Vol. 20 No. 2 June 2021 `75 Pages 68

Health insurance pg 6 Digital Transformation pg 8 India Infoline pg 19 Mandeshi Mahila Bank pg 24 www.bankingfrontiers.com www.bankingfrontiers.live

The Risk Sentinels Presents NBFC’s

ANNOUNCING DNA Distinguished NBFC Awards 2021

Call for Nomination

Last date for nomination: July 16, 2021

Please contact for more information: Ashish Verma : 98332 36943 [email protected] Ravi Lalwani : 77382 97946 [email protected] Stalin Saldhana : 91677 94513 [email protected]

DNA 2021 - Jury Members

Harnath Babu Rishi Gupta Rajeev Yadav Mahesh Thakkar Vishakha R M Sumit Rai CIO, MD & CEO, MD & CEO, Director General, MD & CEO, MD & CEO, KPMG Fino Payments Bank Fincare Small Finance Finance Industry IndiaFirst Life Insurance Edelweiss Tokio Life Bank Development Council Insurance Editor’s Blog N. Mohan Mobile : 9322895820 Email : [email protected]

June 2021 - Vol. 20 No. 2 Group Publisher : Babu Nair Neobanks a boon for customers Group Editor : Manoj Agrawal here is lot of buzz these days about neobanks. Banking industry Editor : N. Mohan analysts say they may if not one day replace traditional banks, Tbecome what Amazon is to the supermarkets. They have proved that Editorial technology can indeed make big difference and bring in convenience factor, Mehul Dani, Ravi Lalwani, V. Raghuraman especially for the customer. One of their offerings is that customers will Research Editors have complete control of their V. Babu, Ratnakar Deole, finances using apps. This is not W.A. Wijewardena, Sanchit Gogia, K.C. Shashidhar, Dr L.S. Subramanian, just a sop for the customers Ajay Kumar but a means for the neobanks to lower their overheads and Advisor-Alliances Ateeq Siddique thereby allowing them to waive fees or service charges that Marketing Kailash Purohit, Dhara Thobani, traditional banks usually levy Rohit Kahar, Aditya Arya on their customers. In markets where neobanks Events & Operations Shirish Joshi, Stalin Saldhana, have firmly established Pramod Jadhav, Ashish Verma, themselves, like in the US, Wilhelm Singh, Sneha Agrawal, the customer service they offer is far superior to those given by traditional Ramesh Vishwakarma, Sushant Tulapurkar banks. And for them, digital is all-pervading. For example, their high- profile Design chat systems ensure that there is no way a resolution will not be found. In Somnath Roy Choudhury, Sudarshan Herle comparison, the apps offered by the highly technology driven banks are Published By often stuck by poor functionality and security concerns. Glocal Strategies & Services Studies have indicated that even when neobanks own less than 5% of D-312, Twin Arcade, Military Road, Marol, the retail market, they appeal up to 35% of new customers per year. Their Andheri (E), Mumbai 400059, India. market size was valued at $34.77 billion in 2020 and it is expected to expand Tel: +91-22-29250166 / 29255569 Fax: +91-22-29207563 at a CAGR of 47.7% from 2021 to 2028. It is not a wishful thinking that neobanks will, if not render traditional banks redundant, come to stay and offer competition, thereby pushing the Printed & Published by Babu Nair on latter to evolve, modernize and become customer-centric. They will also be behalf of Glocal Strategies & Services and pushed into taking up technology for what it is and not just because others Printed at Indigo Presss (India) Pvt Ltd., too are using it. Plot No. 1C/716, Off Dadoji Konddeo Cross Neobanks have facilitated the creation of a new tech course that has Road, Between Sussex and Retiwala Indl. Estate, Byculla (E), Mumbai 400027. completely changed the services, products and speed of delivery. And this makes them highly impactful, transparent, low cost and easy to access. Editor: Manoj Agrawal (Responsible for They are assuming the role of digital challengers to the traditional financial selection of news under PRB Act) services institutions, proving to be the real people-oriented institutions to the people who need them.

Banking Frontiers June 2021 3 N E W S Regulator

Project Jura to experiment on wCBDC Saudi women can operate The Bank for International Settlements’ (BIS) Innovation children’s bank accounts Hub, Swiss National Bank The Saudi Central Bank (SAMA) said it and Bank of France will will allow mothers to open bank accounts be working with a private on behalf of their children, so long as they sector consortium on an are minors. The regulator said it is keen experiment using wholesale to contribute to empowering maternal central bank digital currency clients to manage their children’s affairs. (wCBDC) for cross-border Children’s account will be in the name settlement. BIS said the of the minor but a subsidiary of the project, called Project Jura, mother’s account. Saudi Arabia was the will look into the potential top reformer and improver among 190 benefits and challenges of economies in the World Bank’s Women, wCBDC in settling cross-border payments and digital financial instruments. It Business and the Law 2021 report, getting will involve 2 wCBDCs and a French digital financial instrument on a distributed a score of 80 out of 100, compared with ledger technology platform. The private sector consortium is led by Accenture and last year’s 70.6. includes Credit Suisse, Natixis, R3, SIX Digital Exchange and UBS. The project is an expansion on central bank experimentation investigating the effectiveness of wCBDC for cross-border settlement. Several central banks are exploring the scope of launching CBDCs as a virtual form of a country’s fiat currency. Ravi Menon gets 2-year term at MAS HKMA to set up fintech group The Hong Kong Monetary Authority (HKMA) is setting up a new Fintech Cross- Agency Coordination Group to formulate supportive policies for the local fintech ecosystem. This is part of the central bank’s Fintech 2025 strategy plan. The project involves local commercial banks, blockchain-based data sharing, talent supply and the central bank’s own work in exploring the outer boundaries of digital currency creation. The regulator is proposing to start study on a possible retail e-HK$ to understand its use cases, benefits, and related risks. It is also intending to roll-out a Tech Baseline Assessment to take stock of banks’ current and planned adoption of fintech in the coming years, to identify fintech business areas or specific technology types which may be underdeveloped, and would benefit from HKMA support. Singapore President Halimah Yacob has re-appointed Ravi Menon as the Managing Malaysia regulator sets up new funding facility Director of the Monetary Authority of Bank Negara Malaysia has established a 1-billion-ringgit financing facility, called Singapore for a further period of 2 years. the High-Tech Facility - National Investment Aspirations (HTF-NIA) to support He will now have his tenure until May 2023. local high-tech and innovation-driven small and medium-sized enterprises Menon has also been reappointed to the impacted by the pandemic. Eligible companies can receive up to 1 million ringgit MAS’s board for the same length of time. as working capital and up to 5 million ringgit for capital expenditure. HTF-NIA The central bank said in a statement it has is available until 31 December 2021, or until the funding has been fully utilized appointed 2 new members and reappointed (whichever comes first). SMEs that are not eligible for the HTF-NIA can apply 5 existing members to its board. Menon has for other financing facilities from BNM, such as the SME Automation and seen his global profile rise since he took the Digitalization Facility (ADF). Under this scheme, businesses can receive up to 3 job in 2011. Under his leadership, MAS has million ringgit for the purchase of equipment and software that accelerates the adopted a multi-pronged strategy to build automation and digitalization of business operations. what is now regarded by many as one of the most vibrant fintech ecosystems in the BIS to open innovation hub in London world. The 2 new members of the board The Bank of International Settlements (BIS) has opened a London innovation hub are Lawrence Wong, Minister for Finance, in collaboration with the Bank of England. This is the fourth innovation center that as deputy chairman, and Deborah Ong, a the BIS has launched in the past 2 years, having already established innovation retired partner at PricewaterhouseCoopers. partnerships with the Hong Kong Monetary Authority, the Monetary Authority of They will have a term of 3 years. Tharman Singapore and the Swiss National Bank. It now plans to open such hubs in Toronto Shanmugaratnam, Senior Minister and with the Bank of Canada, with the European Central Bank and the Eurosystem in Coordinating Minister for Social Policies, Frankfurt and Paris, and with 4 central banks in the Nordic region. It has also entered has been re-appointed as Chairman until 31 into a memorandum of understanding with the US Federal Reserve in this regard. May 2024.

4 Banking Frontiers June 2021 Sri Lanka Covid Maneuver: Banks & Regulator Respond Dr W.A. Wijewardena, former deputy governor of the Central Bank of Sri Lanka, shares interesting insights on measures taken by Sri Lankan banks to stay afloat in the aftermath of the pandemic:

Babu Nair: How has the Sri Lankan The sharing of data between the banking sector been able to be resilient banks is bringing transparency in the in the pandemic scenario? banking sector. W.A. Wijewardena: The Sri 2. The Central Bank’s initiative to Lankan banking sector had taken the introduce blockchain technology technological path since some time. The for customer services is also being pandemic came as a shock as face-to-face implemented. transactions took a hit. The banks could 3. Cryptocurrency is being promoted by not render services in the usual way. the Central Bank. The aim is to reduce Some leading banks moved to the digital physical currency by replacing it with platforms more easily than others. Some digital currency. banks introduced banking via vehicles. This allowed the banks to give cash to How is the banking industry going to their customers. This way the customers take business to next level? did not face liquidity problem and could The new normal is setting in. The buy essential goods. banks will have to train their staff for the When it came to other banking new technologies. Most of the banks are services like account opening, the systems going for AI technology for processes. The were already in place. An automated law does not allow the banker to share the clearing house has been introduced by the W.A. Wijewardena highlights data unless they have the consent of the Sri Lanka National Payments Platform, an initiative by Central Bank customer. called LankaPay. Through LankaPay, of Sri Lanka to introduce QR [email protected] customers could log in to their respective codes for use by retail shops bank accounts and make payments to government departments. This way, with banks will have to provide for upcoming Revolutionising just a click of a button anyone could pay businesses. They will also have to seed their bills, income tax, etc. the capital for new startups and invest workplaces The central bank introduced QR codes in newer technology to ease the banking for use by retail shops. The customers system. could make payments just by scanning the QR codes. The Sri Lankan banking Have there been any changes in the system will not have any problems even non-performing assets? if the lockdown is to be extended. NPAs have gone up as customers have not been able to repay. Have the changes in banking methods affected the business of banks? Has the government given a moratorium The government of Sri Lanka on repayment of loans? is trying to stimulate the economy The Central Bank had announced by giving lower interest rates. The a moratorium of 6 months which was lending rates have been brought down further extended by 3 months. Prajit Nair Director, Sales, VMware considerably. However, the government Summary: When enterprises have is supporting the banks fully. Several The phygital system has worked so far. adopted some solution or the other taxes like VAT, nation-building tax etc What is the road ahead for the banks? to optimize productivity have been eliminated for the current Sri Lankan banks are taking many during the pandemic financial year. The negative impact of steps. The important ones are: times, how can they the reduction in interest rates has been 1. The use of APIs is coming up. Data have better systems and offset by the removal of expenses. Hence, collected through APIs will be used processes? the banks’ profits remain the same. The to develop internal banking products.

Banking Frontiers June 2021 5 Health Insurance Data drives Health & Treatment Analytics Udayan Joshi, President - Claims & Personal Lines Underwriting, Liberty General Insurance and Dr Sudha Reddy, Head - Health and Travel, Digit Insurance, speaks about issues relating to data for the health insurance sector:

Ravi Lalwani: What are the new types of analytics. The quality of claims and endorsement. data that health insurers are seeking? this data has improved These together result in Udayan Joshi: A revolution has been significantly over the last increased customer and sweeping the insurance industry for a few few years. Also, the use of partner retention. years now, to improve the management technologies like OCR is Dr Sudha Reddy: and utilization of data. Data is critical for helping insurers improve Health insurance designing new products, offering better the quality of input data companies are developing service, improving customer experience coming from various Udayan Joshi Dr. Sudha Reddy predictive analysis for and eliminating frauds. An established documents. claims, especially to gauge claim predictions new trend is wearable technology that Dr Sudha Reddy: Health insurance that can help in scaling up claims processes, enables customers to track their routine, companies either look at trends from in looking at underwriting ratios and in being calorie intake and manage their lifestyle customer data or use open-source data ready for any sudden increase in claims. choices. This data can help insurers from IIB, GIC or other authentic research These are relevant especially in such times design better products that can reward intermediaries. For instance, when we with more and more covid claims coming in. customers maintaining healthy habits. were curating India’s first covid insurance Technologies like machine learning and product, with no earlier references and What kinds of queries are coming from artificial intelligence are now widely used evolving treatments, pricing was a real customers? How are health insurers - assessing fewer complex claims and challenge. We improvised and used data handling vernacular language data? deploying chatbots to manage customer from public domains globally - like the Udayan Joshi: While customers relations better are some of the examples. John Hopkins Report, Worldometer, continue to interact with insurance Similarly, predictive models built based on research studies published by medical companies with queries about their policy richer data collated from various sources societies, hospital accounts, third-party and to highlight challenges faced during are helping in several business areas such as databases and hospital expenses reports. their policy servicing, now, in addition to renewals management, cross-selling, fraud This helped us understand the main levers the traditional call center option, the mode filtration, etc. of higher/ lower risks and develop our of this interaction has expanded to include Dr Sudha Reddy: Health insurers product accordingly. The quality of such social and digital media. There has been a look for both customer level data as well as data is generally high as they are curated recent growth in technologies that can not overall trends in the health and well-being by research bodies, health ministries or only read, translate and organize data in space across the world. For policy issuance, healthcare bodies. any language from the written text but also insurers are more and more looking at analyze and respond through automated personal details, family history, lifestyle What new functionality and analytics health text and voice communication – and all this patterns etc, to gauge the overall health insurance companies are developing for in the customer’s language. score of a person. Insurers also keep looking leveraging the data? Dr Sudha Reddy: Queries are usually on at overall health trends to understand what Udayan Joshi: The goal of any covid related claims. Customers usually want would be needed from a product level. insurance company is to build a sustainable to know about expenses that are covered, book. This can be done through precise risk whether consumables and preventive What are the sources of data for health selection, which in turn is enabled by data devices like thermometers and oximeters insurance companies? What is the quality models determining accurate customer are covered and the kind of hospitals that are of the data? profiles and pricing – and right pricing treating covid. Customers are also seen to be Udayan Joshi: With this movement helps in maximizing customer delight. enquiring about digital claims processes and from the traditional structure to the While analytics can help in mitigating seeking guidance on the same. unstructured data of today, there has been the risk of fraud and cancellation thus More and more insurers are examining an evolution in the sources of data such as benefiting the company, it can also aid use of vernacular languages to help mobile applications, providers of wearable in designing better customer and partner customers from across the country. We technologies and even web search providers. journeys. Predictive tools can churn data also have our documents in vernacular Many fintech companies specialize in to create personalized experiences and languages and our website is translated in providing data related to specific use machine learning and artificial intelligence multiple vernacular languages. cases and demographic/psychographic is used to improve turnaround time during [email protected]

6 Banking Frontiers June 2021 Paradigm Shift Key to Lending Growth - Speed & Scalability The transformation that is happening in the lending space is enormous. Rajesh Krishnia, Head of Enterprise BFSI at Nutanix India, and D. Venkatesh, Director, Lentra AI, explain the nuances:

Babu Nair: What can banks do to reduce Most of the This is going to the turnaround time for proposals? What demands are reach the gram are the business opportunities in this? in the realm of panchayat level. D. Venkatesh: eKYC has been a WFH and how This will allow game-changer. With the adoption of such the employees’ the village-level initiatives, there has been a paradigm shift work entrepreneurs in running the lending business. Lending experience to get discounts has moved from branch to online. Banks, can be made and loans due to lack of technology, are lagging smoother. without any behind in fulfilling business needs. We are Security and physical empowering them with the right tools to compliance are D. Venkatesh Rajesh Krishnia intervention. cope with the demands. built at the first level so that it becomes easier to move to How can banks aggregate the lending Credit off-take has been hit during the cloud computing from the mainframe. with the help of fintechs? pandemic. How can technology help Venkatesh: Fintechs create niche banks? What technology paradigms will create products. We are dealing with both fintechs Venkatesh: Our tools help to collate further efficiency in lending? and techfin. We try to provide solutions to data and allow the banks to decide on Venkatesh: We enable the firms with the banks using our collaborations. We further steps that will have to be taken. The tools that can aggregate the data and help have over 300 ready-to-use integrations. product’s name is ‘GoNoGo’, and we believe run the business. The platform offers So, solutions are already there for the that it helps banks to make faster decisions digital-first solutions. customers to choose from. on loan approvals. The speed at which the data is collected from various sources and RBI is proactive in reducing the NPAs. What What are the challenges while working in presented will change the way business will has been the role of technology in this? an open API environment? be run in the future. Venkatesh: Early warning systems can Rajesh: Our products are API-driven. be implemented in a 2-pronged approach. We want to remain invisible in the whole The foundation must be compliance- The first will be to review the portfolio. The process. The customers are wanting to driven, secure and must perform in real- best approach will be at the origination modernize the applications. time. What is the technical support that is point. The data collected by our tools from being given to lenders to reduce uptime? various sources give a clear picture to the What are the technologies which are yet Rajesh Krishnia: The bank’s business rule engine. It can be further to be seen in the lending space? application would work on a 3-tier enriched by other ecosystems. We have Venkatesh: Credit off-take is going architecture. Nutanix has brought in a new found that under 1% of the cases had flaws to grow. SEHMATI is a framework that platform. We have tried to converge various and needed intervention. is coming up for lending. This will allow storage and network aspects of banking. It investigation of the accounts of the person is scalable and completely configurable. Open APIs are making inroads in BFSIs. and also credit bureau for any defaults. The availability of the data to the various What is the best way to integrate different This means good customers will get tools makes it even more user-friendly. It is APIs? loans at cheaper rates of interest, and bad fully compliant with RBI regulations. Venkatesh: The traditional customers will not be able to hide. All the lending system was very rigid. Now the banks are doing away with paperwork. There are multiple applications running on government is opening the data portal for multiple clouds. How do you ensure the anyone to access the data; it is a game- What will be the world of lending look like governance of such platforms? changer. The new lending system allows post covid? Rajesh: Hybrid clouds will be adopted banks to connect to outside systems. We Venkatesh: There is going to be strong in the future. We are helping clients with are allowing the banks to choose the growth once the world reopens. The customer use cases. We are trying to move APIs which best suit their business. One lenders are going to see increases in loans. existing applications of clients to the of the revolutionary API-led frameworks There will be all types of lenders. cloud without disrupting their business. initiated by the government is OCEN. [email protected]

Banking Frontiers June 2021 7 Digital Banking Tie-ups for digitization to drive business growth Karnataka Bank has set up ‘Digital Centre of Excellence’ in its quest for focus on improvement in technology, digitization and building values:

arnataka Bank has deployed the most generation, business sourcing, cross- modern IT tools to deliver products selling and profitability? How do you view Kand services for customers’ benefit cross-selling of third-party products? with an aim to develop effective long-term Banks are increasingly becoming relationship with them. Mahabaleshwara intermediary marketplaces in the M S, MD & CEO, lists the several digital digital era, and each prospective event initiatives in this regard: in the customer journey presents a new opportunity. We already have our own Mehul Dani: What are the various tie-ups infrastructure, resources and networking, Karnataka Bank has entered into and the para-banking tie-ups and activities, perspectives of such partnering? What including bancassurance, depository are the steps taken towards digitization service, insurance, MFs, credit cards, etc, through such tie-ups? that have helped increase the reach of the Mahabaleshwara M S: We had bank and bring a vast customer segment embarked on a strategic transformation into the fold of varied financial services. journey, namely ‘KBL Vikaas’ in 2017, Our branches are supported by our complete with a vision, milestones, lead management system (LMS) and roadmap revolving around digitization analytical leads from the system facilitate and customer centricity. In the last 2 years, identifying, engagement with prospective we have tied up with fintech companies for Mahabaleshwara M S claims customers and help us offer additional digital banking products, like Fin Wizard that Karnataka Bank is banking services. This actually helps to Technologies (FISDOM) for mutual ambitiously poised to become build value to our relationships. funds platform, with IIFL Securities for the Digital Bank of Future In retail asset segment, we have demat and trading facilities for our bank tied up with various builders for pre- customers and Corpository for sourcing utility bills, credit card payments, UPI, scan approved housing projects that not only corporate leads and business. & pay, mutual funds, insurance solutions help customers in their decision making We have also tied up with companies and our aim is to bring complete banking for house purchase, but reduces the loan like Karza Service, Perfios, Jocato, NSDL, at the fingertips of our customers. processing turnaround time in the bank. Experian, Hunter, etc. to strengthen, We are witnessing digital adoption Similarly in motor insurance automate and digitize the journeys, and customer delight through customer segment, we have entered into corporate which include processes like onboarding engagements. We will continue to focus arrangements with Tata Motors and of customers, recovery automation, data end-to-end digital solutions for almost all Maruti Suzuki, wherein interested car analytics and risk assessment, lending banking activities so as to take customer buyers can avail finance from the bank automation, etc. engagement to a new high. through our ‘Xpress Digital Car Loan’ In all tie-ups, customer is in the center One more very strategic initiative and process. Our branches and loan processing as we all are moving towards ‘paperless, a milestone for us has been establishing units now have a strong retail marketing cashless, faceless’ Digital India economy. non-financial, fully owned subsidiary of the and sales force that facilitates end to end I am of the view that tie-ups with service bank, KBL Services, which is a big step for journey for customers. platforms facilitates delivery, ease of us in realigning business strategies with the Cross selling of products is undertaken access of the bank’s products to customers, objectives of improving efficiency, results as per RBI’s master directions on para whereas sales platforms are for customer and valuation in the long run for the bank. banking or financial services as issued onboarding, engagements, sales and from time to time. It is in the nature of retentions. What new initiatives the bank has corporate agency, distribution, referral Our KBL Mobile Plus App is well loaded undertaken in the last 2 years to tie-ups etc. In the para banking segment, with features that varies from payment of augment business, like for example, lead we have been offering various third-party

