How digital transformation has become important in BFSI sector

The existence of an app to manage just about any financial operation today has led to an explosion of data. To cope with a rapid growth in information Banking, Financial Services and Insurance (BFSI) companies have been compelled to embrace a data-centric philosophy as part of their digital transformation journey.

However, while embarking on this journey, companies should have a clear understanding of what they are trying to achieve or solve. This is what Bhavesh Lakhani, Senior Vice President and Head-IT, SBI Mutual Funds told Prakash Mallya, Vice President and Managing Director, Sales & Marketing Group of Intel India at the Intel Data-Centric Innovation Summit recently.

Though SBI started its digital transformation journey three years ago intending to become the most preferred mutual fund company in India and overseas, physical forms continue to contribute over 80 percent of its revenues. However, digitisation has helped it significantly when it comes to solving distribution challenges.

"We have APIs available. So, if someone wants to start a distribution business in their community, we offer the platform freely," Lakhani said.

He added that the key to ensuring successful digitisation within the organisation was to adopt digital practises in-house, in addition to rolling it out to consumers. For instance, it moved from paper-based approvals to document management systems and even shifted its HR platform to the cloud.

“We were also the first mutual fund company to adopt Microsoft’s Office 365 and worked with Google and Alexa where customers could talk to these platforms for their basic queries. Soon, they were bypassing the call center and were instead accessing these virtual assistants to get basic information related to KYC and documentation,” Lakhani claimed.

This has prompted the country’s third-largest mutual fund company to continue deploying purpose-driven solutions that are likely to have a positive impact on topline and bottom-line while adhering to regulatory norms.

BUSINESS DRIVES DIGITAL OUTCOME

Interestingly, in India, when opting for data-driven digital business models, most organisations first consider the project cost, while its benefits are often an afterthought. This becomes more prominent in a highly regulated domain like BFSI.

Mallya pointed out that though many BFSI companies have adopted digital strategies, only 2 percent of the humongous and continual data coming through various funnels are analyzed.

How can these companies leverage digital transformation to deal with this challenge?

Bhavesh explained that technology has evolved when it comes to computing and storage and has become cheaper and easier to manage. However, a lot of improvement needs to be done for network and connectivity."Once 5G is here, the value of the data generated in real-time will be immense," he added.

At the same time, one should be prepared for the eventuality of infrastructure failure. That is where Artificial intelligence(AI) and Machine learning (ML)-based monitoring tools can help in spotting fissures in the network.

Systems that can predict and detect these anomalies are becoming more critical for business operations that need to be up 24x7, which is where BFSI companies should focus their tech investments.

ANALYSIS PARALYSIS

Procuring data has become easier and cheaper but harvesting massive amounts of information is quite challenging. This is compounded by issues like data ambiguity, which include incorrect, incomplete or inaccurate information. So, companies must evaluate the time spent on data gathering to fully understand its utility as per their business objectives.

"There is a clichéd term called ‘analysis paralysis’ and what are you going to do with that much data. It is important to first map out the key data points that you want to analyze and what challenges it will solve," Lakhani advised.

One also needs to remember that all data sources have a lifespan and fidelity associated with it. So, it needs to be refreshed as per the business requirements to ensure that the right information is gathered, filtered and available for use.