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SOA brings in an agility in a bank

Intro: Anup Purohit, senior president and CIO, YES Bank, explains the challenges a technology head in a bank faces today and the preferences he has in terms of technology adoptionIntro: Anup Purohit, senior president and CIO, YES Bank, explains the challenges a technology head in a bank faces today and the preferences he has in terms of technology adoption

The challenge for a technology head in a banking institution is not really anything connected with technology but the complexities afforded by rural India.

Can the challenge be not posed by network inadequacy, storage systems, bandwidth?

“No,” affirms Anup Purohit, senior president and CIO, YES Bank, adding: “In fact, none of these is a real challenge for CIOs. The challenge is rural India, where there are millions of people who are unbanked and it is the difficult of banks to cater to this segment of the population with banking services and products – even the rudimentary products and services.”

He explains that as far as urban banking is concerned, there are hardly any challenges today because the technology has developed to such an extent that it can take care of whatever issues that crop up. But that is not the case with rural India. “So, how do we handle this challenge? It has to be done in a structured manner. At YES Bank, we have partnership to meet the vast requirements that go with rural banking. For example, bandwidth issue. As far as possible, we have equipped our BCs with low end nokia handset which requires low bandwidth that enables realtime transactions. Then, we have gone in for digitization in a big way ensuring that the transactions are paperless. We are working on multiple initiatives like microATM, tablet based account opening etc. So what I am emphasizing is that technology is not a problem at all – not a challenge at all. It is the question of how we strategize, how we prioritize. And the overriding factor is the ROI on whatever investments you make'” says he.

He cites the instance of the requirements of Gen Next customers. This segment, according to him, is definitely different from traditional banking clients. “They are tech-savvy; they prefer to get things done their way. But they still like to visit a bank branch, interact with the staff there and fulfil their banking needs. However, the GenY customers have a different set of values, their requirements are different. They are jetsetters and they want banking to be done on the go. So, for a technology person to be ensuring that these two segments of customers are taken care of, has to be innovative and make use of technology in the most appropriate and cost effective manner that there is overall RoI,” he maintains.

“At YES Bank, we have a legacy of servicing the rural populace in a most effective and efficient manner,” he emphasizes.

DATA CLEANSING

Today, it is norm for institutions to be using data from social media, yet it is a tough task to make this disparate data meaningful and actionable. But Purohit maintains that the cleansing of data is not a difficult operation as it is made out to be. “But remember, data is being produced as we speak – from every conversation we make in the social media to every piece of content generated from news sources. In order to produce any meaningful actionable insight from this data, it is important to know how to work with it in its unstructured form. The first step is ensuring that all your customer data is in one place, is usable and accurate. But this is easier said than done. The cleaning of the data is not a big challenge because there are tools now available, which can be programmed depending on the database available. What is challegning actually is figuring out how this cleansed data can be used. There are concepts like 360-degree view of the customer and using various analytics tools, it is possible to have a fair picture of a customer, his needs, his aspirations, his spending habits and the bank can proactively target the customers,” says he.

He also mentions that there is data available in a customer’s social profile. This data is incredibly valuable because it is declared, first-person data and thus, highly accurate. Instead of having to infer characteristics about a person based on his or her behavior, we can gain access to information that can help form a more rounded view of the individual and target him or her accordingly. “The cleansed and structured data is a critical tool for a banker in decision-making,” he adds.

NEW OR UPGRADE

One may have settled for a system that may not be efficient but there was no alternative. But, when one decides to scale up operations and want a more efficient system, what would he opt for – an altogether new and efficient system which could be costlier or an upscaled version of the earlier system, which is easy to implement?

This will depend on the context of the situation, says Purohit. “For example, I have a system, say x, which is meant for a particular purpose. In a scenario where I have expanded my business and the system x is not capable of handling the scaled up operations, I need to replace it either with an upgrade or an altogether new system. There could be instances where the developer of system x does not offer an upgraded version and in that case I will have to look out for a replacement. Alternatively, my studies of the upgraded version found that it is not meeting with my present or future requirements and in that case too I will have to have a new system. What I am saying is the utmost important factor is my business and the system I would be opting for should be optimally useful in meeting my business requirements. Having said that, the point I must always have in mind is that whatever solutions I opt for – an upgrade or a totally new one – should functionally be a long term solution,” he explains further.

SOA IS SUPREME

Banking analysts have identified mobility, high-end analytics, big data management, next-generation data processing, cloud computing and SOA as the six areas that would offer challengeto a bank CIO. How does he visualize the scenario?

“As a banking technology expert, I give the maximum importance to SOA. It brings in an agility in the organization, which is of utmost importance for a bank in today’s comeptitive environment,” says Purohit.

The second preference for him is analytics, which makes the data meaningful and actionable. The third is the hygiene factor, by which he means mobility, which is crucial today for a bank to expand its operational area. The fourth is of course big data, although at YES Bank, this is currently not a focus area. And finally cloud computing although the bank does not make use of the public cloud for any purpose but rely on its own private cloud.