8 Banking Frontiers June 2021 products, which provide one stop financial to provide better customer experience by solutions to the needy customers. delivering flexibility and convenience of In life insurance we function as a the essential banking operations right at corporate agency of PNB MetLife India the customer’s doorstep. Insurance, LIC of India and Bharti Axa Life Insurance. For general insurance What steps have you taken in popularising products we have tied up with Universal and marketing of digital products and Sompo General Insurance and Bajaj what is the visible impact? Allianz General Insurance. Creating a robust digital platform and Our other arrangements with BFSIs integrating all customer touch points across include tie-ups with Way 2 Wealth all channels is what we have ambitiously set Brokers and IIFL Securities for equity into. We believe API integration is critical trading and co-branded credit card facility to business and so also our collaboration for our customers through SBI Card. We with newer and non-traditional players are have partnered with FISDOM, an online to open up their APIs in order to remain platform for sale and management of competitive and witness growth. We are mutual funds, which digitally enables our continuously engaged with the customers customers to invest and track mutual fund through social media marketing, mobile investments on KBL Mobile Plus App at marketing, email marketing etc. to their convenience. stay connected, build relationships, value The collaboration for third party and brand. products helps to improve revenue in the We also have contact center tie- up for non-core income segment and there also providing tele marketing services and also exists a positive correlation to ROA in the popularising our digi-products and solutions. longer run. In collaboration lies success. At the branch level, digital adoption Dhira - Digital Human Interactive Relationship Assistant campaigns are held to popularise and hand How has the process of onboarding of hold the customers for digital adoption. customers changed in the last 2 years in automate many manual tasks to increase As a part of indirect endorsement of terms of ease for customers? accuracy and hence, efficiency with the bank, you will find our bank’s products We have set up an inhouse ‘Digital automatic data entry. It is noteworthy that promoted in various blogging sites, Centre of Excellence (DCOE)’, in our we have already achieved the retail digital bookmarking sites and classified sites such quest for reimagining customer loan process adoption and 75% of as Quora, Tumblr, etc. Customer experience, journey and continuous focus the total/ number of retail loans reviews and recommendations are found on improvement in technology, have been sanctioned in such a here, which affirms our customer centricity. digitization and building way as on date. Also, the covid pandemic has accelerated values. For example, digital Another tech product digital adoptions and we have witnessed loan underwriting products is ‘Tab Banking’, which is this, as our alternate delivery channel such as KBL Xpress Car flexible and reliable and penetration crossed 90% this year. Such Loan, Express Home Loans, empowers our field agents channel transactions have also increased Xpress Ghar Nivesh, Xpress to initiate the on-boarding 3.5-fold and today 90% of overall banking Home Top Up, Xpress Easy process on-the-fly. They transactions are taking place through Ride, Xpress Cash Loan, can capture customer alternate delivery channels. We may say, Xpress MSME etc, have been information on their tablet that branch banking has shifted to mobile successfully launched and devices and initiate the banking. This is enabling us, as there is a implemented by our bank in e-KYC process to validate rationale to downsize 25-40% area in the the last 1 year. it and then upload this branches, to reduce expenses on rentals, We have tied up with information to the core maintenance and other recurring costs. appropriate fintech players for banking system in real-time. We feel, we are on a right path to these purposes. The application Using this solution, we can strengthen our technology and digital helps us to speed up account ensure the agile processing of culture at all levels including business, opening and approval of loan savings bank applications and managing of risk, compliance and application by real-time data opening of accounts. governance, and is ambitiously poised to extraction and ID verification. These customized banking become the digital bank of future. These new age applications applications have enabled us [email protected]

Banking Frontiers June 2021 9 Collections From bucket-based to risk-based Collection systems are increasingly getting digitized and various approaches by financial services institutions make them more and more efficient:

hen it comes to collection efficiency for MSMEs, a Wsituational, 360-degree approach is the most effective. For example, U GRO Capital, being a sector-specific lender, is focusing on leveraging knowledge and experience to understand the cash flows of the entire ecosystem in which a business operates and of the customer’s business as well at a granular level. In situations involving temporary cash flow issues, the company’s approach is to intensify the collection process. For varied situations, it utilizes other tailored solutions. According to Anuj Pandey, Chief Anuj Pandey Vinod P Operating Officer, in the collection process it is crucial to define clearly each milestone explains: “First is mind and later is the body and recognition program to manage the and ensure close monitoring of the required and the 2 must work in a synchronized way portfolio quality. Says Vishal: “Even in the actions that need to be taken when such to function effectively and efficiently.” current challenging environment where individual milestones are met or missed. He adds: “A top-down approach defines the regulator had declared various relief On its part, Fincare Small Finance Bank the basic ground rules and direction to packages like restructuring, ECLGS, etc to has built loan collection tools that not only a bottom-up approach to ensure MIMO the borrowers to come out from the difficult enhance the customer experience but also (Minimum Input and Maximum Output) and situation, collections learning has played lower the cost of operations, thus impacting the bottom-up approach gives the feedback to a key role to identify the right customer the bottom line. The bank follows a hybrid a top-down approach to fine-tune the basic segment to offer these packages to manage analytics-driven collection approach, where ground rules and direction to make it realistic the portfolio in short and long terms.” extensive benchmarking is done and these and feasible to implement. Our adoption of The appropriate collaborations are validated at the field level through pilots both the approaches has helped us to segment between varied departments are critical to at select markets. the portfolio in a sharper and realistic manner ensure high collection efficiency. Especially, “Post evaluation of the pilot results, to improve our collection efficiency as it was teams from underwriting, collections and suitable collection models are launched backed by field flavour.” risk-analytics departments must work across all markets,” says Soham Shukla, in tandem over the long term to ensure Chief Operating Officer - Rural Banking COLLABORATION WITH OTHER sustainable portfolio management. Anuj of at the bank, adding: “In a nutshell, the DEPARTMENTS U GRO Capital explains this feature: “At U combination of expertise and experience Clix Capital’s collection team is in touch GRO Capital, these departments work very has helped us fine-tune our collection with borrowers throughout the loan closely. This collaboration is particularly strategy - leading to best-in-class collection tenor - in EWS, bounce and delinquency instrumental in identifying portfolio and efficiency, despite the disruption caused by management activities. This structure collection triggers at an early stage, post data the pandemic.” feedbacks have been infused in all the key analysis. The cooperation further extends Clix Capital has adopted both efficiency decision-making processes like defining to sales and product teams, which are key and a top-down vs. bottom-up approach the souring scorecard, loss prediction elements in the feedback loop, helping and to work in tandem to improve collection of the portfolio and in refining the refining the product proposition.” efficiency. Vishal Jain, Head – Collections, organizational structure with right reward Soham states that Fincare Small Finance

10 Banking Frontiers June 2021 Bank is in the business of ‘collecting money, not giving loans.’ There is a strong alignment between business, support, and control functions for ensuring robust growth and portfolio quality, he says, adding the risk team helps highlight the operating and credit risks, the audit team ensures strong adherence to processes and support teams provide the required manpower, training, technology, back-office support to help the business teams fulfil their goals. He also shares an example where the risk team put together concentration risk analysis and loss estimation modelling that helped the business teams navigate the way Soham Shukla Vishal Jain forward in a smarter way. Speridian Intelligent Collection System repayment behaviour, are critical. Says But, more than the underlying technology, provides a holistic view of the scenario Anuj: “Both scores are used as inputs in it is the convenience and acceptability of about collections. It helps collate the results the collection strategy and process. These the end customers which is driving the from various departments such as HR, risk, scores are dynamic and vary with time and adoption of systems. finance, etc. utilizing the capability of EWS, circumstances. This process then dictates analytics, AI/ML, etc. Vinod mentions that our collection strategy, to resonate with the CUSTOMER BEHAVIOUR ANALYSIS with the impact of the pandemic, there has posed situation, to achieve the best possible Fincare Small Finance Bank recently been a drastic change in the approach where collection efficiency.” launched a collection application that digitization got a major thrust and the digital Fincare Bank conducts Portfolio Quality enables the loan office to update customer adoption has been swift to everybody’s Review (PQR) periodically by synthesizing ratings at the time of collection. By surprise. “Here comes the real benefit of internal and external data of each customer gathering this data continually, the bank collaboration,” he says, adding: “Our Beacon to understand the risk and evaluate future aims to create Early Warning Signals collection solution synthesizes the data from repayment behaviour. Basis this analysis, (EWS) for its field force and help them various channels, analyses, and provides the bank creates customer segmentation define bespoke collection strategy. valuable insights to the collection team, and applies appropriate collection Customer behaviour score holds high dashboards to the managers such that they methodologies to reduce leakages. importance in devising a collection strategy, can approach their customers proactively as Over a period, collection has also moved believes Anuj of U GRO Capital. He says well as be more informed.” from the conventional way of bucket-based this is particularly essential to gauge the He also maintains that this has treatment to risk-based treatment, hence risk associated. Customer behaviour, being provided good results to the company’s score plays an important role in defining dynamic, impacts the score as well. “It financial services customers. “The alerts, the risk in the early MOB (Month on Book). is essential to appropriately analyze the reminders, collection team dashboards, etc As the MOB increases, the borrower’s behaviour to generate the most effective provide updated information so that these internal and external behaviours gain scores, to ensure efficient collection,” says he. companies can take productive action. Also, higher influence in defining the risk score. Collection has evolved in the past the manager’s dashboards and escalations Vishal explains this: “Even recent risk few years and the borrowers’ behaviour provide help to take proactive steps and score helps to identify the improvement parameters are being used for the risk improve the results.” or deterioration in the portfolio, compared scorecard, which in turn helps to define to souring score and to take corrective the key input metrics like collection FINAL RATING/SCORE measure in new souring as well as the channel, collection intensity, engagement U GRO Capital has a distinctive scorecard- future loss prediction.” scripts and review mechanism for the based underwriting model, for which According to Vinod, while NACH and institutions to improve collection. Vishal the company has filed a patent as well. e-NACH are extremely popular, other concludes the discussion: “Collection can The model takes into consideration the channels are getting more and more be improved if we reach to the customer historical loan delinquency patterns and traction. Financial institutions are eager to at the right time through the right channel cash flow within each focused business utilize such ever-evolving facilities to reach with right communication script and all segment. In this approach, the application out to customers, he says, pointing out that can be defined with the help of customer score, generated at the sourcing stage, and previously there were limited options for behaviour analysis.” the behaviour score, reflecting the customer a customer to pay such as cash or cheque. [email protected]

Banking Frontiers June 2021 11 Small Finance Bank Roadmap to Achieve 50% Growth Shivalik Small Finance Bank will be adopting varied technologies and has engaged top-notch IT companies:

hivalik Small Finance Bank is is displayed. Customers can just pay the the first small finance bank to amount at the press of button and the policy Shave transitioned from an urban is also issued instantly. cooperative bank. It was first registered as a cooperative society in 1997 and was DIGITAL ONBOARDING: E-KYC granted a banking license by the Reserve The bank has introduced paperless account Bank of India to operate from Saharanpur opening using e-KYC for savings bank district. The bank has Suveer Kumar Gupta accounts. Says Suveer: “95% of all savings as its MD & CEO, who is an engineer accounts in our bank are opened digitally. by qualification and has experience in We have plans to enable new account computing and related activities with Tata opening via website to drive customer Consultancy Services. He joined the bank in acquisition digitally.” 1998 an he has been responsible for the all- The bank also offers business round growth of the bank, which is the first correspondent banking. In FY 2020/21, and largest multi-state urban cooperative it introduced an app for employees, bank in Uttar Pradesh. With his deep distributors, agents and BCs to onboard focus on technology, he has brought in customers digitally and enable payment automation and technology drive services services. “We are currently working on in the bank. Suveer Kumar Gupta aims to video KYC and an integration sandbox for offer online fixed deposits and third parties to partner with us,” says Suveer 1000 TOUCHPOINTS digital loans in the current FY itself With a strong technology infrastructure PAYMENTS & CLOUD and a solid customer base, developed over Technology has been a key focus area of the 23 years, the bank today has 340 customer digital transactions crossed 3.5 million. bank. Digital channels offered by the bank touch points, which includes 31 branches, There was 20% rise in mobile banking include mobile banking on both iOS and 57 ATMs and 250 banking agents spread adoption. There was a 150% yoy growth in Android, internet banking, micro-ATMs across western Uttar Pradesh, Lucknow mobile and internet banking transactions. for doorstep banking and Aadhaar-enabled and Madhya Pradesh. More than 40% of the eligible customers payments. Says Suveer: “We are live on all Suveer has ambitious plans for the already has debit cards and this segment is retail payment platforms including UPI, future: “We plan to add 40 customer transacting using micro-ATMs or handheld IMPS, NEFT and RTGS and we are a direct touchpoints in FY 2021-22. In the next devices. And 25% of the eligible customer member of the National Financial Switch. 5 years, we also aim to INCREASE the base is on mobile and internet banking.” While 80% of all transactions in the bank touch points to 1000. The aim is to expand are happening via digital channels, all our through physical and digital channels and LOAN ORIGINATION PLATFORM branches are equipped with cash recyclers, we are therefore looking at various skills The total business of the bank has grown which perform the dual role of ATMs and including branch banking, digital sales, by 10% in FY 2020-21 to `20 billion, with cash deposit machines.” information technology, information deposits at `12.45 billion and advances at Shivalik Small Finance Bank has been a security, compliance, risk management.” `8.05 billion. This is despite extraordinary pioneer in the adoption of cloud way back in situation caused by the pandemic. The 2013, even while it was a UCB. “We were the DIGITAL ADOPTION DOUBLED bank offers instant sanctioning of loans first bank in India to host the Infosys Finacle Shivalik Small Finance Bank has made on digital channels. solutions on the cloud using a hybrid cloud significant efforts in technology induction It has a unique 2-wheeler insurance architecture. The cloud-based architecture in the last 3 years to enable it to scale up plan offered through BQR code, which is provides the bank with unmatched agility rapidly. It completed a major technology offered with the support of Bajaj Allianz to cost effectively manage scale and power transformation in 2017. And the pandemic General Insurance Co. The customer its growth,” says Suveer. accelerated digital adoption by the can just scan a QR code and enter the customers. Suveer says digital adoption registration number of the vehicle. Details TECH VENDORS more than doubled and the number of get populated and the premium amount The bank has a number of established

12 Banking Frontiers June 2021 technology vendors. The CBS is Finacle from Infosys and it has a digital banking suite including internet and mobile banking. The data is hosted at CtrlS data centers which are classified as tier-4 data centers. Other technology partners include FIS Global for Payments and Switching Services, FSS for UPI payments and Bharti Airtel for networking solutions. The bank is about to go live on Oracle’s Middleware and API Gateway solutions both of which also Shivalik Bank recently launched its Rupay Debit Card utilize Oracle Cloud Services. reach into the last mile and offer financial kirana stores, millennials in need of neo- CAPEX, OPEX, TEAM SIZE services for the masses and MSMEs. “If banking services and individuals looking The IT capital expenditure of the bank as the year 2020 has taught us anything,” for gold loans. a proportion of the total income has on says Suveer, “it is that technology and In the next 12 months, the bank aims an average been 5.1% over the last 5 years, digitization is the only way to progress. to offer online fixed deposits, customized which is higher than the industry standard Our vision is to be a new age bank being savings accounts for millennials, digital of 2-3%. It touched a peak of about 16% digital first in its mindset and provide loans against fixed deposits and insurance in FY 19-20, when the bank completed a best in class banking services to the policies, loans against e-warehouse large digital transformation project. IT underserved and underbanked sections of receipts, etc. Says Suveer: “With a razor- opex represented 8.5% of all operating the population, which they may be unable sharp focus on small businesses, we plan expenses in FY 20-21. IT opex (excluding to get from other larger banks. The focus to grow our current loan book of `8.05 staff expenses) have increased by 42% yoy is on doing this through a combination of billion and deposits of `12.45 billion by on average over the last 5 years especially personalized, respectful customer service 50% over next 12 months. Backed by because the bank’s IT infrastructure is and superior technology offering for our significant investments made in building hosted on a cloud-based model. The size of target customers.” a robust digital interface to complement the bank’s IT team continues to grow and is its physical touch points, our new entity about 10% of the total workforce, ie around SECURITY ENHANCEMENT aims to grow the business by `10 billion 50 people. Shivalik Small Finance Bank has migrated and significantly expand its current base of to a new enterprise fraud risk management 450,000 customers in the next 12 months.” CUSTOMER ENGAGEMENT (EFRM) solution to monitor high risk Shivalik Small Finance Bank has been using transactions. “We have implemented TECHNOLOGY ROADMAP customer behavior analysis to offer products Dynamic Key Exchange (DKE) as a security The pandemic has certainly accelerated and solutions to existing customers and enhancement measure for payment systems. digital adoption at a much faster pace drive digital adoption. This is done via an Any investments in technology have to be than would have been organically possible. assisted digital approach whereby contact accompanied by investments into cyber and Suveer expects the trend of transacting center teams of the bank are in touch with information security initiatives and fraud through digital channels to continue and customers. The bank has been able to prevention tools,” says Suveer cross 90% from present 80% in the coming increase mobile banking adoption through years. “Almost 65% of our customer base dedicated calling to customers where HELP FROM FINTECH is using digital channels. We plan to push the teams guide the customers on how to Suveer believes in having a clear vision to this up further by another 10-15 percentage onboard on the bank’s app. create a brick and click bank. The bank points. We also plan to invest in building The bank is also present on all major has API enabled architecture, which will capabilities around digital sales, especially social media platforms including LinkedIn, allow partnerships with fintechs and other on customer on-boarding and insurance, Facebook, and Twitter. “We will continue players. It currently has partnerships in integration capabilities to partner with the investing in latest technology to keep pace place with India Gold, a fintech which external eco-system including fintechs, data with the changing nature of digital banking offers doorstep delivery of gold loans; it analytics to assist customer acquisition and with a key focus on our extended target has arrangements with Airtel Payments business process automation to ensure that customer segment,” says Suveer. Bank and Atyati Technologies for retail and customer journeys can be simplified and microfinance loans. It is actively engaged in time to service any requests are reduced. DIGITAL FIRST VISION discussions with multiple fintech partners These are an integral part of our technology With over 450,000 customers, the bank has to reach newer customer segments like roadmap,” he says. been leveraging technology to extend its entrepreneurial and underbanked women, [email protected]

Banking Frontiers June 2021 13 Digitization Initiatives Pillars of Transformation - AI & Automation City Union Bank is also building middleware platform that would help third party systems and fintechs to connect with core banking and internal legacy systems:

ity Union Bank has been a The platform is expected to help the pioneer in implementing IT bank in reducing manual processes and Cenabled solutions for the benefit time delays. Also, it will help in going of customers who could avail banking digital without paper. Says Sankaran: products and services at their convenience “In all the above cases, the vendors were anytime, anywhere. One of the most selected basis due diligence on product innovative technology products of the capability, lower cost, company profile, bank is ‘CUB All in One Mobile App’. feedback from peer banks and faster time Sankaran G., General Manager, to market as the metrics.” Computer Systems Department, describes the solution: “This is a multilingual voice AI BASED UNDERWRITING enabled interactive chat bot launched by The bank has engaged a data analytics Finance Minister Nirmala Sitharaman. partner to make use of big data The bot can converse in Tamil, English, available with the bank on transactions, Hindi and Telugu. We were the first bank demographics and financials of the to launch such a product in the Indian borrowers to deliver risk-based pricing banking industry. Customers can converse on gold loans and SME loans. This is with this bot for their general banking expected to help creditworthy borrowers needs, including transactions like balance to get credit at a lower rate / discount enquiry, mini statement, fund transfer over Sankaran G. reveals that 90% compared to ordinary borrowers. It will voice/text instructions, wealth management of City Union Bank’s accounts also identify potential NPAs and reduce services, utility payments etc.” are now opened digitally via the risk exposure of such accounts for the ‘CUB Lakshmi’ is the bank’s banking e-KYC or video KYC bank. This project is also expected to go robot. It leverages AI techniques and is live in 2 months. integrated with the core banking solution. It provides information on accounts, transformation journey to adopt open AUTOMATING CHEQUE PASSING answer generic banking queries, last 5 banking and partnerships. Sankaran Usually, cheque clearing at the 3 CTS transactions, 15G submission, cheque says it is building an enterprise-wide grids is done after verifying the customer’s book request, etc. middleware platform that would help signature and payment details. Sankaran third party systems and fintechs to says the bank is proposing to automate AI BASED LOAN PROCESSING connect with the core banking / internal the comparison process of verifying the The bank is also planning some key digital legacy systems. This would enable them signatures in the cheques and those in the initiatives during the current financial to distribute the banks products to bank’s records. “The passing of cheques year. One of them is an AI-based loan potential customers and build products is done during the night. The staff doing processing solution, which will digitally on top of it. “We expect to go live by the comparison at night are bound to accept KYC document, documents like July 2021 and will open up banking for make mistakes due to fatigue. Hence, IT returns, balance sheet, salary slips, fintechs to partner with us,” he adds. we have started procedure for procuring GST returns etc and facilitate approval a solution for system-based comparison and sanction of the loans digitally. Says SAVING FORMS, DOCUMENTS of signature, which will speed up the Sankaran: “The project is expected to go The bank is also implementing a low- clearing process,” says Sankaran. live by September 2021. It significantly code content document management and enhances user experience by reducing workflow automation platform allowing CONNECTING BANKING WITH ERP TAT as application processing is done in the bank to create, share and save forms To provide better customer service 2 working days instead of the current 5-7 and inter-office documents quickly to its corporate clients, the bank is working days.” without building them from scratch and developing an API service that will allow for digital execution. The project facilitate integration with the ERP OPEN BANKING PLATFORM is expected to go live in 2 months by system of the clients so that payables can The bank has set out on a digital August 2021. be managed more efficiently. “With this

14 Banking Frontiers June 2021 service, customers can transact with their application is a static and transaction- CARD-LESS CASH WITHDRAWAL linked accounts on their ERP platform. oriented solution. The bank proposes The bank has launched inter-operable card- Customers can also manage their cash to implement an AI based solution for less cash withdrawal enabling customers to management services with this API. The trade finance. Sankaran says that the withdraw cash in all its NCR ATMs by using project will be live soon,” says Sankaran. proposed solution will be capable of the UPI QR code. Sankaran claims the bank reading the documents submitted by is the first bank in India to launch this facility TAB BANKING, VIDEO KYC customers online and automate the and once other banks launch this facility, City Union Bank has a number of new process of generating recommendations customers of all banks can use this card-less projects with their existing vendors. of LC/guarantee opening, bill payments, withdrawal from any bank’s ATMs. It has already implemented eKYC for retiring of LCs etc. [email protected] opening of accounts with Aadhaar based identification of customers. It has also rolled out tab banking through which Fintrend Setters NEXT – New tech trends amidst the the bank’s staff meet customers at their pandemic (Technoviti 2021) places and using the eKYC process, open the accounts. The bank has also introduced video KYC process through which customer identification is done. Customers can open their accounts through the bank’s mobile banking application from their places. They can book a slot for video KYC and the staff will initiate a video call and verify KYC documents and signatures. Once this Technology is done the account is opened and the leaders, CEOs customer can do all transactions. “Nearly of payment 90% of our accounts are now opened processing firms digitally via eKYC or video KYC,” says fintechs Sankaran. Summary: While it has been a disappointing year that had passed off, fintechs see TRADE FINANCE AUTOMATION a big future tapping into an impending era of mobile payments. As of now, the bank’s trade finance

Banking Frontiers June 2021 15 Customer Management Who, When, What, How - CRM Embraces All Specialists discuss the changing role of CRM, personalized communication, power of social media channels, measures & special projects:

inance companies are focusing on Puneet Kapoor, President - Products, increasing customer engagement Alternate Channels & Customer Fand enhancing customer experience. Experience Delivery at the bank, says: Communication plays a critical role in “Our net banking home page experience terms of timing, relevance and what can be hyper customized by each customer organizations want to communicate or to according to his interests. For example, if a engage with their customers. customer uses bill payments, fund transfers and FDs the most, then he can customize PERSONALIZED COMMUNICATION the home page widgets for the most-used Canara HSBC Oriental Bank of Commerce services to get easy and quick access. Life Insurance Co has invested in a Speridian CRM, which is built on Next customer communication management Best Action (NBA) framework, uses AI for system that ensures customized and recommendations, business intelligence and interactive communication with to synthesize tactics, strategies, and business customers through varied delivery modes. insights which considers all the possible This tool is further supported by a CRM actions during a customer interaction and solution that provides a 360-degree recommends the optimal offer. view of the customer and has analytical Mohammad Omer Kundi, Practice capabilities that the company is starting to Manager - Global Banking SME at unlock to deliver experiential and targeted Sachin Dutta recommends Speridian Beacon, says: “By continuously customer experience. IVR should be flexible & highly suggesting ‘what to do next to a customer, Sachin Dutta, Chief Operating Officer customized to cater to the CRM NBA allows iterative and interactive at the insurance company, believes that needs of customers forms of dialogue that customers identify there is immense opportunity to leverage as natural thereby delivering a first-class on communication platforms already get the maximum benefit from it. This has customer-centric experience. CRM NBA available via social media. This reduces the helped the company to increase its delivery is a paradigm shift from being product- time that one normally takes to get familiar percentage and overall open rates. centric to becoming customer-centric. with new communication. “Therefore, According to Subhasis Ghosh, Senior NBA is not necessarily about knowing the our WhatsApp bot and chatbots provide Executive Vice President & Head – best product or message to serve up to a platforms for customers to converse with Marketing & Group Insurance at Kotak customer, but when to offer it and how to us as per their convenience and device and Life, every customer has his preference of communicate it.” time of choice. We made our IVR flexible consuming information - some prefer SMS and highly customized to cater to the (short content) and other email (more SOCIAL INTERACTIONS needs of customers. We will be investing detailed). Sending communication to the The levels of adoption for social media in more bots like voice bots and email customer on their preferred channel has have increased and customers are more bots to expand our servicing avenues and helped the company to minimize wastage familiar with the social media platforms continue to pursue excellence in this area,” and create a higher engagement, he says. compared to earlier times. BFSI companies says Sachin. are seeing this as a good opportunity to Kotak Mahindra Life Insurance Co SPECIALIZED SOLUTIONS stay engaged with the customers. uses Send Time Optimization (STO) to To personalize the customer experience, Sachin says: “Social media has reach out to the customers at their most Kotak Mahindra Bank has been issuing connected people digitally and has preferred time. Everyone has a different persona-based communications. For emerged as a platform where customers pattern when it comes to checking emails. example, messaging on fixed deposits is can do a lot of research, go through Over the few months, the insurer has a short-term goal-based communication blogs and make themselves aware of new identified a pattern for each customer and for millennial customers, while for market trends, etc. It is also emerging as the best time to send out a communication women customers, the same messaging a tool to exchange views. We do provide to them which will ensure that they have is customized to saving money for WhatsApp as a mode of communication if enough time to read the email as well as emergencies and ease of investment. the customer opts for such services.”

