However, the BFSI industry has always been enthusiastic about the changes brought about by technology over the past two years, but has stepped up the process on several occasions. Playing an important role in this transformation, the cloud and other disruptive technologies have helped the industry weather the crisis. To understand the role of the cloud and other emerging technologies, Rashi Aditi Ghosh interacted with Shabeer Mohamed, Senior Director of Sales, Oracle India.
1. What are the latest trends shaping the rise of small financial banks in India?
With the enormous amount of disruption caused by the pandemic in 2021, many institutions in the BFSI space have stepped up and faced the paradigm shift brought by COVID-19. Among these, in particular the Small Finance Bank (SFB) sector in India has had to row against the winds to ensure continuity. Despite these obstacles, the SFB sector has been able to help the underserved people in society and this has been largely possible thanks to the great support from the government in terms of establishing the required regulations. The Reserve Bank of India (RBI) recently authorized programmed payment institutions as well as small credit agencies to conduct business with the government. On top of that, digital banking has shaped the industry well and ensures that the delivery of transactions is transparent for its banking customers.
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India had the second largest internet population in the world with over 749 million users in 2020, which is growing rapidly year on year. This penetration proves that users can easily access the banking space using the Internet.
The past couple of years have really transformed the industry and we’ve seen a significant trend in 2021 when digital banking has become extremely popular with people and made the customer experience seamless. Mass digitization is absolutely helping SFBs to reach a large customer base and provides an opportunity to open and operate bank accounts in remote areas of the country with just one tap of their smartphones.
Apart from this, the cloud and other emerging technologies such as AI, ML, and RPA are helping SFBs modernize delivery, improve their customer experience, in addition to lowering costs and eliminating inefficiencies. . Acceptance of these technologies will help SFBs to penetrate and serve the underprivileged segments of society.
2. What is the role of SFBs in driving the next banking revolution?
The Covid-19 pandemic has accelerated the rate of digital adoption in the banking space and this is especially true for people who were trying to maintain and secure their credit in a timely manner. 35% of users increased their use of Internet banking services during the pandemic, explains Deloitte. Banks today take a digital approach first. SFBs are one of the most important entities in ensuring the creation of deep ways for them to be more financially inclusive and to enable individuals and small businesses to obtain credit that may be essential for them.
SFBs allow users to manage their transactions and get basic account details on mobile apps. Beyond the authorization of microloans, SFBs also offer services such as opening accounts, online payments, money transfers, etc. which are really beneficial for the rural population and can still totally change the banking ecosystem in India.
Their main role is to closely navigate the financial activities of the poor and help them learn financially. This aspect will be able to create a new generation of financial specialists who will have much more to offer to society as a whole. In fact, recent RBI policy is sure to make them grow more in the coming year. Under the new policy, the RBI authorized programmed payment institutions as well as small lending agencies to conduct government activities. This means they can participate in requests for proposals (RFPs) issued by government and other large companies, primary auctions, fixed and variable rate pensions and reverse pensions, as well as participation in a facility. marginal.
3. How does SFB help India bank the unbanked?
The rural area is the most unbanked part of our country, constituting about 65% of the total population. The needs of rural people are gradually changing, but there is still some reluctance to accept financial institutions and therefore simplifying the banking experience for them is extremely vital. Today, SFBs are fully dedicated to solving these problems.
A great example is AU Small Finance Bank, where they make sure financial services are well received by small businesses and entrepreneurs using Oracle Cloud technology. They ensure that even customers who do not have financial records, established histories and credit scores are banked and can easily take advantage of any banking service.
Also read: BFSI Industry Embraces Digital Mindset to Excel: Raphael TJ, CIO, South Indian Bank
Thus, by taking advantage of modern technologies, SFBs simplify banking and make it more accessible to unbanked people.
4. How is the cloud and emerging technologies such as AI / ML transforming the BFSI space?
Modern technologies such as cloud, AI, and ML have become staple in the world today. Industries across all sectors are leveraging these technologies to empower their businesses. In fact, the BFSI industry was one of the first to adopt modern technologies.
A McKinsey report estimates that AI technologies could potentially unlock $ 1 trillion in additional value for banks each year. Meanwhile, the cloud is also a great source for optimizing costs, ensuring scalability and data security. The cloud has been a great equalizer in a way, with BFSI having access to the same modern, secure, professional-grade technologies that are available to a large enterprise. It also holds great potential to streamline all types of business processes and ensure efficiency across the landscape. We are seeing a significant increase in the number of Indian SFBs turning to the cloud to accelerate innovation, improve process efficiency, reduce operational costs and improve customer service. With the cloud, banks are now focusing on more critical tasks. The increasing adoption and implementation of these technologies will drive the overall growth of the sector, leading to a shift towards a cashless economy.
Going forward, we see an adoption of ‘phygital’ banking, as around 90% of banking transactions in India have now started to move to the non-branch channel, such as internet banking, mobile banking or banking. ATMs.
5. How are SFBs strengthening their cyber defense, while benefiting from cloud-based innovation?
As digitization and automation have invaded the banking segment, the growth of digital transactions is increasing and at the same time it creates more risk of cyber threats. This translates into a growing opportunity for providers of cybersecurity products and services. In addition to fending off cybercriminals, SFBs are also looking to use newer and more advanced security infrastructure and services using emerging technologies. The pandemic has also urged financial services organizations to accelerate their cloud migrations and digitization initiatives.
Also read: At VMware, we’ve seen customers move from ‘cloud first to smart cloud’: Gaurav Agarwal, Senior Director – Corporate and Government Sales, VMware India
We have a proven track record of securely handling the bulk of the world’s data for more than four decades. For us, safety is built into everything we do. Ultimately, we want our customers to spend less time and effort on IT management and instead focus on growing their core business. In addition, our second generation cloud infrastructure is the most secure cloud platform on the market today. We have made available two second generation cloud regions in India spread over two different seismic zones (in Mumbai and Hyderabad) to help SFBs fully meet data residency standards and improve disaster recovery.
6. Why are more and more SFBs and cooperative banks building their future on Oracle Cloud Infrastructure? What is the impact on end consumers?
Oracle has decades of experience in securely managing critical data for some of the largest banks in India and several large institutions in the BFSI space are already leveraging Oracle solutions and services in the segment. Out of the total of 12 SFBs in India, 2 of the top names, Shivalik Small Finance Bank and ESAF Small Finance Bank, are leveraging Oracle Autonomous Data Warehouse and Oracle Analytics Cloud services. For example, Shivalik expects a 25-30% reduction in total cost of ownership over the long term and nearly 10-15% efficiency improvements with Oracle. Not only that, they serve over 4.5 lakh customers in tier 2 and 3 cities and 65% of their overall customers transact through digital channels.
While ESAF Small Finance Bank operates Oracle’s Autonomous Data Warehouse and Oracle Analytics Cloud services, they created a segmented view of the database and extracted useful information. With this, the bank also aims to instill industry data that will help them gain more in-depth insight. They will also be able to better navigate customer behavior and offer relevant services.