“But, for me SOA is of utmost importance. In SOA, I am able to evaluate the needs of the bank and the costs of the different potential solutions and determine which of these ideas should be applied, and how they should be applied. SOA brings in enterprise agility – an ability to re-combine existing functions to meet the changing customer requirements, an ability to develop new functions rapidly and an ability to scale operations to meet different levels of demand. Using SOA I can meet these requirements through service composition, model-driven development and service virtualization,” emphasizes Purohit.

MANAGEMENT OF DATA

How will he assign time and talent in managing data, people and technology in the current setting as well as in future?

“When people and technology are in place,” says Purohit, “data management just falls in line. What I mean is right people in the right place. It is the question of evolving a method in hiring the right people for a specific job, providing adequate training and proper induction and making them understand the requirements of the job. In YES Bank, we have a very efficient skill management and updation process in place and often job rotations are effected so that business people get to know the intricacies of technology and vice versa.”

Purohit also highlights that technology has ensured that the customer’s experience with the bank is made easy, his interactions rendered simple and hitherto complicated and difficult solutions are made simpler. “This has been achieved through SOA. SOA can encourage innovation, which can result in niche solutions to corporate customers. It can also increase the bank’s ability to react to customer feedback a lot more swiftly. Besides, the flexibility will reduce the time to market, bringing in competitiveness,” says he.

INNOVATIONS

How can technology be used in creating innovations in order to support business priorities – say for example, introducing mobile banking or achieving financial inclusion goals or creating an effective customer service program?

“I can say with confidence that a lot of work has been done in YES Bank, especially in taking banking to the unbanked areas, notably in rural India,” says Purohit. “For example, technology has enabled collections using a simple phone, ensuring all the security required in money transactions. The mobile payments platform in partnership with Nokia and Obopay is a first-of-its-kind platform for mobile payments facilitating pre-paid accounts for mobile users while allowing them to make bill payments, payments to other mobile account holders, merchant payments a POS.

“Technology has also transformed the remittances scenario. Think of days when remittances had been a major pain not only for the sender but for the recipient as well. Today, technology allows remittances to be done instantaneously ensuring that the recipient can even withdraw from an ATM in a matter of minutes after the remittance has been done. Another area where there has been a major impact is treasury operations.”

KALEIDOSCOPE

Purohit says information management is a key function in the bank. There has been substantial investment in this field. The outstanding product the bank has been able to design and develop in-house is a business intelligence solution – Kaleidoscope. It uses Oracle data warehouse and QlikView for data discovery. Earlier, some 250 reports were generated manually sourcing data from various unintegrated sources. Such fragmented nature of the organizational data often led to inconsistencies. Also it was not possible to get a single view of the customers. “Now using Kaleidoscope the top management, people in finance and accounts, and human resources can make use of analytics, dashboards, decision support system and do predictions and projections,” he points out.

How is the bank coping with the ever-changing technologies in the banking domain? For example, many banks are in the process of replacing their CBS as the earlier system has outlived its utility. Similarly newer technologies like cardless cash are on the scene.

“This is a major challenge for banks,” says Purohit. The life cycle of any technology is supposed to be 18 months. However, for a bank, 18 months is too short a period to change a technology, considering the investments made, the patches implemented, the surround systems developed and the realtime nature of operations. Besides, the solutions bought at very considerable costs need to give a ROI as otherwise it will negatively impact the bottomline. You cannot change a CBS in 18 months. Or for that matter even after completing five years of operation.”

Purohit believes that BYOD is something that banks should be taking up. At present, it is still in an evaluation stage. As far as security of BYOD is concerned, he says it is a journey by itself. “There are solutions like those provided by Citrix & VMWare. But these solutions are necessarily peripheral in nature and what is required in the right mindset of the people involved.”

What would be the preferred choice for the bank – an off-the-shelf package that can be put on stream straightaway or a system that can be customized in-house?

Purohit is of the view that both have their own advantages and disadvantages. “For example, in YES Bank, there are several systems developed in-house – I will stay as much as 20% to 25% of the systems / utilities we use are in-house developed. These things would actually depend on the focus the bank would have like rural penetration, financial inclusion. In such circumstances, the bank would be well advised to have a hybrid system – part off-te-shelf and part customized. As I said earlier, our systems are mostly on path of SOA architecture and as such we have the privilege of using both the systems. Of course, ready to use systems help you jumpstart your operations as development in-house is a laborious and painful procedure. I would as I mentioned earlier, prefer a hybrid system.”

TECH LEVERAGE

Finally, can he list some of the recent initiatives of the bank that leverages highly on technology?

“I will list them in order of priority as:

  • SOA and API based banking
  • Mobility
  • CRM initiatives
  • End-user virtualization
  • MDM solutions
  • Digitization

In all these efforts, we opt for best of breed technologies and we ensure that the time to develop end-user applications is minimum. Yes, we also have outside consultants and system integrators for our various project implementations and here too we identify and select the best of breed solution providers.”

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