16 Banking Frontiers June 2021 media platforms. A useful tactic is to create custom ads based on customer objections. Speridian CRM offers templates that meet all quality requirements, and which can be optimized for optimal results.”

INBOUND & OUTBOUND Call centres will have to elevate communication through digital channels to thrive in the post-covid world. Scalability being the key, organizations will need to adopt solutions powered by advanced automation which not only offers data security but also provides stability to human operators. The ongoing pandemic has opened newer channels for customer interaction. Kotak Life’s newly launched digital platforms account for a Mohammad Omer Kundi whopping 67% servicing, easing out the Subhasis Ghosh reveals that pressure on its traditional channels - advocates CRM NBA to deliver namely call center and email desk. communicating in the right a first-class customer-centric Sachin expects the IVRs to become channel helped them create a experience more responsive and intelligent with higher customer engagement technologies like voice recognition-based Social media has been the place verification becoming norm. Use cases for He maintains that in outbound calls where irate customers would go when insurance are currently less but companies digital processes/ products assisted by the traditional channels of approaching are experimenting. “Also, we believe that employees get sold on calls. If the effort the company would fail. However, in IVRs are perfect use cases for voice bots or is low, customers are quite comfortable recent months, Kotak Life has noticed virtual assistants provided by all technology engaging with virtual relationship an increase in the number of customers leaders getting integrated and powering managers. Besides, long conversations are approaching the company via online to tell the IVRs in the future. We are also seeing not a deterrent if they add value, and video positive stories. increased adoption of video calls, video- is still the future. Says Subhasis: “We have noticed that based verifications including KYC which as platforms have matured, customers is helping businesses do well during covid MEASURES have become more comfortable with times. Such reliance on voice and video- Due to the pandemic, the Kotak Life interacting about private policy details based technology shall emerge even stronger team had decided to ensure that even in that environment. There are lesser in the next 12 months,” says he. though they were not able to meet requests for call-backs once the customers With inbound calls forced to seek customers face to face, they still are with notice that such avenues are working. We alternatives, consumers too have adopted them throughout. This led to focussing use a third-party application to aggregate a mobile-first approach and have turned the attention of the customer on online all these multi-channel tickets into to net banking. Kotak Mahindra Bank’s mediums for any assistance they need. one dashboard for easier and quicker customer experience center is receiving The company constantly communicated handling. This single view approach has a lesser number of calls. There has been its digital tools through its campaign helped us reduce both first response and a reduction in the number of calls to called ‘Ease hai ….hamesha’ across resolution times.” agents. Puneet provides details: “We have multiple channels - KAYA (chatbot), Puneet maintains that at Kotak witnessed a huge change in customer WhatsApp, OPM (policy manager app), Mahindra Bank, interactions with behavior. The nature of calls is no longer and easy claim’s process online. customers on social media result in the staff only for seeking simple information. Subhasis shares the details: “The getting a sense that inclusivity will matter Customers now call for resolving multiple campaign was successful in reducing calls more than ever. “To facilitate this, we are and complex queries. A total of 43% of on our toll-free number and footfall to using stories as a content format,” says he. calls and conversations are complemented the branches. We went one step ahead Concurring, Mohammad Omer says: with WhatsApp communication. This has and added this campaign as a part of our “CRM uses the objections info to improve led to a 9-11 points higher Net Promoter welcome and onboarding communication, ad campaigns on search engines and social Score (NPS) for us.” which helped educate our customers from

Banking Frontiers June 2021 17 Customer Management

the start about the various digital tools at in terms of budget and influence), giving their disposal to ensure that we stick by salespeople a more or less clear picture of our promise of ‘Hum hai….hamesha’.” the objection they might have. In relating Canara HSBC OBC Insurance Co used leads to the common objections function, a video calling facility where in addition to the CRM generates emails and messages normal inbound, customers can interact for each of the tagged objections, allowing with its agent virtually over a video the salesperson to prepare just the right session. The company comes up with content for each target audience. initiatives like video-based verifications to make the experience seamless for CRM & MARKETING the customers who prefer to interact Kotak Life has started promoter referral with them digitally. Sachin added: “We campaigns that piggyback on its Net interact via social media platforms for Promoter System framework. These are business as well as in creating awareness. directly integrated with its CRM. All such facilities have helped us, and our Kotak Mahindra Bank offers customers operate and engage with us segmented communications basis digitally. We expect the trend to continue propensity analysis. Customer and gain further momentum and shape propensity is analyzed to understand the way companies communicate and which offer will provide the most value engage with our customers.” Puneet Kapoor supports to a particular customer and he receives effective mobilization of CRM communication basis that analysis. This FOR GEN X, GEN Y, GEN Z for individual customers & is further augmented for cross-selling Canara HSBC OBC is focussing on MSMEs opportunities. working with the millennial age group Explains Puneet: “Our CRM was to drive increased uptake of insurance. effectively mobilized during the lockdown. The company understands and foresees leads, segment them and qualify them so It enables pre-qualified offers uniquely that future generations will consider salespeople can customize their outreach. tailored for individual customers and technology and baseline services as given The optimum offer rejection is handled MSMEs, thereby helping us boost new and would want the insurer to interact in CRM by Sales Objection Process; next, acquisitions as well as cross-selling of with them on how they interact with all it provides sales reps with a historical products and services. In addition, it other companies over the web. overview of all customer interactions and provides a powerful lead management According to Sachin, investments in valuable intelligence on how to approach system on a customer’s transaction technology are driven largely by keeping every objection. The CRM system has its behaviour, thereby giving a 360-degree the future in mind and hence are being ways of handling sales objections before view of a customer’s profile to our banking developed with the intent of making it they have happened, while they are relationship managers. This helps us offer fit for purpose for any generation. “We happening, and after they have happened. the right product at the right time to the understand the needs of people who Says Mohammad Omer: “Preventing right customer.” have opted for pension plans with us and sales objections is a function in our Speridian CRM omnichannel insights understand the needs of millennials who CRM system, it creates a database, and reports provide comprehensive may be interested in protection or savings including previous customer objections, information on how overall support is proposition. That is the range we operate regardless of whether the objections were performing across channels. The reports in and our solutions, therefore, need to successfully handled or not. This way, provide a rich visualization and ability to filter be flexible and brutally simple to each of agents have enough saved information across channels, queues, agents and date these generations,” he says. to deal with new objections, even if they ranges to better understand performance Kotak Mahindra Bank has been using deal with a client for the very first time. and troubleshoot problem areas. WhatsApp as a complement to voice Another important thing CRM does is Mohammad Omer says: “Some of conversations. “Last year, we were the first link leads to objections. This will help the useful KPIs include conversation bank to integrate the video KYC process in the agent customize his approach to a engaged based on channels, abandoned the account opening journey. Additionally, particular customer.” rate based on channels, transfer rate based we have also been using live chats with He shares details of other functions on channels, average wait time based on customers,” says Puneet. like automating handling of sales channels, reports based on how the agent objections. He says the CRM does not is performing on channels and sentiment CRM FUNCTIONS simply drive customers your way, but it zones by channels.” Speridian’s CRM system helps to generate examines their buying capacity (foremost [email protected]

18 Banking Frontiers June 2021 CX and Technology Innovation & Tech that boost CX Dharmender Narang, Chief Customer Experience Officer at India Infoline, speaks about CX innovations and technologies:

Babu Nair: What are the remarkable fast. This will help in reaching out to innovations that you have brought about customers in small cities. This will in turn in the last few months? What has the add to the customer base. customer response been? Dharmender Narang: We always try Is it possible to preempt customer to give superlative customer experience. needs with technology? Will process Building trust and being proactive automation help the companies? keep us ahead and progressing. Not When the backend is completely constraining to the channels gives us an automated it is easier to provide the edge over others. We noticed the growing analysis. If a customer query is not being trend of ‘do-it-yourself’. Customers want resolved by AI, it indicates a process gap. to be independent. AI and chat bots have Automating the processes and providing helped us in achieving that. Many peers consistent output will help reduce the provide chat bot facility. We have gone cost of service. Combined efforts of AI one step further by adding AI to the chat and service agents will take customer bot. This gives clients a more realistic service to a higher level. We are always answer. We proactively provide solutions interested in exploring new products in to the customers. the Fintech sector. Irrespective of the channel the Dharmender Narang believes [email protected] customer is using, he should get that technology is moving very uniform customer experiences. We have implemented a common CRM platform fast and new ideas are coming Collections across all channels of communication. up equally fast - It’s like Chess This allows companies to address the queries of the customers. This way (i) there is no disconnect entices the customer. For example, there between the channels (ii) AI is equipped may be many stock broking agents, but with a large database of questions. the well-researched agent, with whom Abhijit Ray Sreekumar M However, if the customer is not satisfied, wealth growth is possible, is the most he has the option to chat with the agent sought after. live. Many times, the customer may not The customer can connect to us know this upfront. The expertise of the Anant Deshpande Alok Chadha through multiple channels 24x7 and person is valuable. This is what gives value irrespective of the channel chosen, he to the product. We provide this expertise gets the same experience in real-time. and allow the customer to create wealth for themselves. Anil Pinapala Kunal Verma It is observed that customers don’t shy away from paying for better What are the new and innovative tools Business Leaders from Fintech customer services. Along with the that you have planned for good customer Companies product differentiator, if an experience experience? differentiator were to be made, what Voice bot is picking up. It will have to Summary: Collections function in a would be the criteria? cross the language barrier. Chat bots are BFSI organization involves making Undercutting will never result in the now giving language options. A lot of work intelligent moves to maximize returns per customer, maximize best customer experiences. The customer is happening on voice analytics. During number of customers, always looks for the value added to the real-time chat the agent can identify an minimize the number of product. There may be many companies irate customer and provide solutions calls, focus on the high- selling products with the same accordingly. Technology is moving very risk cases. technology, but the added value is what fast and new ideas are coming up equally

Banking Frontiers June 2021 19 Digital Journey Becoming a Data First Company MyMoneyMantra is building robust technology infrastructure constituting AI, Data Analytics and Machine Learning to ensure a seamless customer experience:

yMoneyMantra (MMM) is a i. APIs: Our API network is now one of finserve marketplace, helping the strongest in the country with 65 Mcustomers compare products APIs with leading financial partners across 100+ financial institutions and and credit bureaus – ensuring real time opt for the most suited one. Over the last decision-making capabilities. 5 years, it has originated more than $5 ii. Data Lake: It was commissioned pre- billion worth of financial services products covid, and is hosted on AWS and with a through its platform. It currently serves 40 million+ consumer base. about 7 million customers across 60 cities iii. Recommendation Engine: Given the with more than 100+ banking partners and volume of credit origination done 3000 employees. Raj Khosla, Founder & through the MyMoneyMantra platform, MD, traces the digital journey. our recommendation engine gets smarter with every transaction with a Mehul Dani: How has MyMoneyMantra real-time feedback loop. This ensures implemented its digital strategy in we can continue to provide the most 2020-21? favorable terms to our customers based Raj Khosla: Digital has opened up on their specific needs. new avenues for creating competitive iv. Our CRM, B2B and Analytics platform advantage and driving business growth for Raj Khosla outlines that are all cloud hosted and empower our MyMoneyMantra. We have tied digital to our business across geographies. strong delivery and distribution platform to early on in the journey, All the above tech initiatives ensured give us an edge over competitors. Recently, MyMoneyMantra decided that our sales and operations teams could our website has been revamped with new to migrate its data into a work non-stop through the pandemic. We design and functionalities keeping customer standardized Data Lake are one of the largest credit originators in transactional convenience as the main India with $870 million of credit originated objective. Our digital infrastructure has in FY 19. We have been profitable since our expanded our geographic and demographic a credit score below 650, there is no point in inception and it is clocking 25-30% CAGR. distribution multi-fold. wasting either the financial partner’s time We have always maintained that our or that of the customer. What are the usage patterns of the digital digital strategy needs to be a means to an Our marketplace aims to be malleable, footprint – mobile app and WhatsApp for end, not the end itself. Engagement with ensuring we can successfully get transactions marketing, customer serving? our customers, needs to be met on their done and create long lasting relationships We are seeing greater engagement from terms – entirely digital, on the phone or with both sides of the marketplace. our customers on digital channels – digital somewhere in between. By staying true to logins and WhatsApp. Almost every credit our north star, the business grew 2x yoy and Please tell us how new tech initiatives product originated on our platform has we are tracking to originate $2.6 billion of have contributed to increasing business some form of digital component, and our credit this year. and customer base in 2020-21 post covid? job is to ensure customers feel comfortable We are in the business of connecting There is no question that this crisis engaging with us and trusting us to get the consumers with the best financial institution has accelerated the pace of digitization best possible deal on their behalf. for their needs, at any given point (speed). in the credit origination space. We have Our website and CRM are integrated We define best as the highest probability of been working tirelessly with our financial with all our partners and a customer the loan / credit card being sanctioned with partners to digitize every part of the loan application can seamlessly flow into a bank’s the most favorable terms for the consumer. process. We were lucky to have started on CRM in a secure manner. This functionality It also means ensuring we are not wasting our digital journey pre-covid. Fruits of our is also offered down the supply chain to our our financial partners’ time. For example, labor are now present in our numbers. The partner network for reaching out to our if a certain financial partner will not tech adoption has led to exponential versus customers ever more efficiently and safely. underwrite a self-employed individual with linear growth. We employ all channels that we have

20 Banking Frontiers June 2021 developed and integrated to make the customer journey more convenient and to make financial services more accessible. SMS, WhatsApp and emails are leveraged for delivering product information, document verification and transaction confirmations.

How have you brought agents, BCs, etc into the fold of your digital strategy? We serve as a platform for literally MyMoneyMantra.com - Digital Team thousands of brokers. During the How is technology put to use for CRM? been extremely positive. We have had to be pandemic, we saw a 10x increase on our How strong is your company’s presence creative with appraisals and wet signatures broker channel. We have proven to our on social media? in the current covid environment. partners that scale matters. The ability It is important to have a presence on to have instant connectivity with over social media but it is worth noting that In the post covid-scenario, what are your 100 financial partners across the credit people don’t go on Instagram looking targets and plans for IT, digital initiatives, for spectrum increases their ability to serve the for financial advice – they are looking to tech-led business growth in the current FY? customer which they on their own find very engage with their friends. Our job is to There is no secret sauce here. We want challenging. This has also strengthened be top of mind when someone needs help to stay focused on our core competency – our conversion capabilities in tier 3 and 4 with their financial goals. We think it is connecting borrowers with lenders at the centers – creating a truly national credit more important to create a brand around highest success rate possible. The Indian origination marketplace. financial product expertise – we have built retail credit market is expected to touch a brand around financial literacy. Over the $1.3 trillion in the next 3 years – that’s Please describe the technologies that are last 2 years, we had media presence every roughly 2x growth. We think it will be larger in use. Who are the key vendors and what other business day. than this projection, as the need for credit are their services? In terms of CRM, we have built a in a post pandemic digitized world will be We have used an agency to successfully proprietary tool, which is hosted in the even greater. transfer our data lake onto the cloud using cloud and is extremely customer centric. We We have recently revamped our AWS. Additionally, we strengthened our are focused on making sure the customer technology stack and the design of our online technology infrastructure across the board engagement is seamless throughout the marketplace with the latest incorporations – data analytics, digital marketing, etc. loan process and more importantly post from the world of performance design. We We are leveraging new age technologies loan sanction. Customers come back to us are in the process of further modifying our like headless CMS for content, React JS & because they are confident, they will get the rule engine to be able to offer the same to Node JS for user experience, microservices best deal and we will do all the heavy lifting our associates and partners as well. Soon based backend architecture/ MongoDB on their behalf – it’s really that simple. we are launching a savvier consumer app and Oracle for Database, AWS services to provide personalized offers and ease of for data engineering and PowerBI What is the evolution of data science and transaction for our customers. amongst others. of products in the last 2-3 years? Given our continued investment in Our data analytics-backed business While we have had access to a large digital origination and data analytics, acquisition is growing at 20%. Our Data amount of data, the same was challenged coupled with the structural tailwinds Lake initiative helped us overcome covid by the fact that it was being generated from supporting our business, we plan on a and build robust technology infrastructures different sources and hence was stuck in further 2.5x growth this year which would like AI, ML and Data Analytics to ensure a silos and in incongruous formats. Early on ride on need for credit in a post pandemic seamless customer experience. To expand in our journey we decided to migrate our digitized world as well as greater adoption scope of operations, we acquired 2 financial data into a standardized Data Lake. We of technology by consumers and financial marketplaces - Bengaluru-based Ascon and have over time become a data first company, partners. We plan to achieve Rs5.3 billion Hyderabad-based Shaster. where every decision taken is now backed in top-line by 2023. To ramp up our digital journey, we by rigorous data analytics. Additionally, we want to be a household raised Rs1.04 billion ($15 million) funding Mortgage lending has its set of name when it comes to financial products from Netherlands-based IFSD BV and challenges; however, we have been working and our goal is to de-clutter the noise in the Vaalon Capital. Since our $15 million with a handful of financial partners to market and help consumers make informed capital raising in May 2019, we have been develop a digital mortgage product. The financial decisions. investing in our digital value proposition. product is in beta phase, initial uptake has [email protected]

Banking Frontiers June 2021 21 Small Biz A digital journey: From Data to Platform NeoGrowth has adopted Analytics, Technology & Strategy as the engines of growth:

eoGrowth Credit, a systemically digital payments, communication and important, non-deposit taking NBFC support. “As much as 99% of our collections Nand a pioneer in SME lending based are through digital modes of payments such on the underwriting of digital payments data, as POS, UPI, NEFT, RTGS, Bill Desk, etc,” provides finance to small business owners to he points out. drive business growth that matches their ambitions. Headquartered in Mumbai, COLLECTIONS APP the company serves 70+ industries with a Technology has connected internal presence across 26 cities in the country. It has stakeholders in the company (sales, disbursed over `62 billion loans to 29,500+ collections, credit & risk) and an employee customers till date to first-generation with field agent (both on-roll and off-roll) entrepreneurs, women entrepreneurs, work remotely, ensuring seamless and real- and first-time borrowers. It also provides time coordination with the customer and financing to retailers, restaurants, apparel effective collections. Arun says further: shops, kirana stores, petrol pumps, groceries, “There has been pro-active portfolio pharmacies and other MSMEs. management by deploying technology and analytics resources for supporting collections DATA ANALYTICS through calling, recovery and settlement Understanding and making use of data Arun Nayyar points out scorecards. A field executive can easily use to derive meaningful outcomes for the that NeoGrowth has been a collections mobile app on a smartphone business is what differentiates NeoGrowth from his home, to view the amount allocated from other traditional NBFCs and banks. educating its customers to him for collections along with all details Arun Nayyar, CEO of the Company, says through blogs and e-mailers about the customer to enable real-time the company has strong data management about digital frauds understanding of customers’ loan account systems with structured organized and negotiate with him.” warehouse, which enables it to have ready Understanding the customer needs and The field executive could then data available for advanced analytics on requirements through past data and immediately update the collections amount tap. “We have invested heavily in analytics, behavior enables product development and and issue a digital receipt via email / SMS machine learning, digitization of customer enhancement. A 360-degree application of on a real-time basis to the customer. “The journey and digitally verified alternate data science enables us to make decisions integration of this mobile app (ENCollect) sources of data, which has helped us across functions like human resources, with internal systems and data warehouse to reduce the turnaround time for loan operations, customer service, sourcing, has enabled us to make real-time repayment sanctions and underwriting basis various collections and risk.” reconciliation with finance and operations types of alternate data,” he says. stakeholders,” says Arun. FASTER TECH ADOPTION And most importantly, customers do AI & ML BASED MODELS The pandemic has led to various changes not have to keep track of their due dates as NeoGrowth has a data science unit, in the way IT is used by enterprises and NeoGrowth’s customer app notifies them powered by AI & ML based models, which despite several challenges NBFCs in the about their payment cycles. enables it to provide real solutions in fintech lending space were quick to identify making objective decisions for the business. gaps in the existing formal lending space, IN-HOUSE CAPABILITIES Says Arun: “AI & ML based models have points out Arun, stating further that such Strong in-house capabilities in technology enabled us in terms of customer value NBFCs thrive on the strength of faster have enabled NeoGrowth to quickly roll management by identifying eligible technology adoption and government out strategic initiatives on giving options of customers and offer them a loan with fast- impetus. He says for example NeoGrowth tenor enhancement and moratorium. “This track digital underwriting, enhancing has adopted an ATS (Analytics, Technology has acted like Sanjivni for our customers customer experience and reducing TAT. & Strategy) enabled-approach during the to survive and restart their business,” Early warning models enable our risk lockdown phase and the main advantage says Arun, explaining that the company’s management to help take proactive was that the company was able to reach the micro-service-based architecture has been policy actions and streamline collections. customer’s doorstep digitally by enabling designed to ensure that all technology assets

