The finance industry worldwide has a reputation has being ahead of the curve when it comes to IT. Whether it’s new algorithms designed to take trading to new speeds, or the latest security solution designed to provide the utmost protection from criminals, finance organisations are well aware of the benefits that IT can bring to the bottom line.
The finance industry is changing globally and will have to definitely transform here in India as well. Here things are no different, but there are still challenges that finance organisations face. Some of the challenges faced by the IT departments include the following:
- Customer Experience and Payments.
Today’s customers expect an Omni-channel experience. He should be able to purchase, transact, make payments, deposit, etc. seamlessly across channels; whether it is at the counter, through internet banking , mobile platform or at the ATM. There is a huge expectation not only to offer the omni-channel platform, but also to ensure that the cross selling and upselling to be enabled at every touch point. There is also a huge need for the CRMs and various other systems for real time analytics to be working together.
The innovations in payments brought in by the mobile players will take away a major part of banks’ retail business. Also, new financing models such as crowd funding and peer to peer funding is becoming increasingly popular with corporate and establishments. Closely looking at these scenarios, we can see that software and technology with innovation is taking away from the traditional banking space. The pressure is mounting on Financial institutions, especially their IT departments to rapidly transform their current business model.
- Compliance & Risk Management.
As banking is moving into more digital, the chances of fraud and threats increases. Institutions need to upgrade their AML (Anti Money Laundering) and Fraud Management Systems to provide them with real-time insights.
The region is also has a unique compliance issue as most banks struggle with their customers’ information. In many cases there are none or very little KYC (Know your customer) information available or it is outdated. As the documents expires periodically, the banks need to collect and update the customer’s KYC information regularly. This will become more difficult as the new compliance regulations are being introduced. It is always an on-going challenge for the banks’ IT to keep their KYC information updated.
- Master Data Management
Banks use multiple systems to do their business. Typically the top banks may have between 150-200 systems used by their various functions and departments. Customer information is stored in silos and the absence of a central structured data repository providing a single 360 degree view of the customer is always another challenge to the banks and financial institutions. This will also make it difficult to carry out effective analytics as the ‘Big Data’ from various channels and social media is pumped in.
Another major concern for the finance institutions here as it is anywhere else is security. Moreover the recent vulnerability incidents have forced many banks to relook at their cyber security. Thus we are seeing that finance institutions are spending relatively more on security solutions and services than organisations in other industries. Yet, they have to do a lot to enhance their security, vigilance and to create a stronger policy with an effective approach. Most banks are yet to implement systems for real time fraud management system across channels or effective Bi/Analytics solutions.
Finance institutions are under huge pressure to stay ahead of the game, especially technologically speaking. Fintech players have already stated eating the breakfast of large institutions. Obviously, there are multiple factors, including the regulators standpoint and risk aversness which will also play a major role in the game.
