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Security First: BFSI industry leverages technology to meet its data protection and analytics needs

May 30, 2018
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The banking, financial services and insurance (BFSI) industry has been among the first to leverage information and communications technology (ICT) solutions to digitise operations and streamline processes. Owing to the sensitive and confidential nature of consumer data, data privacy and cybersecurity have become crucial for the efficient functioning of enterprises in the industry. BFSI organisations are stepping up investments to bolster the security of their networks and plug loopholes. Going forward, several emerging technologies such as big data, internet of things (IoT), blockchain and artificial intelligence (AI) are expected to find widespread application in the industry. IT heads of leading BFSI enterprises discuss their strategies, technology trends and the level of cybersecurity readiness in the industry...(From left - Sharad Jambukar, Group Head, IT, SBI Capital Markets; Aruna Rao, Senior EVP and Group CTO, Kotak Mahindra Bank; Gururaj Rao, Chief Information Officer, Mahindra Finance; Mohit Rochlani, Director of Operations and IT, IndiaFirst Life Insurance)


What are the key IT and telecom solutions being deployed by your organisation? How has the development of a cashless ecosystem altered your IT requirements?

Sharad Jambukar

We have been using enterprise resource management and unified communication across our national and international locations.

Aruna Rao

Launched in March 2017, the digital native, downloadable 811 account, which can be opened within five minutes, is one of Kotak Mahindra Bank’s unique solutions. It also offers a paperless credit card opening facility. By leveraging biometric technology, the entire process has been made paperless and our sales productivity has increased by 60 per cent. Biometric account opening has also been extended to corporate salary accounts and for on-boarding individual current accounts. It is especially designed to facilitate digital transactions in a cashless economy.

Gururaj Rao

To enable the business of retail and small and medium enterprises (SMEs) and provide financial solutions to its rural and semi-urban customers, Mahindra Finance leverages technology effectively. We have a strong base of business systems supported by enterprise platforms, multiple channels, integration with external agencies, and systems for financial reporting and control. Some of the key systems in this portfolio are the loan origination and management systems for retail and SME lending, business intelligence, business process management, customer relationship management (CRM), service channels, e-KYC, tele-verification, etc.

In order to accommodate a cashless ecosystem, multiple changes have been made in the architecture/enterprise service bus. Payment channels have been integrated and collection systems have been enhanced. We have also spread awareness about digital channels and collection partners among our customers and our employees. A key feature of our systems is their strong offline capability, which enables us to cater to customer requirements even in the remotest part of the country.

Mohit Rochlani

From an IT perspective, the most important solution for any life insurance company is a core life insurance system, which is called the life admin system. The other core system that we use is a CRM system by Microsoft Dynamics. We have also deployed a business transaction management system developed by IBM. These are the three core critical systems we use. There is a certain type of integration among these systems to ensure that the process of service delivery is completely streamlined.

We have been a cashless company for a long time now. Since we are promoted by two banks and most of our business comes through those banks, we have very little cash coming in. Our system is integrated with that of the two banks in such a way that money gets debited directly from a customer’s account and is credited to our account. Therefore, from that perspective, we have been cashless from a very long time. We also have tie-ups with multiple other banks, payment gateways and mobile wallets to give customers more flexibility while making payments.

What are your views on the cybersecurity readiness of BFSI companies? What solutions have you deployed to ensure customer data security?

Sharad Jambukar

It is difficult to comment on the cybersecurity readiness of BFSI companies. However, at large, all companies in BFSI need to focus on cybersecurity in alignment with customer data privacy needs and statutory requirements. It has become increasingly important with the coming into effect of the General Data Protection Regulation (GDPR). More than the solutions, the culture of information security needs to be developed amongst all members of the organisation. Solutions for data security such as antivirus, antimalware and data leakage prevention have been put in place.

Aruna Rao

Cybersecurity and customer data protection are a priority, given the sustained increase in digital transactions by customers. Often, the customer experience on a digital interface and cybersecurity become competing alternatives. Ensuring extra authentication by using a second factor, for example, makes the login process longer and adds friction to the experience. This year, the focus has been on finding less intrusive solutions, which can authenticate in the background with less impact on the customer experience.

Gururaj Rao

We consider information security to be a continuous race where organisations try to keep pace with the changing rules of the game. BFSI companies need to be more mindful due to the very nature of the domain. In addition to the traditional layers of security at the network, perimeter and data centre levels, systems based on big data analytics and AI are deployed to monitor and safeguard the information of stakeholders. We are also conscious of the access to information being provided on a need-to-know basis.

Mohit Rochlani

Cybersecurity norms for insurance came around a year and a half back and every company in the sector is in the process of implementing tools related to cybersecurity. In our case, email advanced threat protection is a key part of the plan that we have charted. As per the plan, multiple tools are being implemented, which follow the cybersecurity guidelines of the Insurance Regulatory and Development Authority (IRDA).

How has the emergence of big data analytics, cloud, IoT and blockchain technology impacted the BFSI industry? Do you use/plan to deploy these technologies?