22 Banking Frontiers June 2021 are integrated and connected smoothly and can call upon data/functions from each other. “We moved developer roles in-house. And our branch level outsourced IT support staff has come down,” he adds. IT team of NeoGrowth Credit Pvt Ltd One major challenge the company faced was multi-browser testing for mobile remote way of verifying customer identify, fund requirements faced by retailers and app, but a solution was evolved using thus eliminating the need for a physical visit small businesses across the country. It is Browserstack opensource tool. to verify identity. The tool aims to eliminate collateral-free loan of `100,000, with just identity fraud through AI-enabled fraud KYC documents. The approval is instant HIGH PERFORMING TALENT prevention and error checks. and online and repayment is `250 daily. NeoGrowth has continued to focus on hiring The loan product was developed on an high performing talent and strengthen the DIGIBIZZ PLATFORM insight from the company’s flagship retailer organizational pyramid at front-line and NeoGrowth has recently launched diGibizz, an outreach program ‘NeoGrowth Sanjivni’. middle level. “We do it to support our overall end-to-end platform to help small businesses Says Arun in this regard: “We use operational efficiency, execution capability become digital-ready. The platform was exhaustive digital checks for underwriting and expand our geographical footprints, conceptualized based on a research done and usage of digitally verified alternate says Arun, adding: “We follow a hybrid during the pandemic to evaluate the need sources of data to ensure risk mitigation operating model that involves hiring and for small businesses to digitize their offerings and governance. Not only this reduces the leveraging contractors on C2H (Contract to to meet stiff competition from big brands hassle created by excessive documentation Hire) model for core IT capabilities such as and shopping apps and portals. “We aim for customer but also ensures funds are development and architecture. Outsourcing to help over 200,000 SMEs double their disbursed within 24 hours, enabling is limited to non-core IT services.” turnover in 3 years by offering access to best- retailers and sole proprietors to fulfil their in-class digital solutions through business urgent working capital and business needs. IT PARTNERS RETAINED solution providers,” says Arun, adding: “With NeoGrowth has always focused on NeoGrowth has mostly continued with the diGibizz platform, we aim to provide creating a positive social impact by lending the existing technology partners for consultation and technology solutions that to first generation entrepreneurs and small their trustworthiness. Says Arun: “Our help small businesses scale up and become businesses. Its business offerings are based performance stands testimony to our profitable. After a quick analysis, we will on the dual axis of customer centricity long-standing relationship with channel provide a customized solution to business and economic growth of all stakeholders. partners and alliances with financial and owners. This could be financial, non- Giving the background of the product, Arun strategic business partners, which has financial, or combination of both depending points out: “While speaking to retailers helped us deliver a superior and rewarding on the gaps that small business owners have across the country, we learned that due to experience for our customers.” identified through diGibizz Digit-O-Meter complex documentation and delays in loan smart analysis.” approvals, they missed out on lucrative VIDEO KYC OUTSOURCED business opportunities. We created NeoGrowth has allied with a video KYC NEOCASH INSTA LOAN NeoCash Insta Loan with the specific goal vendor to enable digital onboarding given The company has recently introduced of addressing all these problems faced by the limitations surrounding physical field ‘NeoCash Insta Loan’, an offering retailers across the country.” visits. Arun says this feature enables a specially curated to meet immediate IT SERVICES: PREDICTIONS NeoGrowth welcomes the restructuring Cyber Security Training & Workshops framework recently announced by RBI. For employees, NeoGrowth does regular communications on themes such as phishing, social Arun feels that all the proactively announced engineering, etc, along with mandatory annual refresher training on information security policy. steps and measures will benefit MSME Arun Nayyar, CEO, explains: “This is done via online learning courses and tests to reiterate the clients, increase liquidity in the system and various aspects of information security and potential threats. This helps the organisation in creating awareness and safeguard it from any unlawful attempt on its internal information.” will alleviate the stress in the system. As businesses became more digital and started adopting technology in their operating He is of the view that leased infra (like rhythm, especially during the pandemic, the need for understanding of information security has laptops on rent) and VPN services will see increased and Arun says that through the company’s Sanjivni initiative, it has launched multiple a temporary increase to enable traditional initiatives to educate customers on the importance of awareness about this aspect. NeoGrowth desktop users to work remotely. Office IT did a series of blogs and e-mailers about cyber scams and digital frauds to educate customers costs such as internet and printers will not about digital safety. increase, says he. [email protected]

Banking Frontiers June 2021 23 Cooperative Mann Deshi UCB benefits immensely by digital platform

he Mann Deshi Mahila Sahakari helped us in terms of higher customer Bank was set up in 1997 after acquisition and loan repayment rate. We TKantabai, a welder who worked are planning to commission a new CBS and lived with her family on the footpath supporting our enhanced activities on in Mhaswad in rural Maharashtra, the digital platform, to create a virtual approached the bank’s founder Chetna branch for our customers and to enlarge Sinha, narrating the harrowing tale of our BC network to serve more in rural being rejected by several banks to open an underserved areas. We have achieved account. Kantabai simply wanted a safe 15% for deposits and 5% for credits space to save some money so she could through digital technology.” buy tarpaulin sheets to protect her home in the monsoons. Moved by the narrative, APP USAGE PICKING UP Chetna decided to set up a bank for The bank is using digital payment system, women like Kantabai. Some 1335 women which includes its own app, BHIM and pooled their savings (`780,000) and set IMPS. Rekha Sunil Kulkarni, CEO of the up the first bank for and by rural women bank, says the bank started IMPS in June in India. It remains a member-driven and 2020 and 419 of its customers are using member-owned bank. mobile-based app. The bank started UPI Chetna Vijay Sinha, who is services in February 2021 and till date Chairperson of the bank, also started Chetna Sinha plans to have there are 744 customers using it, and the India’s first business school for rural a new CBS supporting all trend is increasing. women entrepreneurs. She was one of the activities on a digital platform The bank has tied up with Google 6 co-chairs of World Economic Forum to create a virtual branch for Pay and Phone Pe for digital payment at Davos in 2018. A MA in commerce services. Its agents/BCs are very active & economics, a diploma in sheep and customers in the underserved areas. Rekha says she goat rearing, she is a Yale Fellow, Schwab month average transactions were 27,000. sees good prospects for the bank in the Fellow and Ashoka Fellow. Nearly 40% our customers are using the remaining part of the year and it intends banks’ own ATMs and 60% of other banks’ to replace BCs with digital service, ACCOUNTING, COMPUTER SKILLS customers are using our ATMs.” particularly in credit. “We average 5500 The bank today has 7 ATM centres and an During 2021-22, the bank does not IMPS transactions and 15,000 UPI equal number of branches – at Mhaswad, plan to add new branches or ATMs. transactions per month. But we do not Gondavale, Vaduj, Dahiwadi, Satara, have internet banking facility till date,” Lonand, Dhayri and Kamothe (Navi DEPOSIT, LOAN THROUGH TECH she adds. Mumbai) - in Maharashtra. At present, IT services have played very crucial role in it has 68 employees. the growth of the bank, which is essentially IT VENDORS, CAPEX, OPEX Chetna says the bank has added 2 a micro-enterprise development bank, Coforge is the main vendor for IT services, ATM centres in the last financial year and drawing customers from low-income including CBS, data center and disaster it hires those people who have skills in women groups with incomes averaging recovery site. The bank has a 3-member accounting, computing, credit and sales `40 per day. The bank currently has IT team and its technology capex is Rs1.5 and are dedicated to work in rural areas. over 185,000 customers, and conducts million. Sinha reveals: “Our monthly 10,000 transactions on a daily basis. expenses on IT service is `150,000. AVERAGE ATM TRANSACTIONS Installation of CBS, mobile banking and There has not been any significant During the pandemic, when ATMs of all UPI with QR code have helped the bank growth in expenses over the years. In the other banks remained closed in the local in its business growth both in assets and current financial year, we are changing areas, Mann Deshi Mahila Sahakari Bank liability. Says Chetna: “During the first our IT vendor and we expect the capex to ensured that all of its ATMs worked properly and second covid waves, our customers be `1 million and opex around 155,000 with possible minimum denomination used our digital platform to make and per month.” notes. Says Chetna: “Our per week average receive payments, including for loan The bank has yet started using data ATM transactions, were 6000 and per repayments and utility bill payments. This analytics or a CRM package. Sinha,

24 Banking Frontiers June 2021 however, says the bank is intending to get cooperative banks, especially in terms into these technology initiatives next year. of use of new age banking technology. Rekha stresses: “We not only adopt new SOCIAL MEDIA PRESENCE age banking technology, but also help The bank is live on UPI, mobile banking, our customers adopt these technologies ATM, PoS, e-com, etc. It is also present on through our training initiatives such as Facebook, YouTube, and WhatsApp. “We financial/digital literacy programs and can understand the value of changing ‘digital didi’ program.” technology. We will get the emerging She adds: “Our priority sector lending technologies in banking sector on time is 90%. We have very low loan ticket size, to address the changing customer needs,” focused financial inclusion approach, says Chetna. customized products, micro loans and good savings, door step delivery, high IT TIE-UPS profitability, less cost of funds and and While the cooperative structure has proper compliance.” its own limitations in forging financial or investment partnership, the bank TARGETS FOR IT does have tie-ups, especially with IT Post-covid, the bank has set its targets service providers. “We have tied up for IT, digital initiatives and achieving with Technospire, which has supported Rekha Kulkarni sees good planned tech-led business growth in 15 BFSI entities. We have tied up with prospects in replacing the the current financial year. Says Chetna: Sarvatra Technology, which has a BC network with the offer of “We have laid down our initiatives for customer base of 100 BFSI companies. digital service, particularly in 2021-22. We have plans to migrate on These are apart from our relations with credit to a new CBS system, implement digital Coforge, which already supports more loan origination system, WhatsApp than 100 organizations,” says Rekha. to get a unique view of the impact that banking, video KYC, agency banking and Since 2006, Chetna has been forging microfinance initiatives have on the local e-mandate system.” relationships with global organizations rural population. Through the bank and the Mann like HSBC, British Asia Trust, Accenture, Deshi Foundation, Chetna, no wonder, Clinton Global Initiative, GIZ, Deutsche ONE UP ON OTHERS serves over 500,000 women and her goal Bank, Bonita Trust, and Commonwealth Mann Deshi Mahila Bank claims to is to take this number to 1 million women of Learning and Global Giving to develop be one level up compared with other entrepreneurs by 2022. corporate community partnership mahila cooperative banks in the country. [email protected] programs. These relationships facilitate It is also better managed and result- the corporate sector in the US and Europe oriented compared to a number of good Empower yourself with Multi Digital Channel Business Opportunity

Rajesh Krishnia D. Venkatesh Head of Enterprise Director, Lentra AI BFSI, Nutanix India Summary: Covid has led to the transformation of the age-old lending business of lending and there is need for increasing channel activity to enhance business opportunities.

Banking Frontiers June 2021 25 Cover Story

The Risk Sentinels

The pandemic and lockdown have put the biggest strain ever on chief risk officers. This is the time that their systems were put to test as were they themselves. Largely, the financial community has proven itself to be capable and agile, as seen from the 16 respondents in this cover story. The CROs have also taken the opportunity to expand their knowledge frontiers to prepare for future risks. Kudos to The Sentinels. 26 Banking Frontiers June 2021 Cover Story - 16 Participants

Roopam Asthana Damodaran C Venkata Jayaraman M Gopal Balachandran CEO & Whole Time Director, Vice President & Chief Risk Officer, Chief Risk Officer, CFO and Chief Risk Officer, Liberty General Insurance Federal Bank Fincare Small Finance Bank ICICI Lombard General Insurance

Sadaf Sayeed Sunder Natarajan Bikash Choudhary Vijayalakshmi CEO, Chief Compliance & Risk Officer, Appointed Actuary & Chief Natarajan Muthoot Microfin IndiaFirst Life Insurance Risk Officer, Future Generali Chief Compliance & Risk India Life Insurance Officer, Aviva India

K R Mohanachandran Abhilash Balan Biranchi Mishra Avneesh Trivedi Chief Risk Officer, CISO, Head - Credit, Risk & Product, CRO, ESAF Small Finance Bank Digit Insurance Netafim Agricultural Moneyboxx Finance Financing Agency

Rakesh Bansal Anil Pinapala Sujay Das Prithvi Chief Risk Officer, Founder & CEO, CRO, Chandrasekhar Hero Housing Finance Vivifi India Finance MoneyTap President Risk & Analytics, InCred

Banking Frontiers June 2021 27 Cover Story Part 1 The WFH Risk Pyramid Question: Risks associated with WFH – how has been the actual experience vis-à-vis the expectations?

ver a year into the pandemic, covid has had a devastating a schedule and plan for work days and fun days. economic, social and health impact across the globe. (ii) Focus: It is quite easy to lose focus on what we are doing OHundreds of thousands of lives have already been considering the distractions of family, pets, friends, lost and the end of this pandemic is still not in sight. On the neighbours, household helps, kitchen sounds et al, but to corporate side, there are 2 pictures: either a corporate has gone effectively work from home, one needs to maintain focus bust (or nearly so), or the corporate is in good shape. Judging on what needs to be done and train oneself to achieve this. from the responses, all the 16 organizations that participated Focus makes the work product better and also helps in in this cover story seem to be in good shape. getting it done faster so improve your ability to focus and Our respondents have broadly classified WFH related risks not get distracted easily. into 5 categories: (i) business risks, (ii) cybersecurity risks, (iii) (iii) Mental Health: Pandemic news can be distressing and people risks, (iv) operations risks and (v) other risks. Here are sometimes devastating, playing havoc with our mental their edited responses. health. A regular work environment also provides a social construct for addressing many of the concerns one would Abhilash Balan, CISO at Digit Insurance face day-to-day, but with everyone working from home Work from home often raises questions that ability to socialize and find answers now doesn’t exist on the security of the organization and the as much. Never ignore the stress or the impact on your increased risk of a breach. However, we were mental health and seek the help of your family, friends and able to manage these risks using cybersecurity if required even a medical practitioner immediately. protocols and imparting right information (iv) Security and Confidentiality: Data security is a key risk to our teams. Digit Insurance took 6 key in an environment where a lot of sensitive information security initiatives: (i) Implemented secure and trade secrets are being accessed at home even when VPN tunnels (ii) Strengthened the advanced tunnelled through a VPN. These can be addressed threat protection systems (iii) Audited system & application with several sophisticated security tools to ensure data rights (iv) Used the best AV solution (v) Managed EDR solution security, but the success is more dependent on a clear, for each system in our network, and (vi) Implemented a DLP transparent process and communication that emphasizes agent on each laptop to take care of the company’s data on the importance of adhering to all the safeguards, no matter each system. how cumbersome they might get.

Anil Pinapala, CEO at Vivifi India Finance Avneesh Trivedi, Chief Risk Officer at Moneyboxx Finance During the pandemic, the thing that has really Creating right and feasible kind of IT support changed character is the concept of working system was a big challenge. However, taking from home. Where possible, this privilege was clues from last year’s learnings, it was considered as a ‘breezy-few-days-a-month’ relatively easy for the second phase of the working from the comfort from your couch / lockdown, as WFH is being considered as bed. However, for organizations to think of it a new normal. Teams were also aligned for as a long-term option or a permanent option WFH system this time, so it was relatively for all or most of its employees, requires easy as compared to last year. them to think of the associated risks and get ahead of them immediately. Bikash Choudhary, Appointed Actuary & Chief Risk Having spent most of my career working remotely leading Officer at Future Generali India Life Insurance large teams, we have identified 4 risks associated with WFH: We anticipate 3 major risk areas with the WFH model - lethargy, focus, mental health and security & confidentiality. cybersecurity, physical security and new business volumes. (i) Lethargy: The risk is that it is easy to procrastinate While cyberattacks have become rampant during the pandemic, within the comforts of working from home and add to we have implemented several tools and technologies to protect it the unlimited social media activity that can keep us ourselves from various kinds of cyberattacks and stay ahead of entertained. To counter the risk, we need to inculcate the the curve. Disposable income and frequent lockdowns. discipline of working from home and ensure that we have One risk overlooked was the impact of covid on the safety

28 Banking Frontiers June 2021 and wellbeing of people during the second regular e-events and gatherings besides arranging sessions with and third wave of the pandemic. At the start yoga, meditation and health experts to educate and motivate of the pandemic, we had taken a slew of employees to live a healthy lifestyle. proactive measures to enable our teams to Our overall experience and productivity have been work from home and also educate them about satisfactory except in areas wherein we need regular face- the virus. This approach reaped fruits as we to-face interaction with our customers or other stakeholders had a <1% infection rate and 0 mortalities. outside the organization. However, the second wave of the pandemic has had a significant impact on our employees and our infection Damodaran C, Vice President & Chief Risk Officer at rate is >5%. Federal Bank We, as an organization, will continue to provide support WFH was an unimaginable idea for banking throughout the crisis. We have 3 priorities throughout the sector till the beginning of the pandemic. Now crises. First is providing strong management and leadership banks are effectively utilizing it to maintain support to ensure the health and sustainability of the workforce productivity of workforce by leveraging and our communities. Second is to represent and address the technology enabled platforms. However, interest of employees in crisis with innovative solutions, quick being a service industry, there are certain actions and impactful measures. Third is to support business challenges in having a WFH model in its during this period with relevant information and services as entirety. well as opportunities for remote networking and engagement Business continuity, or rather continuing business as with peers. usual, was one of the major threats that we anticipated during prolonged lockdown and the associated restrictions. Increased Biranchi Mishra, Head – Credit, Risk & Product at Netafim risk of cybersecurity was also anticipated, as more customers Agricultural Financing Agency (NAFA) embrace digital financial services. Working from home brings about many Through the usage of collaborative work environment benefits. However, the organization also and virtual meeting applications, we are now able to offer poses a different set of risks – both for itself uninterrupted banking services. Of course, there are a few and its employees. Below are the top 2 risks domains where WFH model has limitations like catering to NAFA identified when it decided to allow the credit needs of NTB customers. employees to work from home. Cybersecurity is the major threat associated with increasing Cybersecurity Risk: Working from penetration of digitization of financial services. In order to home relies heavily on remote access to the effectively mitigate the threats, we are constantly reviewing company’s network, cloud accounts, email systems, video- our incident tracking algorithms and have ramped up our conferencing tools and others. In general, remote work real-time transaction monitoring capabilities working on a increases cybersecurity risks such as home WiFi security 24x7 basis. Customers are constantly educated on dos and breaches, phishing attacks, weak passwords and access don’ts of cyber security and all members of staff, including top controls, risks associated with accessing the company database management, are mandatorily required to undergo rigorous through multiple systems and increased data sharing over in-house programs on cybersecurity. the internet. We realized that people are often the weakest WFH has its own advantages and disadvantages as far as link in cybersecurity efforts. We started training employees non-branch operations are concerned. The major challenge was on basic security practices such as setting proper access to securely enable access to the applications for the employees controls, identifying phishing emails using strong passwords working from home. The bank was quick in enhancing the IT and deleting suspicious emails. We also restricted access to infrastructure and upgrading the IT security to successfully websites not required for day-to-day job-related activities meet the challenges. Members of staff were constantly educated and select employees were allowed to share mail outside the on the dos and don’ts of WFH. Access of staff working from domain. anywhere to applications were routed through the secured Employee Health & Safety: Remote working exposes VPN, on a need to access basis with proper approval from the the divide in living setups, divides the ways people and authorities. Such logins were monitored constantly to ensure organizations work and creates a divide in our individual needs that there is no unauthorized access to the bank’s systems. for social interaction. WFH isn’t about just video conferencing - it’s about tools that streamline and enhance communication, Gopal Balachandran, CFO & Chief Risk Officer at ICICI collaboration and transparency. However, we think beyond Lombard General Insurance these tools to ensure that teams are ready to tackle time If we have been able to survive the pandemic, it has been management challenges and productivity while working with attributable to our robust Enterprise Risk Management colleagues remotely. Even if teams work remotely, HR arranges (ERM) efforts. ICICI Lombard has been at the forefront when

Banking Frontiers June 2021 29 Cover Story

it comes to ERM. It was the first Indian K R Mohanachandran, Chief Risk Officer atE SAF Small company to achieve the ISO 31000:2018 Finance Bank certification in April 2018. The ISO On adoption of WFH, systems of banks need to move from standard has emphasized having an effective confined and contained environment to open environment. risk governance mechanism, a risk aware This could result in serious vulnerabilities if not patched or culture, a strong risk assessment process addressed properly, more particularly for financial institutions. and robust and dynamic risk and control Use of Virtual Private Networks (VPN), hotspot Wi-Fi devices, frameworks. video conferencing facilities and personal devices used for Here are the 5 main risks from an organizational and official works/ meetings, etc, could expose banks to risks due finance perspective. to possible dilution in security protocols and (i) Counterparty Risk: In a volatile environment like the present encryption standards. WFH scenario is more one, it is crucial to keep a close watch on counterparty risk, vulnerable to cyber-attacks, because of lesser by virtue of the fact that if the counterparty fails to settle security controls. his obligations to the company, it could in turn impact our While WFH could largely help banks cash inflows and thereby end up impacting our balance more in administrative functions, customer sheet in some way. Therefore, we continue to keep a close facing transactions cannot be executed watch on the credit ratings of our counterparties and through the employees working from home. whether the counterparties would continue to operate as Digitization in banking is still not at appropriate levels to get all a going concern. customer facing transactions approved by staff working from (ii) Mark to Market Value of Investments: We continue home. to keep a close watch on investments portfolio through We have started WFH arrangements since beginning of assessing the market value of its investments and thereby the pandemic in a structured manner, taking the limitations providing for impairment, where necessary. Our focus as detailed above into account. WFH is extended to staff of is to look at qualitative investments in good companies branches also in a limited manner. The expectations are largely and also ensure that the right percentage of investments met, by implementing various technical controls (like multi- is maintained in liquid assets at all times so that we can factor authentication, endpoint posture check, etc) and no honour our obligations to customers on a timely basis. In security breaches have been reported so far. the last 2 decades, ICICI Lombard has not witnessed any The WFH concept will not go away – staff expectations, default on its fixed income portfolio, which is a testament pandemics, natural disturbances, regional conflicts, etc, will of our robust investment practices. force organizations to think that remote work is an option for (iii) Cybersecurity: Given that we are operating in WFH all times. environment, protecting valuable company data becomes a key aspect, which places a key focus on cybersecurity. Prithvi Chandrasekhar, President Risk & Analytics at WFH best practices including Dos and Don’ts have InCred been rolled out to users on a periodic basis using various The biggest risks associated with WFH are in communication channels, end point security measures, the real economy. Entire sectors like travel, e-learning modules, etc. Security related educational hospitality, commercial real estate, or even videos are being published to guide employees and ensure retail, will be adversely impacted for a long security in a WFH environment. time. In the shorter term, there are also (iv) Fraud Prevention & Management: These uncertain employment risks and income risks, especially times also necessitate keeping a close watch on fraud risk to contractors or those earning incentives since it is crucial to ensure that only genuine customers and commissions. There are collections risks are paid claims, thereby protecting the bottom line. We arising from borrower/employee migration. have re-visited the triggers for fraud investigation/s and There are also internal risks. WFH requires a higher level are carrying out claim related investigations. On account of of technology security in a sensitive industry like financial physical inspections being difficult, virtual investigations services. It also makes it harder to assimilate new employees. are being undertaken through the digital route. So far, these risks have been successfully mitigated. The worst- (v) Reputation Risk: We are proactively tracking any impact case scenarios have been averted. But a lot of uncertainty on the reputation through monitoring of various social remains, such as covid phase 2, lockdown, vaccination rates, media posts, articles on various social media handles, possible covid phase 3, etc. Responsible risk professionals will articles appearing in national and regional dailies and continue to be cautious. other communication modes to ensure that there would be no untoward incidents which would have a material Rakesh Bansal, Chief Risk Officer at Hero Housing Finance impact on the brand reputation of the company. Data safety is the main issue. All the laptops were hardened and

