are seeing an accelerated pace in adoption of next generation technologies in the banking, financial services and insurance.

(BFSI) Space

In India, these interactions are driven by the “voice, vernacular and video” paradigm. This makes it necessary for organizations to ensure seamless and faster provision of communication services through these “3Vs”, both in urban and rural areas.

The COVID-era has seen demand from customers and service providers change in the financial services sector. Both are now looking for access and work from anywhere environment over the internet. There is a demand to embed artificial intelligence (AI) and internet of things (IoT) in processes for connected ecosystem, efficiency and speed, as also for less-touch operations. Expectation has also increased for data on the go – secured and through the 3Vs, and multi-channel unified customer experience.

The technology drivers to address these needs and newer demands have also evolved. The key trends that will impact the sector over the next 2-3 years include the following.

Technology advancement in connectivity and communication: In addition to deployment of next-generation wireless networks, in the mobile networking arena, it is the 5G standard that’s expected to disrupt mobile network and communication. Two large local mobile operators have started 5G trials, and we should see early adoption in 2022. Also, for provision of internet to rural areas, low earth orbit (LEO) satellites will also gain traction.

Software-defined networking: To address the need of establishing a variety of network connections consisting of assets in the cloud, data centres, and branch offices that function like a single, seamless system, SD-WAN will become mainstay and replace traditional hardware-based onsite networking approaches.

Increased public cloud adoption: AI and IoT led interactions and remote collaboration will lead to increased public cloud adoption. The need for efficiency, on-the go services, customer experience and business continuity in remote operations have accelerated public cloud adoption in the BFSI sector.

Focus on security: With remote working and collaboration and digital transactions, cybersecurity has become one of the main concerns for the BFSI sector during the COVID-19 outbreak. This is where Service Access Security Edge (SASE) and Zero Trust model can help to create a single cloud-native security service, coupled with other enablers.

Autonomous networks: AI and machine learning (ML) will be baked into network platforms. ML can make predictions based on network data, while AI can take intelligent action based on those predictions and thereby evolve into validation mechanisms and the beginnings of a self-operating network.

Remote operations and hyper-automation: Devices, clients, applications, IoT… it is all trending to be more distributed. Tomorrow’s networks can automatically secure and optimize workloads that are dynamically changing at an accelerating pace. Automation will get infused across endpoint management, SaaS platforms, self-service, and zero-touch provisioning.

BFSI Sector Challenges

A networked and connected India is vital for the growth of the BFSI sector and provision of digital financial services. However, there are several challenges in the adoption of the technologies that can help the sector become truly ready for the digital normal.

Availability: Accessibility in rural India is less than half compared to its urban peers. This digital divide prevents provision of digital financial services in rural India. Though the BharatNet and National Broadband Mission are accelerating the rural adoption, we still have a lot of ground to cover.

Accessibility: With smartphone penetration still low in rural parts of the country, accessibility of network, computing equipments, and new age devices is an issue. Hence, last mile connectivity for financial services dissemination still continues to impact the sector.

Usability: User convenience and experience will need to be balanced using “3Vs” in the applications for users, across rural and urban regions. For instance, vKYC for customer onboarding in rural areas could be challenging due to lack of internet connectivity and device compatibility. Similarly functionalities like “smile to pay” using facial recognition through mobile app will have to wait.

IT talent: As BFSI entities build next-generation networks, talent models will need to evolve as IT talent upskill and retrains to address the new normal. In the context of advanced connectivity, expertise for SDN and 5G is not widely available across regional and industry talent pools.

Investments: This change to next generation technology adoption for the network and connectivity platforms is an immediate and business critical need. Provision of adequate investments midst this the pandemic could be a challenge.

The  Opportunities

A ‘connected economy’ has immense potential for BFSI and as India adopts next generation network and communication technologies there will be significant opportunities in customer acquisition, product innovation and servicing. While 5G will bring in high-speed internet, it will also usher in multiple opportunities for the sector.

• Micro-products in insurance, wealth management and advisory can be rolled out with collaboration of fintech, all using mobile app.
• The ongoing growth in mobile and internet penetration will pave way for a bigger and more sophisticated digital payments market.
• The sector can also benefit by rolling out quick and efficient performance of more complex processes, minimizing waiting time for things such as ID verification for new customer onboarding and loan tracking.
• Upgrading ATMs and kiosks to 5G will deliver faster service, giving people access to more interactive and digital services.
• It will help in providing effective fraud detection and prevention tools, chatbot, and voice-bots for customer support.
• Enable provision of better security and compliance.

Similarly, SD-WAN is an imperative today for remote collaboration and operations. It provides for WAN optimization, centralized management, reporting, and application steering, thereby managing costs and enhancing communication efficiency.

The Solutions

All stakeholders – government, industry bodies, IT entities and BFSI sector will need to work cohesively to expand internet adoption and new technologies. At overall ecosystem level there is an urgent need for faster rollout of broadband services to connect every gram panchayat. Hence, there is a need to expedite the National Broadband mission rollout. A lot can be achieved through PPP for investments in network and communications, and private-state partnership is needed to expand network connectivity and broadband through fiber and other modes.

At telecom and IT sector level there is a need for faster adoption and rollout of 5G, SD-WAN, and cloud. The telecom and IT industry will have to work closely to drive broadband penetration and introduction of new technologies to grow the ecosystem. This is vital to facilitate usage and foster innovation to make India self-reliant.

Technology too has solutions in hand and there is a need to infuse AI, automation in network products and services. We have seen how AIops and CloudOps are being gradually used in remote operations to drive faster/self-remediation and efficiency. The related analytics will enhance the quality of usage and end customer experience.

Overall, the BFSI sector needs to adopt next generation network and connectivity platforms. With Industry 4.0 and the digital opportunity (with IoT, Analytics, AI etc.) never before has the potential been so transformative. There is need to define clear phased timeline-led approach in weaving in new products, services (like beyond banking for MSME segment) and agile operations, underpinned on next generation network and connectivity platform.

Networking and connectivity platforms can also have significant impact on AI and biometric-led payments. In India, UPI has simplified the entire payment’s experience and created the road-rails for innovation. Adopting biometric led payments, like “nod/smile to pay” in BFSI will be possible through in the near future through new age communication platforms.

India has experienced a significant growth in recent years, enabled by encouraging financial inclusion, government policies and initiatives. As we outline the growth narrative for the future, the network and connectivity infrastructure will need to transform and accelerate Industry 4.0. This will lay a strong foundation for financial services to roll out innovative products for the bottom of the pyramid and expedite last mile digitisation.