Sharad Jambukar

We are clearly focused on the rational use of technology rather than on doing it for the sake of doing something new. We are evaluating cloud and AI for some use cases.

Aruna Rao

There is an explosion of new technologies from analytics to cloud. The goal is to apply and leverage these technologies to deliver business value. One of the technologies that we have leveraged this year is natural language processing (NLP). Keya is the first AI-powered voicebot in the banking sector that has been built using NLP. Developed on a library of millions of phone banking conversations, Keya services customers in English and Hindi and facilitates query resolution in a single interaction.

Gururaj Rao

Although these technologies are in the initial stages of implementation at present, they will become mainstream in the near future. Given the digital footprints generated by retail customers, it is imperative to use big data analytics to mine and analyse data to provide meaningful business insights. Similarly, reduced time to market and scalability of cloud solutions is a huge benefit for various business initiatives. Blockchain technology is a disruptive concept and use cases are being developed for its adoption. We, at Mahindra Finance, have already developed a solution to put this into production.

Mohit Rochlani

We have implemented a few analytics tools in our company. In all other cases, it is mostly work in progress for the industry as a whole. For example, a few insurance companies including IndiaFirst have done a few proof of concepts (PCs) with blockchain to identify fraud. In the coming years, blockchain will definitely be picked up as an area of focus by the industry.

The most important thing is that the entire industry will have to come together to make blockchain successful. To this end, a forum has been provided by the regulator, insurance council and the IRDA for some PCs for blockchain. The forum has started with 13-14 insurance companies and a few PCs have already been done. The next step is to sit with the regulator and chalk out a path forward.

As far as IoT is concerned, discussions are still on regarding use cases in the life insurance industry. While general insurance has picked it up, it will take more time to ascertain whether IoT is useful from the life insurance perspective.

What are the key challenges faced while implementing new technologies?

Sharad Jambukar

Technically skilled manpower and lower shelf life of new technology solutions are the key challenges.

Aruna Rao

Each technology has its own set of challenges. For example, in NLP, a large amount of research on customer behaviour has to precede the actual technology implementation. Also, accents and local dialects have to be factored in.  However, there are also some common challenges that all new technology implementations need to resolve, such as change management for users of the new technology solution, new cybersecurity challenges specific to that technology, etc. Further, each new technology requires specialised skills that need to be developed and nurtured.

Gururaj Rao

The key challenges faced while implementing technology are:

• Last mile connectivity constraints at rural and remote locations: Connectivity plays a pivotal role in the success of technology solutions. For example, a solution like e-KYC would work only online. Some of the challenges can be tackled by building offline capabilities, but even today, online solutions are a challenge in remote locations.

• Resistance to change: It is essential to carry customers and employees along while designing changes. People adopt changes if the benefits outweigh the discomforts. This requires communication and training.

• Technology and vendor risks: Risks of interoperability, skills and support, security, etc. are inherently associated with new technologies.

Mohit Rochlani

The first challenge is choosing the right technology. We need to choose a technology that is scalable, time tested and robust. We need to ensure that any chosen technology satisfies these criteria. The second challenge is meticulously tracking and monitoring the adoption of the new technology. If its adoption is lacking in any way, then the expected benefits from that technology are lost. A lot of work has to be done to ensure that stakeholders are aware of the benefits of the technology and are actually using it.

What are the key technology trends that will shape the industry in the next few years?

Sharad Jambukar

Big data analytics-driven insights have formed the cornerstone of client experience and new value-added service opportunities to generate more revenue. However, recent social media data leakage and privacy issues may hamper the real commercial benefits. The traditional CRM approach of segment-based offers must move towards offers based on an individual customer’s tastes and preferences. With increasing regulations and compliance requirements along with pressure on reducing costs, robotic process automation (RPA) is being adopted by the BFSI industry. RPA necessarily involves full digitisation of the traditional processes and enables the company to reap the benefits of advanced technology such as AI, machine learning and NLP. Blockchain technology has shown promise in trade finance and manufacturing of special goods, but needs a robust ecosystem.

Aruna Rao

In our country, the India stack technologies provide a lot of infrastructure and facilities like biometric, QR codes, etc. For example, Aadhaar-based authentication facilitates digital account opening and India QR code provides a means for making payments through a mobile device without the need for cash or plastic money (credit cards and debit cards).  Banks and other financial institutions will develop customer solutions by building on this infrastructure.

Also, as data is the new oil, technologies that can store, analyse and predict from the data will shape customer interactions in the near future. Big data platforms to store data, machine language and AI will be used to customise design offers and solutions for individual customers.

Gururaj Rao

The key technology trends that would affect financial services are AI (including NLP, image recognition, machine learning, etc.), cybersecurity and big data analytics. The advancement in risks and security would also be significant. We would also see the widespread implementation of encryption, biometric and multi-factor authentication, and use of chatbots and digital assistants for customer service. These would significantly impact the way we behave and interact with each other.

Mohit Rochlani

The first trend that will have a major impact on the industry is blockchain. Second, I feel a lot more can be done on the mobile platforms that are already in use. Third, I think a lot of AI will come into the picture, be it for process efficiency or improving user experience.

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