30 Banking Frontiers June 2021 outside mails with attachments were not Productivity monitoring is another risk given that the permitted. Also, it was difficult to assess new nature of business is more into foot-on-street model. The proposals of self-employed customers. We sudden switch to a virtual scenario has created confusion and focussed on salaried segment. There were can lead to productivity risks. Muthoot Microfin has developed other restrictions like legal and technical its BCP to ensure team leaders are always connected to the team agencies were not working properly. SROs and stay engaged throughout the day through virtual connect. were shut. There were no takers for fresh People are socializing less and there is lesser human home loan purchases and hence volumes contact, which is a big risk for mental health. Lifestyle-related were less. illness risks have also risen over this period. To address this our wellness team is regularly calling the employees and offering Roopam Asthana, CEO & WTD, Liberty them all types of support. The company has also introduced free General Insurance on-line health consultations for employees and their families. As the pandemic became more severe, we There is also the issue of keeping track of all assets in use, proactively shut our physical outlets and chances of damage, security risk if they do not adhere to access moved to 100% WFH. The expectation here and privilege protocols etc. Our IT team has disabled some was that this will keep our employees safe programs at the employee’s extremities so that risk factors may from infection, but what we realized was be reduced. The IT team can access the system at any time that employees working from home were using any desk application. exposed to more external sources of infection and that they were probably safer in our offices with monitoring of body Sujay Das, Chief Risk Officer atM oneyTap temperature, usage of masks and hand sanitization. On one side, WFH allows one to take care The other risk associated with WFH is the disconnect of their family and spend more time with with colleagues and lack of informal interactions that help them. On the other hand, it brings new employees, especially new joinees, imbibe the company culture. challenges on the work front. Many a time, The good news is that with the entire ecosystem working from a face-to-face discussion is more fruitful home using video communication and other digital assets, and faster to get to a decision. Scribbling on the exposure of ‘digital hesitants’ to the new way of working the whiteboard sometimes help in making increased forcibly, and this has hopefully converted a lot many somebody understand a concept faster. At more to continue using digital assets. times, a 5-minute corridor discussion can move things faster However, here the expectation that all will move away rather than waiting for people’s calendars to free up for a call. from the traditional face-to-face interactions will not hold It is said that humans are social animals by nature. Going true. Apart from the general risks, we also encountered risks to the office and meeting colleagues help usher in that social pertaining to processes and systems as everybody had to pretty element to a lot of people’s lives. It also helps a lot in terms of much overnight devise processes and systems to manage the decision making and teamwork. While working from home, it new work model. does get slightly challenging to have overly distinct boundaries Risk pertaining to processes mainly revolved around between office and personal work environment and timings. premium collection, policy issuance, investigation for fraud The new normal is now, everyone understands, more about detection and claims, etc. Strategic risk included challenges in say, background noises, children playing or even household distribution of our products, change in mindset of customers noises to be a part of calls! A change in environment always as consumer confidence dipped, scaling digital channels with refreshes you for the next task, be it personal or professional. changing demands, etc. Risk pertaining to systems included Hence the pandemic, has made it more stressful for teams as cyber and data security threats and challenges relating to they are in the same environment all the time with no reprieve, obsolete systems/hardware, etc. and it can get hard to keep track of time moving. However, we have also evolved due to work from home and Sadaf Sayeed, CEO at Muthoot Microfin technology has allowed us to keep things going with minimal The main risk associated with working disruption. That is quite an achievement and has also proven remotely is connectivity and backups. Since that we can still deliver things at a respectable pace by working the entire organization is working remotely, from home. any connectivity issue which may affect work may create serious risk issues. We addressed Sunder Natarajan, Chief Compliance & Risk Officer at these issues by providing CUG SIMs to IndiaFirst Life Insurance all employees and ensured consistent We experienced lesser risks than expected. The biggest risks coordination with the service provider for we faced were business risks of an unplanned surge in claims seamless connectivity at all locations. and a sharp dip in new business and renewals. While the

Banking Frontiers June 2021 31 Cover Story

incidence of claims did go up across the year, level of the bank. the new business and renewals witnessed a consistent recovery quarter on quarter. A Vijayalakshmi Natarajan, Chief Compliance & Risk robust process built over the years helped Officer at Aviva India shape the recovery. The pandemic led to businesses around the globe transitioning Other big risks were around the market workers to remote work, introducing new challenges to and interest rate volatility. Tight governance companies and employees alike. One of the biggest of these of our investment philosophy and tight were cybersecurity and keeping company ALM management helped us derive best benefits the situation intelligence safe with employees no longer presented. Operational & IT risks were also kept under tight protected by corporate firewalls. Four key control through timely upgrades and astute management. risks associated with WFH are: (i) insecure asset (ii) access to unauthorized sites (iii) data Venkata Jayaraman M., Chief Risk leakage (iv) insecure internet connection Officer at Fincare Small Finance Bank exposing the company to information and With the advent of the pandemic, traditional cyber security threats. work models are getting transformed, Moreover, we need to ensure that the connectivity to with increased use of automation and company’s systems and applications is strictly through the digitalization tools. As the number of company’s network enabled through secure VPN. For an employees and home IP addresses have insurance organization, it is important to restrict this concept taken a step jump, the diversity of threats on to safeguard the company’s information. Our focus is to devices exposed to local home network, pose a few challenges, provide adequate training and awareness to promote safe including: usage of systems and applications and enhance the ability to (i) The need to put in place necessary infrastructure to provide differentiate between genuine emails and phishing attempts. secure access to confidential information from home/ remote. SUMMARY (ii) Network latency at the employee’s location leading to Except two, all our respondents spoke about cyber risks, issues in providing seamless connectivity through and that places it at the top of our risk pyramid associated VPN. with WFH. Six respondents spoke about human risks (iii) Endpoint patching. – chiefly social issues as well as physical health (iv) Providing remote IT support. and mental health issues – and that places it at (v) Remote onboarding of new joiners. CyBeR the 2nd position. Five respondents spoke about (vi) Given that home networks are inherently Risks business risks, placing it at the 3rd position. insecure, need for continuous monitoring Three respondents spoke about operations for new IoCs & IoAs. risks, placing it at the 4th position. Other At Fincare Small Finance Bank, our risks mentioned include reputation risk, security priorities have always been staff induction issues, etc. The same is aligned to the bank’s strategy pillar of PeoPle Risks represented as an infographic. Our safe and secured banking. Given the respondents also put forward a heightened threats, cutting-edge very wide variety of solutions in cybersecurity solutions were response to the WFH risks. implemented to strengthen [email protected], the cybersecurity maturity Business Risks [email protected]

oPeRations Risks

otheR Risks

32 Banking Frontiers June 2021 Part 2 Unique challenges need unique solutions Question: What policies and practices have you adopted to mitigate risks associated with start-ups?

he explosion of the start-ups and their huge growth Prithvi Chandrasekhar, President, potential opens a variety of opportunities for the Risk & Analytics at InCred Tfinancial sector – to see them as customers as well as The startup ecosystem is distinctive and partners. Four risk experts share their insights. nuanced. Startups naturally have much more survival risk than mature companies. Damodaran C., Vice President & Chief Risk Officer at However, as a lender, we are more exposed Federal Bank to the survival risks as our upside is limited. Banks may face risks like business continuity, Startups also generally have less mature data privacy/ confidentiality, cybersecurity processes in terms of tech-security, fraud control, etc. etc. The pandemic has exposed the We therefore provide startups with arrangements that protect inadequacy and ineffectiveness of business our risk while providing them with the funding they need. This continuity strategies in some of the startups. includes due diligence on the startup’s equity position and cash flow, Having said that, the services that startups, FLDG (first loss default guarantee) arrangements, and extensive particularly in the fintech space, provide technology-based monitoring to ensure that the underlying credit to help partner banks in using innovative and cost-effective and compliance risks are being appropriately managed. solutions for widening the scope and reach of banking services is commendable. Sujay Das, CRO at MoneyTap As the bank engages startups to deliver new experiences to In a startup, things do tend to move very fast. There is minimal our customers and to reach out to new customer segments, a wait time before decisions get taken and the robust framework is put in place covering selection, approval ability to huddle together as a team and come and ongoing monitoring of the partnerships for managing the to a quick decision is another quality. This risks involved. The experience that the bank has gained in credit leads to quicker implementations. assessment comes in handy while selecting an ideal partner too. The challenges that are usually seen with We look into the managerial capability, the experience of the speed is that it brings in the risk of processes promoters, their systems and process, the importance they give breakdowns. A keen eye on the process allows to banking regulatory compliances and so on. you to make sure that there are enough checks Almost all startups leverage technology for offering their and balances. It also helps to take a step away to make sure you services. We assess their business continuity mechanism, are also seeing the higher-level vision of where the direction is technological capabilities, measures adopted to ensure headed. It helps you to monitor so that things don’t fail or that cybersecurity, easiness of their system to interact with our there are triggers which are like notifications for you as soon as system etc. We share the least minimum data with our startup there are any problems, so those can be rectified immediately. partners and we are keen to ensure that their systems and With our company being in the fintech lending sector, processes are as robust as ours in fulfilling our responsibilities the customer relations are long term. Hence, there are many towards customers. touchpoints for a customer - starting from onboarding to repayments, to foreclosure, to re-opening of accounts, to customer K R Mohanachandran, Chief Risk Officer at ESAF Small service. As a result, whenever any product gets launched or any Finance Bank changes are done, there are many departments that get involved. We deal with startups without hesitation or While we plan to do it fast, we make sure all departments sync worries that startups are not experienced or up about the product and each of their processes are built in. that they do not have proven experiences or We document the end-to-end process comprising all the achievements to demonstrate. Our policies departments and then start the build. When you put a document and practices are accordingly aligned. around any concept, it makes your head and vision clearer. It Obviously, startups whom we engage as our becomes easier to explain and then point out if anything is missing. business partners undergo litmus tests on their professional, managerial, technical and SUMMARY financial capabilities. Data Points for Assessing Start-Ups:

Banking Frontiers June 2021 33 Cover Story

i. Managerial capability. viii. Measures adopted to ensure cyber security. ii. Financial capability. ix. Ease of interaction with the bank’s systems. iii. Experience of the promoters. iv. Robustness of Systems and process. Solutions v. Importance given to banking regulatory compliances. i. FLDG (first loss default guarantee) arrangements. vi. Business continuity mechanism. ii. Have triggers which give notifications as soon as problem arise. vii. Technological capabilities. [email protected], [email protected]

Part 3 Risk management supports technology spread

Question: Having mapped the risks associated with emerging technologies like API, RPA, AI, ML, etc, what patterns have you observed?

he wide variety of technologies and the interconnections databases, credit bureaus, etc, analyzed within seconds in real- between them are creating a system that is beginning to time and offer a reasonable answer to a customer looking for Tresemble the ecosystem of nature that we live in. Nature emergency credit. has a way to keep the ecosystem in balance which enables living So, the reliance on RPA, AI, ML or similar technologies is organisms to thrive. Risk management concepts and practices heavy and has been one of our key differentiators in building are evolving to sustain the technology ecosystem in a similar a strong and profitable book of loans working with the under- manner. served and unserved customers. While most exaggerate the use of these technologies, using these in the right way can Abhilash Balan, CISO at Digit Insurance accelerate business growth in this competitive space. We have Although there is a direct benefit of using strong audit and oversight processes to ensure that the various APIs for faster integration with partners, it algorithms being utilized continue to work within the scope is an immediate target for hackers as well. and guidelines laid out when implementing them. There are multiple security risks associated with API and process automation, such as Avneesh Trivedi, CRO at Moneyboxx leakage of customer data, fraud, etc. With Finance respect to AI and ML, it requires more data Emerging technologies have helped in and is more complex to implement than others. Apart from assessing and forecasting repayment that, there are vulnerabilities, misconfigurations, providing patterns during last and the current covid false information, etc. We have ensured security does not take wave. It also gave a sense about the customer a back seat during our adoption of newer technologies and have occupation segment impacted on high, implemented robust framework around the same. medium and low parameters. Identification of new hotspots was also done with the help of technology tools. Anil Pinapala, CEO at Vivifi India Finance Bikash Choudhary, Appointed Actuary & Chief Risk AI, ML, API, etc, are the most common Officer at Future Generali India Life Insurance terms in the startup world, with or without Technology is constantly evolving almost daily, and with these adoption. Having been in the lending space changes, new risks are emerging. For us, it is important to keep for over 20+ years, it is important for us ahead of the curve and remain innovators in the insurance to ensure that a deserving customer is space by not only adopting relevant emerging technologies but not turned down while at the same time, also managing the risks arising from holistic adoption of these. the rogue players – synthetic fraud or wilful defaulters – are Across organizations, stakeholders including the board, not let in. In this process, we need to analyze data provided functional heads and internal auditors are exploring ways to or authorized by the customer, sought from public domain improve efficiencies and provide cutting edge solutions and

34 Banking Frontiers June 2021 products to clients and stakeholders by organization’s digital journey. Inappropriate investment leveraging emerging technologies. More can lead to a waste of time and money. Organizations often than not, however, organizations tend should perform adequate due diligence while selecting a to either ignore or side-line security and risk technological partner and tools. considerations, while implementing new technological solutions. Damodaran C, Vice President & Chief Risk Officer at With technologies characterized by little Federal Bank or very little intervention of human beings, AI/ML systems and models have high risk management plays a pivotal role in their implementation. dependability on the environment and input Here are some key risks and controls that an organization data to learn and train itself. Any changes in should consider while implementing or planning to implement the variables, outside the possible bounds, new technologies. renders judgement of the system/model (i) Non-standardization of processes – This often leads ineffective. These models should have to solutions being customized to an organization or a an effective governance mechanism and business unit, resulting in errors and increased cost of constant oversight to ensure that the system automation. Before implementation, organizations should is functioning as envisaged. The volatility induced by the first standardize most of their processes across business pandemic has altered the variables to a great extent such that units. the present and future cannot be predicted only using historical (ii) A lack of ownership, roles and responsibilities – observations. Functional heads tend to think that a particular technology Further, the possibility of corruption of input data by rogue solution is owned by IT, while IT think of themselves elements manipulating loopholes also needs to be watched as just the enabler and the functional heads as solution for. As more applications are migrating to fully digital mode owners. This leads to a situation where nobody owns with straight through processing and intelligent processing the errors and problems of a technology driven solution. mechanisms, governance and oversight framework should be Organizations should clearly define the ownership, roles routinely updated and adhered to. and responsibilities of each of the stakeholders for any Federal Bank has adopted multiple controls for managing technology solution they adopt. risks associated with emerging technologies. We rely on trial (iii) Data privacy and cybersecurity – Technology runs, random verifications, ongoing monitoring and periodical implementation comes with several inherent risks such validations to ensure that the bank remains the master over as internal privileged access rights that can be exploited technology. by cybercriminals. This can lead to the confidentiality, integrity and reliability of data that the organization K R Mohanachandran, Chief Risk Officer at ESAF Small processes being compromised. Organizations should Finance Bank review and deploy adequate cybersecurity and data privacy Technologies like AI, ML, RPA etc are all controls, depending on the data exposure and extent of based on algorithmic models and knowledge personal data available within the organization. base. The pattern observed is that there are (iv) An effective change management process – As the high chances of accidents, unanticipated level of automation within an organization develops, data consequences and privacy violations. We mapping and configuration will also change. If the related ensure proper security tests before moving configurations and data mapping are not updated within on to production and also when any major the technology solutions, it will deliver inaccurate results modification happens in the code. and incorrect output. Organizations should define and A huge risk with AI and ML is that these technologies are adopt a strong change management process to mitigate highly prone to bias and prejudice. This fact is often ignored this risk. or underestimated. It will require consistent evaluation by the (v) Process documentation – In many cases, process AI/ML implementation team to identify whether the AI/ML documentation is not updated, making it difficult to engines develop bias, prejudices or throw stereotype outcomes. manage changes at a later date in the application. Organizations shall ensure that all documents, supplier/ Prithvi Chandrasekhar, President vendor information, inputs, logic processing, outputs and Risk & Analytics at InCred customer information are updated, which enables any We use technologies like APIs and AI/ changes to be easily implemented when required. ML models extensively. These tools are (vi) Selection of the technology solution and partner central to our business model and, in the – Failure to invest in the right solutions and partners balance, mitigate risk. The specific risk can directly impact the viability and outcome of an created by these technologies is complexity.

Banking Frontiers June 2021 35 Cover Story

For example, 20 years ago, my risk models were all generally rapid improvements in uplifting process regression equations that were not hard to interpret intuitively. productivity. Apart from the customer, the Now, more powerful AI/ ML models use synthetic features that expectations of other key stakeholders like are harder to interpret. We mitigate this risk by ensuring that distributor, regulator and the shareholder some human supervision of models is always maintained. have gone up. There is a deluge of service providers and identifying the right partner Rakesh Bansal, Chief Risk Officer at is critical. The risk of obsolescence is high as Hero Housing Finance newer versions keep coming up quite often Many credit checks were done through APIs and as a result, doing a cost-benefit analysis over a long period integrated through fintech companies. We is tricky. were validating PAN, bank statements, etc, through APIs which made the process far Venkata Jayaraman M., Chief Risk Officer at Fincare more efficient. Small Finance Bank Some of the patterns observed are in the Roopam Asthana, CEO & WTD, Liberty General Insurance following areas: (i) Quality of data (ii) Liberty General Insurance works with Handling of business-critical data (iii) mainly API & RPA technologies and has Level of integration (iv) Interoperability (v) recently introduced AI/ML in its processes. Upgradation of technology stack and (vi) Besides the risk of the vendor going out of Security review of platform, middleware, business and resultant inability to provide and technology stack. continuing support, expected risks include non-standardization, poor design, selection Vijayalakshmi Natarajan, Chief Compliance & Risk of wrong processes, faulty allocation of roles Officer atA viva India and responsibilities, lack of strategic approach, dependence on Technology is constantly evolving, and new related system / process changes, which may not be managed opportunities are arising every day. But as synergistically and lack of inhouse experience in managing is often the case with new opportunities, these technologies. come new risks. Artificial intelligence, If done the right way, it has many benefits like improved robotic process automation and the cloud efficiency, innovative approach to customer experience, saving are emerging technologies that particularly time, removing manual dependency which had led to errors, excite because of their capacity to do all ease to reuse and quicker response time. These benefits can these things and completely transform be achieved with the right knowledge of the developers, organizations in the process. clear requirement analysis, functional and non-functional AI is only as good as its teacher – its outcomes can be affected design study, lifecycle planning and a thorough look from the by poor training, bias and ‘bad data’. AI can deliver erroneous governance and compliance angles as well. outcomes due to bias in data, algorithms, or development teams. Another prominent area of risk that has emerged is the Sujay Das, CRO at MoneyTap third-party risk that arises when organizations are relying on API integrations have helped the financial external providers for these new technologies – a reliance that lending world to get different types of is set to increase and create an even more complex ecosystem. verifications of thousands of customers within Risk now needs to be considered and designed at the inception seconds. Machine Learning models have of new products, services, channels or transformation. To given a boost to predictive power of different create trust, all risks must be addressed together, at the same models, bringing out hidden patterns from time – and critically, ahead of time. data. RPA has allowed repetitive work to get [email protected], [email protected] automated and increase efficiency. Today, using all of these, fintech companies are able to service different segments of customers with their financial needs quicker and with better accuracy.

Sunder Natarajan, Chief Compliance & Risk Officer at IndiaFirst Life Insurance Two key risks are (i) the problem of plenty and (ii) the risk of fast paced change. Embracing emerging technologies has become a necessity to keep pace with the market and make

36 Banking Frontiers June 2021 Collective Wisdom in a Box – Related to Technology RISK SOLUTION 1 (i) Quality of data (ii) Handling of business-critical data (iii) Level of Rely on trial runs, random verifications, ongoing monitoring and integration (iv) Interoperability (v) Upgradation of technology stack periodical validations, security review of platform, middleware, and (vi) High chances of accidents, unanticipated consequences and technology stack. Ensure proper security tests before moving on to privacy violations. production and also when any major modification happens in the code. 2 Not updating configurations and data mapping which leads to Define and adopt a strong change management process. inaccurate results and incorrect output. Process documentation is often not updated, making it difficult to manage changes at a later date in the application. 3 Multiple security risks associated with API and process No solution offered. automation, such as leakage of customer data, fraud, etc 4 Vendor going out of business and resultant inability to provide No solution offered. continuing support. 5 Non-standardization, poor design, selection of wrong processes, No solution offered. faulty allocation of roles and responsibilities, lack of strategic approach, dependence on related system / process changes which may not be managed synergistically and lack of inhouse experience in managing these technologies. Risk of obsolescence as newer versions keep coming up quite often. Collective Wisdom in a Box – Related to AI & ML RISK SOLUTION 1 AI/ML systems are highly prone to bias and prejudice. This Consistent evaluation by the AI/ML implementation team to often ignored or underestimated. detect bias, prejudices or stereotype outcomes. 2 AI/ML systems and models have high dependability on the An effective governance mechanism and constant oversight environment and input data to learn and train itself. Any to ensure that the system is functioning as envisaged. changes in the variables, outside the possible bounds, renders judgement of the system / model ineffective. 3 Complexity. 20 years ago, risk models were all generally Ensure that some human supervision of models is always regression equations that were not hard to interpret intuitively. maintained. Now, more powerful AI/ML models use synthetic features that are harder to interpret. 4 AI/ML vulnerable to misconfigurations, false information, bad Risk now needs to be considered and designed at the inception data and poor training. of new products, services, channels or transformation. To create trust, all risks must be addressed together, at the same time – and critically, ahead of time. 5 The possibility of corruption of input data by rogue elements No solution offered. manipulating loopholes. Source: 2 NBFCs, 3 Banks and 5 Insurance Companies

Part 4 Slave power rising - what must the Master do? Question: What has been your experience with using technology to mitigate risks arising out of technology momentum?

echnology is too powerful a tool to be taken for and does behave in unpredictable ways. 12 experts tell granted. It is totally unsafe to assume that technology us how we can protect ourselves and keep control over Twill behave only as we want it to. Technology can technology. Banking Frontiers June 2021 37 Cover Story

