Amit Dua has stocked up a wealth of experience in the financial services industry. He’s been at the core of the market for 25 years, working on a myriad of projects, and has a proven track record of opening new markets and growing existing ones. We spoke to the recently-appointed executive vice president of SunTec on his views on digital banking, changing customer experience and India’s demonetisation struggles.
How did you start in the industry?
I worked at Infosys for 18 years, but I was never a part of the outsourcing business, I was part of the banking products area of the business. After many years in the industry, the last couple of years became extremely interesting, and also a little challenging. This was because we were realising quickly that banks were finding replacing their core systems extremely expensive and risky. In the last couple of years banks took the whole API vision of the landscape, and said that their core systems, even the new generation core systems, are not suited for customer experience management.
This is because customer experience management is a sort of layer in the landscape of the bank which needs to be far more agile and nimble. Customer expectations today are high - people are used to dealing with the Google’s and Amazon’s of the world. They’re used to Netflix; where you watch half a movie on your iPad, and when you get onto your TV or iPhone you can pick up where you left off. It’s wonderful when it comes to omnichannel. But that doesn’t happen in a bank. How many times have you done a transaction online, and then gone to their call centre, where you have to go through the whole story again?
Changing customer experiences is crucial, and we found that fewer banks were changing their core systems; more of them were extracting functionality out of their core using API’s and leaving the customer interaction lower or building it up separately. You can’t expect the back office engine to right that.
Around two years ago I started observing as part of the core banking business that banks want to fix their back office and talk more about innovation, customer experience and user journeys, and that’s what caught my fancy. I jumped ship after a long time and it’s essentially in line with what’s happening in the industry.
With all the innovation going on, will the high street bank branches live forever?
I think everybody is aware that digitalisation is happening quickly and that the core banks won’t need as many branches as they have. To me it’s all about collaboration. There’s a value that banks offer where they’re a brand and have the trusted customer relationship.
Most people when asked the question: “Where do you think your money is the safest?”, they will reply “in banks”. I went to talk to three banks in Paris, and one gentlemen said “Yes, Facebook and Apple may have more customers eventually, but I ask my customers a simple question: 'If I ask you to upload your driving licence to Facebook as an authentication mechanism, would you do it? And would you do it if a bank asks you to upload your driving licence?' The answer there is simple.”
At the end of the day, despite the trust erosion that happened in 2008, I think banks have an equal if not a better chance to be the customer relationship owner in the ecosystem based marketplace. The trick is to collaborate with these agile players. To me, the most useful or disruptive technology is AI. It’s brilliant and makes life so easy.
What do you make of India's cash crisis?
In general my sense is that is the cashless society will really flush out the black money out of the economy and bring it back into the legitimate economy, so it’s a good thing. I was in India four weeks ago, and when we were there it was the 59th day since the announcement of demonetization. That morning, the finance ministry had called all the CEO’s of the private sector banks into a conference call to say that overnight you guys have to start capturing the denomination of big currency notes that are being deposited in your branches. Not just the value but the denomination, whatever the note was. For a bank whose core system doesn’t allow this to happen, this is a two month job, and they wanted it done the next morning.
On that 59th day, a business ended up telling us that they received 77 circulars from the central bank of India in 59 days on what to do. The Indian consumer is so innovative when it comes to holding cash, that the game that’s being played out is: today the central bank is coming out with a regulation, and by tomorrow there’s a loop hole, by the day after there’s another regulation to plug it, and so forth.
When I met a CIO of a big bank in India, he talked me through behind the scenes and perspective of what happens. Imagine if you’re a very respected bank in the subcontinent, have over 2,000 branches, and you think you’ve got data analytics and BI completely sorted out. You know precisely who are the high net worth individuals and the other ones which are more or less dormant accounts. And all of a sudden, demonetisation is announced, and the accounts which were dormant, where you were essentially making losses, gets deposits of half a million or a million dollar equivalent of Rupees overnight. The whole claim to analytics and BI goes upside down over night.
Those who were keeping cash turned into the highest network individual accounts within a month since the demonetisation announcement. The first challenge here is to create stickiness with these people because nothing guarantees that by tomorrow morning they can take all of that cash out the account and deposit it into another bank. People are essentially trying to beat the system. Yes it’s a mess, but the good thing is that the efficiency will start building up as the national payment interface being built.
Innovation in India is huge. People now have apps on their mobile phones, where they pay and get paid through the app. They’ve taken the whole pain of KYC out of the system by allowing the Aadhaar (which is the financial social security number for 1.3bn people) which is all linked to the fingerprint of the individuals. It’s the largest database in the world now. 900 million of the 1.3bn Indians were issued an Aadhaar card, with fingerprint tagging, so if they want to open up a bank account all they need is their Aadhaar card and fingerprint, and it opens the account instantly. The innovation happening there is mind boggling. For some workers the Aadhaar cards can be linked to their iris. The innovation happening in India is more than anywhere else in the world at the moment.
In terms of the financially excluded, over a period of time, this will boost GDP, with more financial inclusion coming in to the legitimate system. It’s a short term pain for a long term gain.
It's not how much data you have on your customers, it's about how you use it. Do you agree?
Yes. Most organisations have data but it’s down to how they use it. In our case, we sit above the core banking and back office systems to help build the customer experience orchestration, which happens because our system becomes a single proof for all the data. I pull out data from the back office systems, and essentially use analytics on top of it to make the best offer to the customer. Today, yes data is important, but unless you get it to a single source or a single truth view, it only has so much value.The value of data and the way we view it is core to our business.
Referring back to India’s cash crisis, it’s not dependent on how much data you have but how you use it. Overnight all the banks in India got so much new information, but it was troubling to find out who in truth is most valuable customer. So they’ve been trying to map the data to the right people and work out what deals they can get for the customer.
What are your predictions for 2017?
I believe distributed ledger will gain mass adoption. It will no longer be an option that people wonder about. I think it’s natural that if you can cut down contracts exchange time for international transfers from a number of days to seconds and fund transfer down to cost to zero, it’s a no brainer that distributed ledger will see mass adoption.
Artificial Intelligence (AI) will also seep increasingly into it. The AI technology in things like the driverless cars will start to build up this year. There are driverless trucks that are evolving, and the largest employer in America is the 2.8 million truck drivers on the road. Everybody says that surely their jobs are at threat.
Also now, from wherever I am in the world, I can switch on and off my boiler and heating system. If I’m driving to my home, I just switch on my heating on the app. There’s also an app that acts as a bell and notifies you if someone's at the door. The app will open up automatically and show who's at the door, and you can talk from the app and make them believe you're inside the house. Sure we have alarms systems, but then to practically open the door sitting on the couch whilst talking to the individual is something else.
As well as AI, IOT will seep into our daily life and will be big. Only up until last year we were talking about your refrigerator being able to order for you, or restock what you have, or be able to order it from your car from just speaking to your phone. It's now becoming a reality.
IOT and smart fitting is a massive avalanche that is coming through. In that world from a personal trend point, when you start filling your refrigerator from your car, all of this eventually has to get into the pricing and billing system. Somebody has to settle that exchange of value, and that’s why we are working very closesly on a few smart city and smart meter concepts, particularly in China.