Sidhartha Dutta, an experienced banking technology professional, explains how various drivers like technology, business, customer demands, etc are impacting core banking transformation:
Manoj: What is the impact of digitalization in core banking in terms of workload, customization, etc?
Sidhartha: The core remains the core. It has to be the strongest pillar in the banking system. With each passing day, the transaction volumes are increasing. There are many new applications coming up, which needs to integrated to the core system. So, the core system has to be stronger than before. To make the banking experience system smoother for customers, many new systems would be integrated into the banking system. That is how all banks are building the best of the services to serve customers.
Does a typical core banking system come readily with API interfaces?
It should. The core banking system should be API enabled system which is not so difficult. It is a close-ended system that used to be difficult decades ago, but now the system has become really smooth and easier.
There are customers who also do micro-transactions like Rs10, Rs50, which was earlier not happening. Do they all hit the core banking system?
It does not matter If you are spending Rs5 million or making a payment of Rs50, the transaction will happen the same way and it will go to the core banking system. But there are checks and alerts for avoiding fraud, when it comes to higher-value transactions.
So how is the CBS IT team composition these days? How is it different from 10 years ago?
Yes, there are a few changes. The core banking system never sleeps. It has to be up and running 24×7, for which the IT team has to be on its toes. There are a lot of transactions that happen daily and so a lot of automation is being applied. The people managing this system are not only developers, but also those who understand the business of banking, payments, etc. Also, as discussed before, the systems are opening up. These days Core Banking systems are adopting Open Banking concepts, where in they connect to newer applications, facilities, etc. All these are widening the services to end consumers.
A progressive bank exposes you to many trainings, and some are mandatory trainings. The scope of training has also widened to topics like Cloud Computing, Regulatory and Compliance. When you talk to different vendors and stakeholders, you learn a lot of things. Learning should always be there, as that opens various doors.
What pace of upgrades do you see in CBS?
If I work on software applications, tomorrow I would like to have something very new everyday. New features have to be rolled out for our customers. Every day, new patches keep coming in. These developments can be because of the regulatory guidelines or instructions by the government, and also because of the changes in technology. It is more incremental in nature. It is an interesting time to be in banking technology.
Has the number of regulatory changes increased due to this pandemic?
We have a very strong and professional regulator in India, who is very proactive and responsible too. Yes, the number of regulatory changes has increased.
What is the ratio of these regulatory changes to business changes?
There are 3 kinds of changes – business, regulatory and technological. There will always be new technologies to increase the productivity of the process. For a new bank, about 30% are regulatory changes. Banks that are well established will have many lines of business. So, because they are into many things, there will be more business changes. So, for them, the ratio would be 20:80 wherein 20% is the regulatory proportion and 80% is business and technology changes. These figures are approximate, and vary bank to bank, depending upon their digital ambitions.
Does the age of the CBS make a difference – whether it is an older system or a newer one?
We are witnessing new age Core Banking products that uses much smarter technology stacks. However, an older company that has been offering CBS for a long time has the benefit of experience, and they have built-in abundant product features, which the new age companies might be able to offer in a while.
Is there is a huge demand for coders in the market for developing software?
Yes, that’s true. Covid times saw a lot of digital implementations and new projects in the last 2-3 years. So, the demand for developers has also increased. This benefits the country as a whole, as India provides most of the development work to the world.