Abhilash Balan, CISO at Digit Insurance (vi) Rank potential risk and specify the desired outcome We are a technology first company, and we – Threat profiling should be carried out and analyzed are aware of risks such as misconfigured post identification of a risk. The analysis should consider systems, access issues, data leakage, etc. outlining the types of risks an organization can encounter We follow established governance and as well as the likelihood of the risk occurring. Based on the policy framework to ensure systems and analysis, the organization must choose the appropriate risk data are protected. We have implemented management strategy - risk avoidance or risk transfer or multiple controls covering data protection, risk reduction or risk retention. authentication and log review to monitor and mitigate the risks. Also, we are continuously upgrading Biranchi Mishra, Head – Credit, Risk & Product at Netafim our systems and processes in line with the evolving threat Agricultural Financing Agency landscape like phishing attacks, ransomware, etc. Given that technology plays a vital role in the risk management and financial reporting Bikash Choudhary, Appointed Actuary & Chief Risk process besides improving efficiency in each Officer at Future Generali India Life Insurance function, the integrity of the technology and Technology has truly become the backbone the outputs are critical control elements of of every modern organization. From the use the internal control environment. The output of computers, smartphones, tablets and the of technology addresses several assertions internet, organizations now have a global inherent to effectiveness, efficiency, exposure to cyberattacks that are difficult confidentiality, integrity, availability, compliance and reliability. to understand and predict. Basis learnings, IT risks are the events that depict ‘what can go wrong’ in not following are 6 key lessons which, if followed, meeting the above fundamental assertions. Secondly, unlike will help in mitigating the risks arising out of natural systems, organizations are managed by intelligent the technology momentum. participants who may find ways to defeat the purpose unless (i) Identify key risk, measure probability and impact – It is there are adequate controls. Appropriate controls, constant very important to identify in time the key areas of concerns upgradation and regular internal and external technology and measure the probability of occurrence and impact on audits help mitigate the technology momentum risks. business activity. This will help in developing an effective mitigation plan. Damodaran C, Vice President & Chief Risk Officer at (ii) Measuring Risk – Once the risk is identified and analyzed, Federal Bank measure its impact. Digitization of risk management functions is (iii) Analyze security threats – The organization must identify necessary for mitigating the rapidly digitizing all security vulnerabilities. This must include external business domain. Use of AI & ML on the threats such as cybercrime and cyberterrorism, as well domain of risk management is increasing. as internal threats, such as the distribution of restricted This enables banks in early effective information. Review of security requirement related to monitoring, early detection of risk events following areas is very important: (a) System access and and ensuring timely remedial action. While controls (b) Authentication (c) Transaction authorization banks rely on a host of technology enabled (d) Data Integrity (e) Audit trail (f) Security event tracking models for decision making, we have put in place model risk (g) Exception handling and (h) System activity logging. management practices for periodic monitoring, back testing (iv) Analyze the risk of hardware and software failure - and reviewing such models. We have put in place tech-enabled Organizations should consider what the risk of hardware models for transaction monitoring and fraud prevention. These and/or software failure entails for the organization and its models are constantly reviewed and upgraded to detect the overall operations. Questions that must be answered: How emerging frauds in digital transactions. stable is the equipment and software the organization uses or plans to use? What are the potential consequences of K R Mohanachandran, Chief Risk Officer atE SAF Small failure? Finance Bank (v) Outsourcing risk – It is very common for an organization We use proper technology risk assessments to hire a third-party company to handle system to identify the critical risks and ways to development and maintenance, network administration, mitigate them. We see the costs and take a disaster recovery service, application hosting and cloud call whether to go for risk mitigation using computing. A third-party vendor must be carefully selected technical controls or administrative controls. and evaluated on the basis of their viability, capability, In majority of the cases, only technology can reliability, track record and financial position. help in mitigating the risks arising from

38 Banking Frontiers June 2021 digital acceleration. Sujay Das, Chief Risk Officer at MoneyTap We follow the concept of ensuring Confidentiality, Integrity Technology enhancement has helped in and Availability (CIA) in our information systems and mitigating risk in several ways for financial applications. The information systems of the bank are subjected organizations. There are many things to Vulnerability Assessment and Penetration Testing (VAPT) that can be done instantaneously using periodically, as a preventive measure against cyberattacks that machine learning algorithms and through could threaten the CIA of data and the systems. API integrations. In our case specifically, The bank has implemented a 24x7 Security Operations checking the validity of self-taken images Centre (SOC) to detect and analyze all potential incidents that customers send us, validating of PAN and notify the application owners who have been affected, to card details, verifying geo-location, eKYC and video KYC, contain, eradicate and recover from the incident. All cyber income verification, etc, are a few examples where technology security incidents are recorded and reported to the InfoSec has helped the credit underwriting and verification processes team. Also, we conduct planned and unplanned DR drills. The become faster and more accurate. These go a long way in bank’s technology platforms have proved to be robust to face mitigating credit and fraud risk for financial organizations. any potential cyber security and IT security risks. However, there should be proper checks and balances built in the processes to see that there are no failures in the Prithvi Chandrasekhar, President Risk & Analytics at technology. We should build in robust monitoring processes InCred that get triggered if any technological failure happens, so that I see complexity as the main risk emerging it can be immediately fixed so as to reduce operational losses. from the accelerated use of technology. In the balance, these emerging technologies Sunder Natarajan, Chief Compliance & Risk Officer at are immensely powerful. They clearly make IndiaFirst Life Insurance our customers and our industry better off. Risks include adoption, teething and early However, dealing with the complexity (and redundancy. A head start in the use of the unintended consequences) of these technology across the sales process over the technologies, is something we are still recent years has helped us ride the momentum grappling with. which I have largely driven by the willingness of the end customer and our distributors to Roopam Asthana, CEO & WTD, Liberty General Insurance engage through digital or phygital means. Technology momentum in any industry We have seen a digital uptick across the would affect 3 major pillars of any customer life cycle - right from engaging prospects through organization - Processes, Systems and web workshops, paperless onboarding through an OTP-based People. While risk of obsolescence and customer consent, ongoing customer service through WhatsApp, lack of continued tech support can be IVR, and chatbots, collecting premium and remitting maturity an outcome of not keeping pace with and claim proceeds through digital means. technology, risk relating to introduction of The first level risk arises from the above is adoption, new technology can likely lead to a major especially if it involves a large set of users. The immediate failure. Hence, it is crucial to identify possible risks and create next challenge is the ability to overcome teething troubles and a plan to mitigate these risks. Post identification of these course-correction alongside changes. The biggest risk, however, risks, we must have a strategic plan in place like business is maintaining the status quo in the age of rapid change. continuity plans and back-up plans. Constant identification of technology risk should be an ongoing process. Venkata Jayaraman M., Chief Risk Officer at Fincare Small Finance Bank Sadaf Sayeed, CEO at Muthoot Microfin Technology has been a game-changer in Various risks are arising out of the technology addressing several challenges by optimizing momentum. The most important is the the end-to-end risk management process. data accuracy, availability of the data and Our experience with using technology to security of the system and data. These IT/ mitigate risks arising out of technology data security risks can be mitigated through momentum include: (i) Adopting a shift various technological and logical tools. We left strategy towards security testing (ii) are implementing the basic security tools Putting in place inbuilt security into the effectively. Yes, with complexity of the product rather than retrofit (iii) Implementing DevSecOps data, process and IT systems, we will be implementing more (iv) Automating continuous vulnerability assessment and (v) sophisticated security tools. Automating CI/CD pipeline.

Banking Frontiers June 2021 39 Cover Story

Vijayalakshmi Natarajan, Chief Compliance and Risk Information and cyber security of outsourced vendor must Officer at Aviva India be reviewed at regular defined intervals. Other crucial issues With the increase in digital adoption in sales include testing at onboarding stage, tight digital and physical and servicing, the fact remains that the risk access control management. Finally, there is a need to ensure of information and cybersecurity threats ongoing training and awareness for employees and vendor do multiply. However, it is technology in resources associated with the company. itself that helps address the risks created by technology. The key to this is right SUMMARY investment in information and technology Looking at all the responses, it is clear that technology poses a vast architecture and infrastructure at the right variety of risk thereby presenting a rich scope for dealing with them. time supported by an IT strategy roadmap. One interesting perspective is that thanks to technology, there is now This should essentially address obsolete technology, timely a dual intelligence within every organization – the human intelligence upgrade and patching, robust DLP tool, firewall protocols, and the cyber intelligence. When they work with synergy, magical underlying security protocols and annual real time BCP results happen. But when the synergy breaks down – accidentally (Business Continuity Plan) drills. Add to that, information and or wilfully – the outcome is usually disastrous. Net net, the human security risk assessment both at pre-go live stage and at defined intelligence must keep moving ahead to remain the master. intervals for critical applications. [email protected], [email protected]

Part 5 Mental Health - U Shaped Recovery

Question: Are you looking at risks associated with emotional issues like frustration, depression, isolation, alienation, resentment, etc? Please give an overview of the mitigation plan.

he fear created by the pandemic and the isolation ensure that there are continuous community created by the lockdown have had the biggest ever activities and independent feedback systems Timpact on mental health. Fortunately, companies have that help identify emotional issues arising found a variety of solutions that mitigate the problem. All 16 out of work or non-work circumstances and participants shared their insights and their company’s practices provide assistance to our employees. In our to tackle this issue. organization, we have created a transparent process and safe space wherein our co-workers Abhilash Balan, CISO at Digit Insurance don’t feel any reservations in speaking about With a remote work environment and loss of emotional issues or issues related to their mental wellbeing. In human connect, we do see these emotional fact, we make a conscious effort to choose plans with health phases in employees. But our HR team tries insurance companies where there is adequate support provided its best to foster motivation, productivity to our employees with access to adequate care on mental-health and mindfulness through various initiatives. issues. From a tech point of view, we utilize all tech resources to ensure our employees are Avneesh Trivedi, CRO at Moneyboxx Finance empowered to work from home without Yes, focusing on emotional quotient of a hassle. Team connects, training modules, appraisals and employees is very important in current meetings are all there and we have a business continuity plan in scenario. Continuous engagement with place that helps employees to work smoothly even from home, employees and devising plans on their overall thus helping to mitigate these risks. mental and physical wellbeing has been a very critical area. We focus on helping employees Anil Pinapala, CEO at Vivifi India Finance to keep mental calm through regular We have strong HR and administrative policies and practices to pranayama and yoga. Creating a positive

40 Banking Frontiers June 2021 environment with right messaging (Dos and Don’ts) has helped unprecedented amount of change. Employees in boosting employee morale in these turbulent times. at all levels continue to be worried about their health, the wellbeing and health of Bikash Choudhary, Appointed Actuary & Chief Risk family members, in addition to performance Officer at Future Generali India Life Insurance pressure. Our company’s leadership makes Uncertainty breeds anxiety, and we are living sure employees feel heard, supported and in uncertain times. Between rising numbers led with empathy. Management, team of covid cases, questions about the ongoing leaders have regular informal interactions challenges and the economic fallout of the with employees individually and in groups, address concerns pandemic, we don’t know what will come in the most productive way possible. We prioritize the safety next. And that’s taking a toll on our mental and wellbeing of employees and release guidance for working health. This unprecedented situation is safely in general and during the pandemic. HR regularly clearly demonstrating that individuals are arranges interaction with doctors and wellness experts to assist largely and emotionally unprepared for the detrimental effects employees in dealing with their mental and physical health, of the large scale and prolonged effects of the pandemic. which has never been more important. In the current situation, anyone can experience crippling levels of stress and anxiety now and due to the remote working Damodaran C, Vice President & Chief Risk Officer at environment people managers need to be alert for signs that Federal Bank indicate employees are struggling to cope. We recognized The certification ‘Great Place to Work’ is these challenges early on and implemented the following to a testimony for Federal Bank’s employee- help employees manage their wellbeing, work-life balance and friendly work environment and HR practices. proactively work with emotional issues due to the pandemic: We consider human resource as the most (i) Dedicated break-hours – Fixing break-hours helps an important asset of the bank and take all employee take note of the time to relax and ease out the steps to keep it vibrant. The pandemic has pressure of work during work hours. We have dedicated affected all human beings across the globe, lunch and break times with instructions of not scheduling psychologically, financially and physically. Social isolation, fear or attending any meeting during those fixed timings. We of contagion, fear of impact on family members, etc., can all call it ‘Me Time’. cause distress. With full awareness of the reality, the bank has (ii) Digital Signoff – We all experienced long and odd working come out with timely HR support measures. hours during the initial days of lockdown. Over time, We have operationalized WFH, duly assigning priority for things improved but I believe it still requires revisit and those staff who are considered more vulnerable to pandemic improvisation. All employees are encouraged to log off by 7 and wherever the risk of spread is assessed as high. The bank pm unless they are working on anything which is business- conducts webinars on health-related issues and arrangements critical, which needs to be notified to the line manager. are made for interactions with medical practitioners and (iii) Self Care – Encourage employees working remotely to counsellors. Round-the-clock counselling helpline is available take time for self-care and movement/exercise during the for employees to seek assistance of trained persons to help them workday. with their emotional issues. (iv) Quick check-in – We conduct a quick round of check- The bank also takes care of expenses for treatment of ins from participants at the beginning of every virtual employees and dependents. Emergency financial support meeting to see what’s on people’s minds, personally and is provided if any of the close relatives of the employee is professionally. hospitalized. The bank is taking exceptional steps in vaccinating (v) Sharing information – We arrange sessions by leaders who all the employees and their dependents. The employee welfare are empathetic and who talk personally about challenges measures, cordial relationships among employees and strong that they understand people are going through. family bonding are the foundation stones on which Federal (vi) Tele-Wellness Services: We tied up with Truworth, a tele- Bank is built and these factors have played crucial roles in wellness partner to provide our employees with on-demand keeping up the employee morale during these testing times. medical consultations, online pharmacy and medical test Various communications channels are open for to-and-fro booking services. These services were extended to their communication between HR and employees and our MD family members as well. & CEO reaches out to the employees at least once in a week through motivating messages. Biranchi Mishra, Head – Credit, Risk & Product at Netafim Agricultural Financing Agency Gopal Balachandran, CFO & Chief Risk Officer at ICICI Both employees and the company are reeling from an Lombard General Insurance

Banking Frontiers June 2021 41 Cover Story

The uncertain times related to the pandemic like employee connect programs, online training sessions, can be extremely unnerving. However, senior officials addressing the staff in a structured manner, staying resilient and calm is the best counselling arrangements, medical support, etc. Advisories are opportunity and option we have, if we have issued by the corporate office periodically. Personal contacts by to win this pandemic war. senior officers with those employees who are tested positive for Employee welfare and safety are key covid-19 provide relief to the employees. components for all organizations. The pandemic outbreak has taught us that Prithvi Chandrasekhar, President Risk & Analytics at anything is possible and accordingly we have accelerated the InCred digital ways of working to ensure that productivity is ensured Yes, we believe WFH can have an impact in a WFH environment and employees can be safe and sound on the mental health of our employees. in their homes. The most important mitigant is ongoing The company has also regularly engaged with employees by employee engagement. We are making circulating educational material on safety and productivity and sure that our employees are constructively also urging employees to restrict travelling. involved in substantial work, and embedded Again, mental health is a very important area which needs with their teams, despite WFH. Further, we consideration. The company has organized digital wellness also support employees with flexibility and resources if they sessions for employees for which external experts are invited ever need to deal with more severe mental health issues. to address employees on the importance of good physical and mental health. They also provide valuable insights on staying fit Rakesh Bansal, Chief Risk Officer atH ero Housing Finance and healthy through activities such as regular exercise, healthy Our company hired a psychologist to deal diet plans, engaging in arts and craft, spending time with the with these issues and he was available on family and similar other initiatives. call. We kept the team engaged by giving The company has organized hobby groups and employees them exciting projects on portfolio analysis are encouraged to be part of such hobby groups to ensure that and policies and process analysis of various they can pursue their hobbies and interests and engage with companies. We also helped them develop like-minded individuals on digital platforms provided by the new skills during the lockdown. company. The company has also encouraged employees to spend Roopam Asthana, CEO & WTD, Liberty General Insurance more time with their families and whenever any employee The current pandemic situation and its achievement has to be celebrated, the company reaches out to related complications have created the ground the employee’s family to ensure that it is a memorable event for for emergence of mental health problems the employee and family. and emotional issues within employees and The company also has an in-house program called Santulan, these are a risk to the long-term wellbeing which is a 24x7 assistance program providing employees of any organization. Our WE CARE health access to trained counsellors while ensuring confidentiality. program for our employees has identified Employees can share their personal and professional concerns that one of the root causes for anxiety, fear with trained counsellors, who would play a pivotal role in and related emotional challenges is also misinformation. To boosting psychological strength. address this, we have organized Medical Expert Talks for our Through our IL Take Care App which has crossed 500,000 employees and families in regional languages so that they can downloads, we even offer the facility of tele consultation or a better understand the 2nd wave of the pandemic. It helped put doctor on call facility, for employees as well as customers. at rest many doubts and allay fears. A robust Employee Assistance Program with expert K R Mohanachandran, Chief Risk counsellors available on call, in regional languages, is another Officer at ESAF Small Finance Bank effort to solve the issues. Additionally, we realised that many The current situation of widespread families were grappling with some challenges like how to talk infection has a psychological impact on the to children about covid, how to quarantine without loneliness, employees of any organization. The WFH and we have organized seminars on such topics. arrangements, distancing from friends and colleagues, infection, loss of life of some of the Sadaf Sayeed, CEO at Muthoot Microfin colleagues’ relatives, social restrictions, etc, We are effectively reaching out to our employees to provide cause anxiety for employees. Some of them are able to manage awareness and ensure psycho-social support through our the stress by themselves, but we, as an institution, have taken online HRMS and learning platforms. We promote and many steps to address this issue and to support the employees, ensure that employees are engaged in relaxation activities.

42 Banking Frontiers June 2021 Rediscovering healthy hobbies or activities people feel more secure in the troubling times. We make sure are promoted through various employee that employees and individuals are getting help with medical engagement activities like cooking, painting, tests, covid sick leave, leaves for caregivers and for vaccination photography contests, etc. We stay connected purposes, vaccination drives, care packages, accommodation, 24x7 through our helpline numbers in transport, food, (for people staying alone, or far away), mental case employees are in need of any support. health counselling, wellness webinars every week, etc. Further, we have contacted each and every employee from HO to take feedback on Venkata Jayaraman M., Chief Risk Officer at Fincare their safety and wellbeing. We have also facilitated free online Small Finance Bank consultations for employees to connect with a mental health Remote working seems to cause higher professional by phone or videoconference through Practo fatigue levels than being in office. There are mobile app and another doctor on call facilities. instances of losing interest or motivation, start and end time pressure, natural Sunder Natarajan, Chief Compliance & Risk Officer at distractions, lack of meaningful socializing, IndiaFirst Life Insurance pressing issues, both at work and personal Mental health is directly related to front. The bank has tried to navigate this productivity and is underrated. While we challenging phase by providing flexibility of may have rarely seen mental health issues work from home/remote location to ensure personal comfort, surfacing pre-covid, the same is not true in no strict start-end timings, regular leadership town-halls in the last one year. Even now, we are seeing order to alleviate fear and anxiety and regular team interactions just the tip of the iceberg. In an office about health and wellness, both physical and emotional. environment, we may witness the effect it has The bank offers leave/financial benefits, offers support on productivity and behavior while the cause groups in case of infections for self/family members, engagement would have remained a mystery. In the times we are living in groups for social interaction, R&R as usual, special R&R and today, both cause and effect are a challenge to detect and assess. events, motivational posts in internal groups, social media buzz The mitigation has to be both proactive and reactive. about bank’s progress and fight against covid. All these have Simple yet effective measures to engage the team have made a helped us create positivity and buzz in the organization’s fight difference to us. While some of these are done for knowledge against the pandemic. enhancement, connecting over a coffee for 30 minutes and chatting up, and seeing each other’s faces have also made a big Vijayalakshmi Natarajan, Chief Compliance and Risk difference. Leaders are encouraged to reach out to the affected Officer at Aviva India team and family to offer help. Small wins are applauded and Emotional distress has increased celebrated instantly. We set up helplines a few years ago and phenomenally in covid situation and the they have started buzzing last year. extended lockdown, especially when self, close or extended family members and Sujay Das, Chief Risk Officer at MoneyTap friends are affected. The mental stress The pandemic has brought in many increases manifold under the situation of uncertainties in the lives of people. Many work from home as well considering there people have been working from home for is least face to face contact with fellow the past one year with restricted movement employees. as well. Lots of screen time and difficulty To address this most employers are directing this risk in separating office and home timings have on the ongoing business by creating support systems both made it important for the companies to start on formal and informal platforms with ample employee thinking of better ways to get work done. outreach programs. Mandatory team connect with leaders, Managers have been asked to be very proactive in speaking participation in seminars and conferences, extensive usage of to their teams about shutting screens and doing off screen safe communication platform for face-to-face engagements, activities. It’s important for mental health reasons that people connect with a doctor to address both physical and mental issues, be reminded to nurture hobbies, read books, gardening, yoga, maximizing safety protocols while at work in office, tie-ups meditate, or anything else that can bring some relief from it with medical support platforms for medicines, consultations, getting too overwhelming. Even suggestions such as playing hospital care, health care support are among initiatives that board games, cooking new dishes, music and other activities have been taken up by the company. Personal touch to show are encouraged. that ‘I Care’ is key to connect and embrace employees during The HR team has been very timely with their efforts to these stressful times. bring in external help wherever needed, and making sure Living the value of ‘Care More’ to help our people and

Banking Frontiers June 2021 43 Cover Story

support them in fighting the challenges of the availability of iv. Encourage Pranayama and Yoga. medicines, hospital beds, oxygen, ventilators, tests/vaccination v. Tele-wellness services covering medical consultations, online etc, we have created Aviva War Room - a group of 50 volunteers pharmacy and medical test booking services, for employees and who track the leads for medical supplies in real time, verify family members. them and answer the distress calls. Some of our other initiatives include an in-house ‘Happiness Campaign’ to help our people 3. Finance Related: combat stress, anxiety, anger, depression, cultivate happiness, i. Emergency financial support if any of the close relatives of resilience and mindfulness in these turbulent times using the employee is hospitalized. activities, micro steps, videos, stories etc. A similar campaign (WFH -Work Feeling Happy) had a positive impact last year 4. Work Related: during Lockdown 1.0 and we hope to create a positive impact i. Strong HR and administrative policies and practices to with this exercise ensuring our people do not feel isolated or ensure that there are continuous community activities. depressed. We have collaborated with Dr.Lal Path Labs & ii. Independent feedback systems that help identify emotional Apollo Pharmacy for discounts and home collection of blood issues arising out of work or non-work circumstances. samples and delivery of reports. We have also tied up with iii. Making sure that employees are constructively involved in Practo to offer complimentary online consultation to all our substantial work. employees, and their family members, with some of the best iv. Help employees developed new skills during the lockdown. doctors across India. These initiatives have strengthened the belief of our people 5. Communications Related: that the organization stands with them in all ups and downs. i. Transparent process and safe space wherein co-workers We will continue our efforts to ensure safety – physical and don’t feel any reservations in speaking about emotional psychological - for all our people until we sail through these issues or issues related to their mental well-being. challenging times. ii. A quick round of check-ins from participants at the beginning of every virtual meeting to see what’s on people’s SUMMARY minds - personally and professionally. The participants in this round shared a wide variety of iii. Creating a positive environment with Do’s and Don’ts. responses. We summarized them and divided them into 6 iv. Session from leaders that are empathetic and talk broad categories. personally about challenges that they understand people 1. Time Related: are going through. i. Dedicated break hours to help employees take note of the v. Wellness webinars to assist employees in dealing with time to relax and ease out the pressure of work during work mental and physical health. hours. vi. Seminars on how to talk to children about covid and how ii. Encourage employees to log off by a particular time, unless to quarantine without loneliness. they are working on anything which is business-critical. vii. Medical expert talks for employees and families in regional iii. Ask managers to be very proactive in speaking to their teams languages. about shutting screens and doing off screen activities. viii. Social media buzz about the company’s progress and fight iv. Encourage employees working remotely to take time for self- against covid. care and movement/exercise during the workday. 6. Hobbies Related: 2. Health Related: i. Organize hobby groups on cooking, gardening, painting, i. Vaccinating all the employees and their dependents. photography, meditation, music, etc, and encouraging ii. Mobile app for tele consultation with doctors. employees to be part of such groups. iii. Psychologist on call. [email protected], [email protected]

Part 6 Looking, but not touching

Question: What risk management frameworks do you expect to put in place as and when cryptocurrencies become legal and start gaining traction?

44 Banking Frontiers June 2021 arge parts of the world at showing a lot of interest in management framework. The evolution of legal, regulatory and crypto currencies. Bitcoin and others have been rising risk management frameworks for dealing in cryptocurrencies Ldespite some drops. The financial sector however has in the country is expected to be accelerated, with the verdict only a little to say on the subject. Here are responses from 13 of the Supreme Court and the subsequent clarification from of our participants. RBI enabling customers to avail banking services in connection with their dealing in virtual currencies. RBI has recently Abhilash Balan, CISO at Digit Insurance advised regulated entities to carry out customer due diligence Currently the same is not legal in India and in line with the existing regulations like KYC, AML, CFT and have much less data to comment on the risks obligations under PMLA, in addition to ensuring compliance associated with it. with FEMA for overseas remittances. Cryptocurrencies may not easily gain acceptance as a Anil Pinapala, CEO at VivifiI ndia Finance medium of exchange and may remain a speculative asset in We have a strong regulator the near to medium term in future. A few central banks are in India - Reserve Bank designing their own digital currencies, which are naturally of India - and I am expected to gain traction and acceptance as a medium of sure that the regulatory framework for payment. As Central Bank Digital Currencies gain traction, cryptocurrencies set up by them will be the central banks are expected to come out with regulations for driving force for all processes of transacting cross border transactions as well as domestic holdings in digital with them. We are strongly guided by the currencies providing the platform for banks to build their risk central bank’s guidance in managing the management systems. risks associated here. Given the high-risk nature of cryptocurrency as an asset class, banks may tread very cautiously in assuming Avneesh Trivedi, CRO at Moneyboxx exposures. Cryptocurrencies are susceptible to technology and Finance cybersecurity related risks, given that blockchain technology is We need to wait for RBI guidelines on this. their operating platform. We have already identified blockchain Fintech in blockchain space is going to be as a fast-emerging technology with wider scope for application fiercely competitive. The big push will be for in the domain of banking and finance and put in place security startups who want to raise funds through standards for its use in line with the prevailing best practices. Initial Coin Offerings. Bank will tread with caution as far as assuming exposure to cryptocurrencies are concerned and tighten the risk Bikash Choudhary, Appointed Actuary & Chief Risk management framework on use of blockchain technology to Officer at Future Generali India Life Insurance address technological and other associated risks. Vulnerabilities Cryptocurrencies are in a very nascent of blockchain to technological and operational failures will stage and regulators are yet to decipher be addressed by building robust governance framework and their adoption. While not illegal, they business continuity measures, inter alia, including appropriate are not regulated. In India, we do not incident response and recovery time. have a regulatory framework to govern Though the distributed database and the cryptographically its functioning till date, but the Indian sealed ledger reasonably mitigate corruption of data, the value government is exploring crypto regulation stored in customer wallet is susceptible to theft. Confidentiality in consultation with industry experts and of data stored is also exposed to risk, as transactions appended regulators. As cryptocurrency is still an exploratory phase to the ledger can be accessed by all the participants. Even in India defining a risk management framework around in a permissioned network where data could be stored in a cryptocurrencies will not be appropriate at this stage. hashed format, metadata available to the participants can be monitored to get information on the type of activity and the Damodaran C, Vice President & Chief Risk Officer at volume associated with the activity. Federal Bank A robust technological framework needs to be evolved Cryptocurrencies carry high risk, as to mitigate the risks involved. Creating technological as well evidenced by the huge volatility in value. as cybersecurity awareness associated with the underlying RBI and the Central Government have technology among the staff and customers would be one of the often alerted the public about the high risk challenges that needs to be addressed from a risk management involved. The debate as to whether these perspective. Appropriate monitoring mechanisms and are currencies or assets is still on. Against exposure limits will have to be put in place to manage the risks. this background, it is too early to have an Legal and regulatory risks around smart contracts involving opinion on the cryptocurrency-related risk blockchain technology also will have to be carefully evaluated

Banking Frontiers June 2021 45 Cover Story

and mitigated. Council will have to take further cognisance. At present, it is More clarity needs to emerge on regulatory and legal only speculative and highly volatile. framework around enforceability and governance of smart contracts within a network, inter alia, covering interactions Sadaf Sayeed, CEO at Muthoot Microfin between such contracts as well as with the external legal and There will be huge risk arising from the use of regulatory framework. The developments in the domain of cryptocurrencies. These may be in the form cryptocurrencies and blockchain technology will be keenly of wallet vulnerability, double spending, risk watched going forward and appropriate stand will be taken at of rogue miners, volatility and liquidity risk the right time, duly upholding business prudence. and reputational risk for the organization. There will be requirement of the multi-fold K R Mohanachandran, Chief Risk Officer at ESAF Small risk management strategy. This will be in Finance Bank the form of automated monitoring as well as The BCBS’ March 2019 statement on crypto- tracking of incidence as well as alerts. assets articulates its minimum expectations for banks’ exposures to crypto-assets and Sujay Das, Chief Risk Officer atM oneyTap related services. These expectations apply It is difficult to comment about to jurisdictions that do not prohibit such cryptocurrencies at this point. It has to exposures and services, and may be further be seen how the central bank rules and augmented by additional country-specific regulations come in for cryptocurrencies and requirements. In December 2019, the their acceptance. Then risk management committee said in a statement that the immature nature of strategies and frameworks can be built the asset class meant there were still significant challenges for around that. regulators to deal with. Due to the volatility of cryptocurrencies, banks will have Sunder Natarajan, Chief Compliance & Risk Officer at to impose restrictions and stringent margins where the bank IndiaFirst Life Insurance accepts cryptocurrency as value rather than as a medium of Avoid is the mantra for now. This is a exchange. A secondary concern would be increased scrutiny of domain where we have limited expertise and transactions in cryptocurrencies from AML/CFT perspective we would not want to venture into it unless given the fact that cryptocurrencies are the preferred medium it stabilizes and we have stronger legislation of payments on the dark web. and controls.

Prithvi Chandrasekhar, President Risk & Analytics at Venkata Jayaraman M., Chief Risk InCred Officer at Fincare Small Finance Bank We don’t deal with cryptocurrencies right On the radar are NIST 800-53, ISO 27001, now. We look forward to the technology and RBI cybersecurity frameworks and any regulatory environment for crypto becoming other relevant advisories received from more stable, so we can weave these emerging regulatory bodies, industry associations or technologies into our business model. best practices.

Rakesh Bansal, Chief Risk Officer at SUMMARY Hero Housing Finance No one wants to touch the crypto currency I will avoid cryptocurrency players as lot business until the regulator or the government lays a roadmap. of money laundering and terrorist funding The risk officers prefer to apply their mind only when they get exists through digital currencies. We have this clarity. What this also implies is that none of the financial defined this as negative segment in our organizations (or perhaps a very small number) are really credit policy. interested in making an early move to grab the opportunity. [email protected], [email protected] Roopam Asthana, CEO & WTD, Liberty General Insurance Cryptos are still unregulated and there is no framework to govern. It will not become a legitimate investment horizon, till it is approved by the regulator (RBI). Further, insurance regulator (IRDAI) and Insurance

46 Banking Frontiers June 2021 Part 7 Interest is high, but adoption is low

Question: What has been your experience with cyber insurance as a risk mitigation tool?

ne doesn’t have to ask an expert to know what are the management tool. biggest threats to any financial organization – the two At Future Generali Life Insurance, we are proactively working Obiggest threats are pandemic and cyber-attacks. 14 on thwarting cyberattacks. We have done so by implementing experts share their perspectives on the effectiveness of cyber several initiatives such as SOC, endpoint encryption, endpoint insurance is against cyber risk, and how to adopt it. detection and response, digital risk management, etc. However, we also have recognized that the dynamic nature of cybersecurity Abhilash Balan, CISO at Digit Insurance needs us to consider that we can have certain blind spots and Cyber insurance does offer protection in have opted for a cyber insurance cover as well. This enables terms of mitigating monetary loss, providing us to mitigate the cyber fallout through post facto financial support for forensics, reputation costs, loss indemnification and at the same time become a proactive regulatory fines, etc, in case an organization ex-ante prevention mechanism. suffers a security breach. It also brings to the table access to international level experts Damodaran C, Vice President & Chief Risk Officer at and vendors to help in covering these risks. Federal Bank It allows us to transfer some risk to the Cyber insurance provides an effective insurance service provider, but one has to be aware that it’s just risk transfer mechanism against the low one of the components of risk management framework. frequency high impact cybersecurity incidents. This needs to be aligned with the Avneesh Trivedi, CRO at Moneyboxx Finance regular operational risk indemnity covers Cyber insurance is gaining traction now. for deriving the maximum benefit and cost With the increased pace of digital journey in optimizations. Assessment of the financial consumer lending space, cyber insurance is value to be covered and the policy clauses required are a needed to safeguard against any eventuality. In challenge as this is a relatively new area and new cyber risks are the current scenario as most of us are working constantly emerging. from home and are a fully remote workforce, organizations are facing email threats, end Gopal Balachandran, CFO & Chief Risk Officer at ICICI point security gaps, etc. Cyber insurance is Lombard General Insurance designed to cover the fees, expenses and legal costs associated Cyber insurance is a very vital tool for risk with cyber breaches. It is imperative to use this insurance as a mitigation and the times we live in make it proper risk management tool. imperative for every business, irrespective of its scale to aim at availing the right set of Bikash Choudhary, Appointed Actuary & Chief Risk insurance covers to protect businesses and Officer at Future Generali India Life Insurance individuals against cyber risks. Due to the rapid adoption of remote working, The 14th edition of Data Breach cybersecurity has ballooned into major Investigations Report (2021 DBIR) by US-based Verizon concern for all organizations, governments Business, analyzed 29,207 security incidents from data collected and individuals across the world. Since the from 83 contributors, with victims spanning 88 countries, 12 onset of the pandemic the frequency and the industries, and 3 world regions. The report showed that with complexity of cyberattacks have increased an unprecedented number of people working remotely, phishing exponentially. Thus, management of cyber and ransomware attacks increased by 11% and 6% respectively, risks has become increasingly onerous and with instances of misrepresentation increasing 15x compared inevitable. to last year. Organizations are often left perplexed in the event of a With most people working from home, due to the pandemic, cyberattack as they are either faced with the proposition of there has been a significant growth in cybercrime. The year 2021 large payout (ransoms) to the cybercriminals or face potential saw 5258 data breaches across the globe. reputational damage and / or regulatory penalties. In such Additionally, breached data showed that 61% of breaches situations cyber insurance can prove to be a very effective risk involved credential data. About 95% of organizations suffering

Banking Frontiers June 2021 47 Cover Story

credential stuffing attacks had between 637 and 3.3 billion data bases and systems of an airline and a large oil pipeline malicious login attempts through the year. are perfect examples of increasing cyberattacks. Adequate Among financial and insurance industries, 83% of cyber cover will help to mitigate the risk of losses arising from data compromised in breaches was personal data, while in such attacks, of course along with proper IT security practices professional, scientific and technical services industries, 49% – as prevention is better than cure always. Unfortunately, the data was personal. Further, the report also revealed many cyber risk insurance product has still not caught the fancy of breaches that took place in the Asia-Pacific region were caused consumers. by financially motivated attackers - phishing employees for credentials and then using those stolen credentials to gain Sadaf Sayeed, CEO at Muthoot Microfin access to mail accounts and web application servers. The above We have not availed cyber insurance till now. statistics speak volumes. Therefore, in today’s day and age, whilst cybersecurity is Sujay Das, Chief Risk Officer at MoneyTap an essential tool, it is equally important for all organizations, As we move more towards better and more including SMEs, to assess their nature of business from a seamless digital processes, cyber risk is risk profiling perspective and accordingly make an informed becoming more important to consider. With decision on obtaining the right set of cyber insurance covers. increasing number of cyberattacks across the They must evaluate the terms and conditions of the insurance globe, cyber insurance is a good tool to cover policy. those losses. At this particular time across any industry across the globe, the awareness of how important K R Mohanachandran, Chief Risk cyber insurance is frequently known to the companies using Officer at ESAF Small Finance Bank technology usually. An increasing awareness within individuals Cyber insurance policies offer insurance cover is also necessary as we see increase in losses due to identity for risks such as data liability, administrative thefts, phishing etc. However, it is also important that fintech obligations, reputation and response costs, companies and other financial institutions constantly monitor multimedia liability, cyber and privacy and keep updating their systems and technologies so that extortion, network interruption, PCI DSS cyberattacks can be minimized. assessment, reward expenses, fraudulent communication loss, cyber terrorism, fraudulent fund transfer Sunder Natarajan, Chief Compliance loss, psychological support expenses, social engineering frauds, & Risk Officer at IndiaFirst Life Insurance etc. Any financial institution is susceptible to cyber frauds. We Reviewed renewal. No claim. We have have opted for cyber insurance as a mitigation tool. not raised a claim yet. However, we did a comprehensive review of requirements Prithvi Chandrasekhar, President Risk & Analytics at whilst renewing our cover during the year. InCred We don’t specify cyber insurance right now Venkata Jayaraman (apart from our broader business insurance M., Chief Risk Officer at Fincare Small framework). We look forward to the Finance Bank technology and regulatory environment for The bank is on a journey to undertake cyber insurance becoming more stable, so we risk assessment on continuous basis and can weave these emerging technologies into mitigate risks to keep it within the acceptable our business model. risk appetite. However, cybersecurity is always fighting against the unknown. Any Rakesh Bansal, Chief Risk Officer atH ero Housing Finance organization needs to protect a multitude of areas against any We have to evaluate this option. weakness, whereas a hacker needs a single gap or weakness to penetrate the organization. Hence continuous and rigorous Roopam Asthana, CEO & WTD, Liberty monitoring framework is the key to staying on top of the game. General Insurance The e-space ecosystem in India has Vijayalakshmi Natarajan, Chief undergone a very large transformation Compliance and Risk Officer at Aviva India during the recent past and is vulnerable The probability of cyber risks, which include to both natural accidents as well as phishing, smishing, vishing, malware and intentional interventions. Cyber ecosystem, ransomware attacks have increased 3-fold if overlooked, can lead to credibility crises with the entire world moving on to work having financial and social consequences. Recent breach of digitally from home. This has increased

48 Banking Frontiers June 2021 awareness about cybersecurity protocols across industries significance is growing day by day. without any distinction. Data and information protection has assumed paramount importance with the industry having SUMMARY resorted to extensive use of internet and all available modes of Not a single participant has spoken against cyber insurance….all digital platforms for communication, both formal and informal, have commented on its importance and effectiveness. From the to elicit information and speed up servicing. 14 organizations that responded to this question, 3 have actually This is where cyber insurance comes into play - to protect purchased cyber insurance, 3 haven’t purchased and the other 8 against damages, losses, penalties, etc associated with data haven’t indicated either way. Of the 3 that have purchased cyber loss or recovery cost in case of a cyberattack/hacking that insurance, 2 are life insurance companies and one is a small results in disruption. But, the extent of liability covered by finance bank. The 3 that haven’t purchased cyber insurance are cyber insurance would be an area of debate for most as well all NBFCs. The low penetration of cyber insurance indicates that as affordability to cover all damages and all instances. With the product has to mature to fit a greater variety of needs and the the impending Personal Data Protection (PDP) Bill in India, awareness too has to grow. organizations are willing to invest in cyber insurance and the [email protected], [email protected]

Part 8 Variety is the spice of learning Question: What new skills have you acquired based on your experience with the pandemic and lockdown?

he pandemic would be a wasted opportunity if people didn’t - functional knowledge and behavioral knowledge. Considering it take advantage of the adversity to learn something new. as a black swan event, insights about changed consumer behavior TFrom the responses, it is clear that none of our 16 participants can be observed in these times. wasted this opportunity. Here is what each of them has learnt – some focused on personal learning, some focused on professional Bikash Choudhary, Appointed Actuary & Chief Risk Officer learning, and others focused on organizational learning. at Future Generali India Life Insurance The pandemic has amped up risk management, Abhilash Balan, CISO at Digit Insurance forcing executives and employees to adapt to The pandemic and the lockdown which remote work, learn new technologies and find followed forced us to stay confined in our home, different ways to serve clients and customers. but it also helped us get more time to adapt and Covid has helped more people than before learn new skills. During the lockdown, I picked understand that a single root cause issue can up skills like cloud security aspects and global totally trigger risk at an enterprise level that trends in risk management that would help me affects everything. stay afloat while working in this domain. Here are the key methodologies and skills that I adopt when it comes to risk management: (i) Put our employees first (ii) Anil Pinapala, CEO at Vivifi India Finance Understand technology, digital adoption and risks associated Having played sports all my life, the pandemic with it. (iii) Challenge the basics (iv) Identify emerging risks & (v) induced lockdown made me pick up yoga along Develop strategies to respond, monitor and communicate risks. with my wife. Reading & playing sports and yoga has greatly helped me in keeping fit during Biranchi Mishra, Head – Credit, Risk & Product at Netafim this time and helped me overcome mental and Agricultural Financing Agency physical stress. If the pandemic has taught us anything, it is that events in far-off corners of the globe can Avneesh Trivedi, CRO at Moneyboxx have massive repercussions on our traditional Finance risk management plan. Irrespective of the size The pandemic and lockdown have reflected 2 or geography, it is critical to evaluate the risks important facets of human behavior - resilience seemingly outside our scope that could impact and upskilling. Adoption of online learning tools our business and to what extent. has really been a very enriching experience. In One of the skills that we are trying to acquire focuses on these times, I have upgraded myself on 2 fronts categorizing and quantifying risk in terms of its interconnection

Banking Frontiers June 2021 49 Cover Story

and the sequential impact. It helps us to develop a comprehensive (ii) Cross Functional Interdependencies and System Flow: As risk management plan for all associated risks. The key is being the finance function has significant inter-dependencies on flexible, looking at emerging risks from multiple angles, and have other functions across an organization, every function would proactive mitigation plans in place. have to look at being more technology savvy. Data has to flow seamlessly into the financial accounting systems from various Damodaran C, Vice President & Chief Risk Officer at revenue and expense booking systems and to ensure the same, Federal Bank the data flow management needs to be looked into along with Adaption to the WFH environment was the most appropriate integration of various technology-based platforms. important learning across the organization, If the various legs of revenue and expenditure booking have induced by the prolonged lockdowns and manual elements involved in them, the same would have to associated restrictions. With more than one year be transformed to being managed through the technology through the pandemic, managing teamwork systems, to ensure that the finance function gets accurate and through virtual meeting platforms and fully timely data required for finalization of accounts and other digital means of communication has become activities. the order of the day. Remote working and (iii) Information Security: In a remote working environment, virtual meetings without affecting productivity and compromising information security is very important. Therefore, the work on security are the key institutional skills acquired during the forces of the finance function, which are in the possession of pandemic. WFH also led to more disciplined organization and Unpublished Price Sensitive Information (UPSI) would have systematic handling of functions. to be knowledgeable on information security aspects. Pandemic exposed Business Continuity Management to (iv) Use of Analytics as Levers to Detect Outliers: The finance an unchartered territory, with no parallel in recent history. It functions deal with large quantum of data. Therefore, they necessitated quick realignment of BCP strategies and out of the would be more knowledgeable in the use of analytics which box responses across the organization. Experience gained in can help them detect outliers and verify the accuracy of the conducting meetings involving employees from different locations outliers in terms of assessing false positives or false negatives. through virtual mode in the normal times proved handy for the The same would go a long way in ensuring that the accounts organization to smoothly migrate fully to digital communication give a true and fair view. platforms. Our digital capabilities increased manifold during the (v) Blockchain Technology: Where transactions are being pandemic. The bank has put to use its digital capabilities in all undertaken with parties outside the organization, there is a spheres of business – be it customer interaction, digital banking need for ensuring smooth flow of information as well as the services and online products, induction and training of staff, transfer of authentic information, including assessing whether upskilling of staff by providing digitized learning experience and the right counterparty is receiving the accurate information internal / external certifications, marketing, risk management, with the required levels of confidentiality. Blockchain monitoring and control functions, business analytics etc. Now the technology could go on to play a big role to enable this. I would organization is more agile and can respond and adapt to changes like to particularly lay emphasis on a critical soft skills aspect, with more confidence. which has gained prominence in the WFH operating model. Building relationships on the fundamental of empathy and Gopal Balachandran, CFO & Chief Risk Officer atI CICI navigating between cross functional teams with stakeholders Lombard General Insurance at all levels, is extremely crucial for achieving long term success. This is a situation which has not been Amongst other aspects, the WFH model has laid focus on being experienced ever before and with new situations sensitive to needs of fellow colleagues, helping them during and there comes the need to build new skills and these tough times in all possible ways and above all, lending new work-related abilities. an ear patiently to their concerns and endeavouring to resolve Being the Chief Financial Officer and Chief them at all points in time. Risk Officer of the company, I would like to As time passes, situations and functions are expected to evolve, focus on a few key skills/areas from a finance and all-in-all I am fairly positive that the finance function will perspective and the endeavour would be to focus on leveraging stand the test of time and continue being a business partner to and suitably applying the skills to enhance the contribution of the their organizations. finance and accounts functions of the organization. (i) Honing skills in Technology: The workforce has to be more K R Mohanachandran, Chief Risk Officer technology savvy in terms of being able to navigate through at ESAF Small Finance Bank tough situations and get the work done utilizing the various Pandemic risk management has been a topic of systems and other tools available on technology driven academic interest so far. But it has now become a platforms. Utilizing paper is a thing of the past and must be reality. Concepts and plans in pandemic risk were forgotten!! not tested earlier. Like any other risk, pandemic

50 Banking Frontiers June 2021 risk has also become a reality and that itself is a big learning. Sujay Das, Chief Risk Officer at MoneyTap The pandemic environment has offered many more real time Since I have had an interest in cooking, this experiences upfront with fewer hours for mitigating and managing additional time on my hands has given me the the same. All processes of life have undergone testing and changing. opportunity to brush up on my skills, and also A new lifestyle pattern and uncertainties in the front made risk learn how to make many new dishes. I have management yet more dynamic, essential and meaningful. The most also been fascinated to learn the history of how important skill that one might have acquired during the pandemic many different Indian cuisine dishes have been is to dispassionately deal with uncertainty. prepared with details of procuring the original ingredients for authenticity, which I try and recreate as best as I can. Prithvi Chandrasekhar, President Risk So, I make sure I am doing the research that is necessary for this. & Analytics at InCred Photography has also been a good hobby and since I like the Personally, the most important new skill I’ve science behind the photo-editing, it has given me another reason acquired is compartmentalization. Previously, to enjoy research this subject all the mechanisms behind the scenes I could get into a certain persona or mind-set of taking a photo and editing it. at work and switch back into a different more relaxed persona on my commute home. With Sunder Natarajan, Chief Compliance & WFH, that no longer happens. I’ve had to learn Risk Officer at IndiaFirst Life Insurance to switch between different mindsets, or modes of functioning, Getting camera savvy, shedding ego to seek help even while I’m in the same space. Mindfulness or yoga practice from Gen Z and tight calendar management. has helped me manage this critical switch. Venkata Jayaraman M., Chief Risk Officer Rakesh Bansal, Chief Risk Officer atH ero Housing Finance at Fincare Small Finance Bank Some of the industries were badly impacted My approach here was 2 pronged – first to during covid period, and we were overly strengthen emotional resilience. In today’s cautious during lockdown in those segments. context, more than ever, when one must deal I started interaction through video discussions with multi-level challenges, emotional quotient with the customers. I became more tech savvy is imperative to managing self, family, teams and started team meetings through Zoom calls and extended family of team members. The and Google Meets and saved travelling and second is keeping abreast of the developments telecom costs. in cybersecurity domain not just in banking but across, through webinars and e-learning has been a productive use Roopam Asthana, CEO & WTD, Liberty General Insurance of time as well. Some of the skills that have become highlighted in the current situation are agility and ability Vijayalakshmi Natarajan, Chief Compliance and Risk Officer to thrive in an increasingly uncertain world, at Aviva India living in and being effective in a phygital At a personal level, enhanced mental strength world, digitally connecting with people at and emotional strength are the value adds in the large (includes employees & customers), current situation of prolonged lockdown. From being open to change and increased focus on the organization’s point of view, we have learnt governance and risk management. to value each other. We work remotely but even more efficiently with optimum utilization Sadaf Sayeed, CEO at Muthoot Microfin of available resources. Time management As an organization, in the new hybrid with balancing between work and home with mode of operations, we are looking for reduced support system is key. We have to become more empathetic candidates who are self-driven and possess with our fellow colleagues, peers and teams. Also, it is important to remote management skills. The preferred appreciate what we have on hand rather than what we do not have. skillset would include coaching and Nature has taught us unforgettable lessons for life. counselling, interpersonal and problem solving, communication skills, coordination/ SUMMARY collaboration and related computer skills. Consistent with Clearly, none of them let the opportunity go waste. What the the current scenario, we believe that ‘resilience’ is the new variety shows is that there is an amazing number of ways to look competency we have seen among our employees. They gave at a situation and respond accordingly. That in itself is a powerful their 100% and were quick to learn and proved their flexibility risk management capability that mankind is blessed with. to adhere to changing business scenarios. [email protected], [email protected]

Banking Frontiers June 2021 51 Cover Story The tree of new learnings

CLOUD SECURITY GLOBAL TRENDS IN FUNCTIONAL RISK MANAGEMENT KNOWLEDGE

CATEGORIZE & NEW WAYS TO QUANTIFY RISKS BLOCKCHAIN HANDLE UNCERTAINTY SERVE CUSTOMERS APPRECIATE TECHNOLOGY DISPASSIONATELY WHAT IS IN HAND

NEW INFORMATION YOGA TECHNOLOGIES LIVING IN A SECURITY PHYGITAL WORLD BEHAVIORAL KNOWLEDGE BE MORE VALUE EMPATHETIC DIGITAL CONNECTION EACH OTHER TIGHT CALENDAR WITH PEOPLE MANAGEMENT GOVERNANCE BEING OPEN TO CHANGE

ZOOM CALLS & ANALYTICS TO CROSS FUNCTIONAL SHED EGO TO SEEK HELP DETECT OUTLIERS INTERDEPENDENCIES FROM GENZ GOOGLE MEETS

COOKING MENTAL & EMOTIONAL TIME STRENGTH PHOTOGRAPHY MANAGEMENT AGILITY COMPARTMENTALIZATION

52 Banking Frontiers June 2021 Credit Risk BCT rt Digital Risk Management Suite A Bahwan CyberTek Company ACHIEVE COMPLIANCE IN 90 DAYS & SAVE $100-500 MN EVERY YEAR BCT Digital is a global Fintech company specializing in regulatory technologies USPs of the cloud-ready suite announces the launch of its specialized Cloud- u AI/ML-driven Rule Engine comprising Ready rt360 Credit Risk Suite. The company has 170+ pre-built early warning indicators; been recently recognized as “Category Leaders” expandable to include custom requirements under the Chartis RiskTech Quadrant for Model Risk Management solutions, 2021, presented u Real-time alerts to prevent fraudulent transactions by Chartis Research – a leading provider of u Cloud-ready architecture tuned for research and analysis on the global market for on-premise / cloud / hybrid models risk technology. The full-stack credit risk suite u Horizontal and vertical scalability to is a powerhouse that comprises origination & meet increasing volumes and user-base. AI/ML-driven solutions on-boarding, credit monitoring, fraud monitoring, u The product handles massive volumes take center stage in credit analytics, and other value- added services - 100s of branches, 1000s of customers, the post-pandemic – all on the cloud. and millions of transactions The company’s award-winning rt360 EWS economy today as (Early Warning System) is now an integral frauds through real-time data,” said Jaya they can effectively component of the cloud-ready credit risk suite. Vaidhyanathan, CEO, BCT Digital. measure and monitor This can now empower banks, NBFCs, and HFCs Risk practitioners involved in lending/ to rapidly implement the product and gain control investment decisions aimed at building the book your credit portfolios, over their asset book very swiftly. It has sheer have deep concerns, which the rt360 Credit Risk detect credit stress power to handle millions of data points through Suite addresses diligently. It enables lenders and and recover loans sophisticated AI/ML-based predictive models in portfolio managers to have tighter control over order to detect patterns and quantify risks. their asset book at any point in the credit lifecycle, before they become While Indian banks reported a decline in bad through various business services, such as the rt360 NPAs. loans in the last quarter of 2020, the impact of EWS, that are available in a highly modular form. the extended pandemic situation may have major The product is designed using state-of-the- ramifications on the asset quality over the next art micro-services-based open API architecture two to three years. To tackle the vulnerability, and it comes with connectors and real- time financial institutions need to invest in disruptive automated data capturing mechanisms. technologies that proactively and accurately These integrate with the internal and external detect risk and improve regulatory compliance. sources to extract millions of data points on “Financial institutions must step-up customers through APIs, streaming feeds and monitoring and take timely corrective measures legacy methods. Sophisticated AI & ML models to mitigate the impact of credit risks arising from detect fraud patterns, minimize false positives the pandemic led disruption. Though public and quantify risks through effective scoring sector banks have preferred an on-premise algorithms that compute critical default statistics. solution, it has been our persistent endeavour to The pre-built and extensible library of early construct robust and technologically advanced warning indicators include regulator- prescribed systems that empower not just the large banks indicators such as RBI’s RFA and the Department but also smaller financial institutions to augment of Financial Services scenarios for India. Alerts their risk management capabilities. Cloud ready including those of fund diversion, negative news, solution helps these banks be compliant with and financials are delivered to a configurable RBI and DFS regulations on credit risk in as little mobile responsive inbox. Bankers can leverage as 90 days. This will help them mitigate the risk rt360 EWS’s powerful case management tool to of bad loans and enable them to achieve their manage alerts as per the escalation hierarchy financial inclusion goals that benefit MSMEs and undertake timely corrective action. The as well as retail customers. The cloud-enabled cloud-ready rt360 Credit Risk Suite empowers credit risk suite will build a future-ready and financial institutions to focus on profitable credit resilient organization by preventing possible growth while mitigating risk.

53 Banking Frontiers June 2021 Web Panel Discussion Architecting the Workplace Revolution Banking Frontiers organized a panel discussion of technology and cyber security experts to discuss how the cyber workplace is evolving and how to make it more secure. Participants were Deepak Sarda, GM-IT at Indian Bank, Ratan Kumar, GM at Central Bank of India, KM Reddy, CISO at Union Bank of India, Babitha BP, CISO at CSB Bank and Prajit Nair, Director Sales - End User Computing at VMware. Manoj Agrawal, Group Editor at Banking Frontiers, moderated the discussion.

Manoj: What major issues faced by the employees have been eliminated or automated? Babitha: Due to the pandemic, the focus shifted to automation of the processes. Initially only few tech savvy employees worked from home. After one year, more employees have been upskilled. Ratan Kumar: The branches were working with 50% capacity. But the backend was fully equipped to work from home. Employees faced many glitches and disruptions initially. We are in the process of redesigning our websites, call center workings and digital products. Deepak: The biggest change was the use of technology for major decision Babita BP finds that networks Ratan Kumar observes that making. We have ramped up our IT support. Some applications which were and end points sometimes get during the lockdown, the allowed only to be used on intranet are overloaded while running tools branches were working with allowed on home PCs now. It is difficult and applications 50% capacity, but the backend to replicate the physical branch banking was fully equipped to work for public sector banks. collaborating with vendors to provide from home IT solutions. With only 15% physical Manoj: What kind of support did you presence, we are able to manage 100% challenge. Many banks have solved this take from outside service providers to business. using the VDI solutions. Now they have mitigate the issues? increased the security layer by introducing Reddy: During the first lockdown Manoj: What kind of requests and facial recognition for user. This allows the the challenges ranged from scarcity queries have you been receiving from firms to measure employee productivity of hardware to disruption in business BFSI companies? also. To get new devices connected to continuity to security of the devices. Prajit: Each bank has its own demand. the bank applications, without having This time the challenge is coming from But access management is common to to call the IT department is also being employees getting infected and managing all. Banks would like to have visibility of requested. All the companies have been to keep the business running. To handle their end points. With hardware now not going through various phases: the unpredictable situations, we are restricting to premises this is the biggest React: What do we do? As the lockdown

54 Banking Frontiers June 2021 KM Reddy has identified a Deepak Sarda points out that Prajit Nair describes 3 phases shift in problem from first technology has reached all in response to the lockdown: 1. phase (scarcity of hardware) over, but the challenge is that React - figuring out what to do to second phase (employees in rural areas people are not 2. Responding - building tools getting infected) tech savvy that enable WFH 3. Rethink - think about the big picture was announced everyone was scared. challenge being faced. Moving from older We are helping the organizations to Respond: Each firm started building tools to the new ones takes time. Threats consolidate the tools, reduce them, bring tools to make work from home easy. have increased and multilevel security is in more automation, reduce cost and Rethink: Now the firms have started needed. The networks and the end points bring in more efficiency. thinking about bigger picture. No more are sometimes getting overloaded while point solutions are working. To find running these applications. Manoj: Which will be the bigger balance between security and ease of challenge: What to do or how to do? working for the employee has become the Manoj: What is being done to make the Reddy: With integrated technology priority for the firms. adoption and usage of technology easy? both these questions can be answered Prajit: A lot of work has been together. This is the era of hyper Manoj: Do you see the business enabler happening at the data center level. automation. tools also increasing at the same pace Client-side consolidation has started to Ratan Kumar: There are lot of as business applications? happen. To bring all the different types vendors giving lot of solutions. This takes Deepak: RBIs regulation requires of devices and networks under one roof care of the how to do part. What to do to install tools as part of cyber is a challenge. Sometimes the devices will depend on each organization’s needs. regulations. Along with that some tools are also connected through VPN. This Deepak: The reach of technology has are implemented by banks themselves. increases the vulnerability of the data allowed us to implement many services. The general idea is to have maximum center. VMware has brought unified But in rural area where people are not security on the end user site. Each bank’s end-point management, ‘VMware technology savvy, it is challenge. requirements are different hence the workspace 1’, which unifies multiple Babitha: How is not a challenge any applications will vary. tools. It increases the visibility of the more. The question remains – how are we Babitha: Implementation and devices. We have also integrated next going to deliver the payment gateway to management of various tools in the right generation anti-virus solutions with it. customers in a secured way. Banks cannot way needs resources. Sometimes due With our latest solutions the devices can pass on the bug in case of issues. That will to network issues the applications are be patched automatically. If the user or have to kept in mind before accepting any underutilized. Integration of these tools device is not registered it will not be proposal. with SOC for alerts is another operational allowed to connect to the bank’s network. [email protected]

Banking Frontiers June 2021 55 Managing Data Evolving Data & AI With all products, services and other industries adopting digital platform, a wave is coming. How do we manage this huge chunk of data and put it to our use? Analytics, data virtualization and playing with data are some of the tools which firms are using for business advantage. Sushil Ostwal – Head of Data Science at Motilal Oswal Financial Services, shares his insights:

his year’s global crisis has caught with new products. This is speeding everyone off guard. Firms are up digitization. This is also bringing in Ttrying to reduce their payback competition along with it. time. AI and data models are being scaled How to bring together all the up across firms. New lockdowns have aspects of digital transformation? The made it difficult for people to visit their IT department, business stakeholders offices. With retail physical businesses and the data science team need to work closed, more people are looking for digital together in harmony. Though data was solutions. This has brought in newer available, it was spread across various demographics online. Kids from 16 years formats, databases and systems. to older people until 70 years are looking What will be the road ahead from for trading through online. here? Organizations must create a Financial insecurity has brought in roadmap so that future needs can be more people into trading, so that they foreseen. AI needs to be scaled up. This can have additional income. This has will help in data driven decision making. accelerated the digitization of firms. In the future, technology should be used Both the products offered and the firm’s to interpret the data. Looking into use processes are now on digital platform. cases for creating the model, training For better performance, we will Sushil Ostwal believes that AI the users will be the plan to tackle future have to put data and people together. can be scaled to any measure, demands. Maintaining data quality is a big challenge [email protected] for firms. The challenges are two-fold: (i) but it has to be woven with the organization Prashant Lele Evolving Data & AI the Transformational Journey – Director Denodo How to bring data in one big pool? (ii) How to get clarity among the chaos? How to access it by different individuals? Data is available everywhere…. how According to Sushil Ostwal, another to put it to use is the challenge. A important change would be in the digital service provider can help mindset of people. The working methods the firms in reducing the time taken used till now will undergo a drastic for making decisions. The next change, which people will have to accept. step in digital evolution will be self- AI can be scaled to any measure, but it Sushil Ostwal service. Data virtualization can help has to be woven with the organization, Head-Data in connecting to new data sources. only then it will give better performance. Science and AI, Whether the data is structured or Motilal Oswal Addressing the customer at each un-structured, it can create a view Financial Services touch point is necessary. With more about customers. The business customers joining the online trading this team can take quicker decisions on Summary: AI & has to be resolved immediately. To serve how to proceed with the customer. Cloud are evolving and This will reduce the dependency on them better and at right time, we will creating new technology IT team. This will also fasten the AI have to prepare processes and workflows benchmarks in the BFSI or ML by providing proper data. ready for next step. sector. A great number of fintechs are coming

56 Banking Frontiers June 2021 Cooperative SVC Bank’s medical loans up by 7% to `8.56 Bn The prominent cooperative bank has special loan products - SVC MediEquip, SVC Chemist and SVC Hello Doctor - for the medical and health care fraternity:

he Ministry of Finance has reach among micro & small customers. “We expanded the Emergency Credit already have a robust net banking and mobile TLine Guarantee Scheme (ECLGS). banking facilities for our customers. Core It has offered, amongst many other things, banking software is also being upgraded to ECLGS 4.0 for onsite oxygen generation, suit emerging requirements,” he adds. wider coverage of ECLGS 3.0 and increase in tenor for ECLGS 1.0. Under ECLGS 4.0, MEDICAL, HEALTH CARE CLIENTS 100% guarantee cover is provided to loans One of the bank’s focus areas has been the up to `20 million to hospitals/nursing health care sector, which contributes to homes/clinics/medical colleges for setting social infrastructure. Ravinder points out: up on-site oxygen generation plants with “We have specially designed loan product interest rate capped at 7.5%. The validity of schemes like SVC MediEquip, SVC Chemist ECLGS has been extended to 30 September and SVC Hello Doctor to target the clients 2021 or till guarantees for an amount of `3 from medical and health care segment by trillion are issued. offering financial assistance to doctors, chemists, dispensaries, health care workers FOCUS ON MSME etc. In addition to that, we also provide RBI has advised cooperative banks to do customized loan assistance to nursing higher proportion of lending in the priority Ravinder Singh asserts that homes, hospitals and pharmaceutical segment of the economy. Ravinder Singh, SVC Bank is committed to companies to suit their requirements.” Chief General Manager & Head - Corporate help the health care sector to Banking at SVC Cooperative Bank, says the SIGNIFICANT YOY GROWTH bank has accordingly increased focus on overcome the challenges from The year-on-year growth in loans and small ticket micro, small and retail segment continuous lockdowns advances given by SVC Bank to doctors, not only to spread the advances portfolio hospitals, pharmaceutical companies and but also to mitigate risk. It has maintained been focusing more on quality of advances chemists is significant. a healthy mix of MSME mid-corporate and and an optimum mix of banking resources.” Ravinder updates: “Our bank had large corporate segment business and retail 223 accounts, amounting to `7.53 billion business over the years, he adds. LOANS THROUGH EMAILS in 2018-19 in all such loans. Our bank SVC Bank has also made efforts to expand registered 24.66% growth in accounts, QUALITY OF ADVANCES its outreach through electronic and digital amounting to `8.02 billion in 2019-20 and The bank has realigned its credit policy to means. Ravinder says a large number of 23.74% growth in accounts, amounting to tackle the highly competitive market. Says customers are applying for loans through `8.56 billion in 2020-21. Approximately Ravinder: “We have worked out region-wise emails. The bank is also using emails for faster 80% of these sanctions have been disbursed strategies with a focus on loans and advances communication and TAT. It is under process by the bank, which is an indication of our offtake and increase in yield. We have also to finalize a digital partner for expanding its ‘connect’ with the customers.” Appropriate healthcare financing is a SBI aims for `100 bn covid book means to ensure that adequate funds are Dinesh Kumar Khara, Chairman, State Bank of India, said during the bank’s Q4 FY21 Earning allotted for health care, to provide equitable Conference Call that a health infrastructure related covid book is expected to be created and access to all population groups and to internally the bank thought of having book size of somewhere around `100 billion. “We already reduce financial barriers to utilize health have exposure to the pharma sector. But we will be very aggressively supporting the hospitals services. Ravinder maintains that the bank is and nursing homes or augmenting their oxygen needs and oxygen facilities,” he had said. committed to help the health care sector in the SBI is quite open to be consider the NBFCs also for the onward lending in this particular current FY also to overcome the challenges area because RBI schemes permit banks to do that. Khara added: “So, we will be quite keen to from the continuous lockdown during testing support any such initiative. We will be happy to avail the reverse repo facility and also, the most times of pandemic by offering timely financial important factor for us is the priority sector component. The priority sector is something, which assistance at competitive rates. we are very happy to look at.” [email protected]

Banking Frontiers June 2021 57 Development Funding ADB commits $3.92 bn loans to India in 2020 Expects to help expand the country’s infrastructure development

he Asian Development Bank (ADB) the health system’s resilience against committed $3.92 billion in sovereign future shocks, with supplementary support Tloans to India for 13 projects, ADB’s to protect small businesses and underpin highest-ever annual lending commitment education and social protection,” says to India since the start of its lending Takeo Konishi. operations in 1986. “ADB is expanding assistance to quality STRONGER ASIA infrastructure development to support At a recent 54th annual meeting of the India’s fast economic recovery. ADB’s Board of Governors of ADB, its President lending assistance will be further supported Masatsugu Asakawa said the Asia-Pacific with knowledge work to help develop region can emerge from the pandemic even transformative projects”, says ADB Country stronger than before by focusing on 5 areas Director for India Takeo Konishi. to help achieve a prosperous, inclusive, Throughout 2020, ADB continued its resilient, and sustainable future. “I believe regular assistance to energy, transport, the path we have laid out will help lead our urban development and public sector region out of these uncertain times,” he management in India. Among the new had said and added: “We will continue to projects committed in 2020 included deliver ADB’s unique synergy of finance, $500 million to build a modern, high-speed Masatsugu Asakawa predicts knowledge, and partnerships. And we will 82-kilometer Delhi–Meerut Regional Rapid prioritize the quality of our assistance over Transit System corridor; energy sector that the Asia-Pacific region can quantity, meeting near-term needs with loans to strengthen distribution network emerge from the covid pandemic a clear vision for the future. If we stay in Maharashtra, Karnataka, Uttar Pradesh even stronger than before on this course, I am confident the region and Meghalaya; and support to build a will emerge from the current crisis even 120-megawatt hydroelectric power plant in The benefits of the proposed loan for stronger than before.” Assam. In the urban sector, ADB approved Gujarat Paguthan wind energy project Asakawa explained the 5 focus areas: loans for sustainable urban development in include (i) addition of 132.8 MW (50.4 MW 1. Place ambitious climate actions at the secondary and smaller towns in Rajasthan for Samana – Phase II, and 82.4 MW for centre of development, with increased and Madhya Pradesh. ADB also committed Saundatti) of power generating capacity to focus on adaptation and resilience and funds to support the Government of West help reduce the growing supply deficit in with full commitment to the goals of the Bengal’s fiscal consolidation program. India; (ii) development of new renewable Paris Agreement. The Project Readiness Financing (PRF) energy sources, which will decrease fossil 2. Address inequality including the gender for ‘Sikkim major district roads upgradation’ fuel consumption and reduce the emission gap – which has worsened during the will fund consulting services for (i) initial of greenhouse gases and other pollutants; pandemic – by investing in health, screening of the tentative list of candidate (iii) and demonstration of the successful education, and social protection. roads and bridges; (ii) feasibility studies of implementation of large-scale wind power 3. Promote high-quality green and digital the shortlisted roads for final selection; (iii) projects by the private sector. infrastructure, enabling economies to detailed design for selected road and bridge rebuild smartly while closing the digital subprojects, including the environmental HELPING COVID RESPONSE gap and attracting substantial private and social safeguard assessments and The funding of $3.92 billion includes investment. preparation of environmental and social $1.8 billion in projects to support the 4. Deepen regional cooperation and safeguard planning documents, cost estimate, Government of India’s response to the integration, so that ADB developing economic analysis, due diligence and covid pandemic. ADB also committed member countries can seize the capacity building on financial management, $356.1 million through its non-sovereign opportunities of renewed globalization assistance and capacity building on operations to India, including 3 covid and strengthen regional health security. procurement, preparation of bid documents related projects. 5. Strengthen domestic resource and supporting the bidding process “Going forward, ADB stands ready to mobilization, to ensure that governments until contract award; and (iv) providing provide additional resources to address have the resources they need to finance assistance for developing the institutional India’s many covid related challenges, sustainable growth and respond strengthening and capacity development including funds to expedite the country’s effectively to future crises. component of the ensuing project. ongoing vaccination program and build [email protected]

58 Banking Frontiers June 2021 Investment Options Gold bonds rise and shine Sovereign Gold Bonds are attracting wide range of investors and acceptance across spectrum, be it retail, HNIs or ultra HNIs:

antosh Shetti, Product Head, Investment, Insurance & Research Sat Motilal Oswal Financial Services and Anil Gupta, Vice President, Financial Sector Ratings at ICRA, analyzes the progress of Sovereign Gold Bonds scheme since 2015.

Mehul Dani: What is the total volume and value of investments in gold bonds through banks, brokerage houses and wealth management companies in all the earlier Series since inception in November 2015? Santosh Shetti: Since the launch of the Anil Gupta Santosh Shetti first Sovereign Gold Bond Scheme by RBI, there have been 50 issues till May 2021. prices rising in uncertain times. SGB has Anil Gupta: Recently, RBI has Over the years, the scheme has started helped the government in its objective of announced a buyback price of 4837 per attracting wide range of investors and financialization of savings from physical gram for the first tranche of gold bond acceptance across spectrum, be it retail, assets to financial assets. Online buying, issued in November 2015 at `2864 per HNI or ultra HNI. Last financial year was available with `50 per gram discount, has gram. This along with 2.75% interest on a historic year for SGB, as investments resulted in maximum buying. these bonds works out to be a 5.5-year were higher every month and the year. In Anil Gupta: Given annual imports of CAGR of 14%. Nifty was 7900 in November August 2020, Series V mobilized over `33 almost 700 tons, the issuance of 68 tons 2015 and has given returns at CAGR of 13% billion and in FY21, overall mobilization since inception is not very significant, but apart from dividend yield of 1-2%. 1-year was `160 billion. This was higher than all still a good amount. Also, in relation to the bank deposit rates during this period previous years’ combined mobilization of overall debt of the Government of India at ranged between 7.5-8.0% at beginning of `96 billion. `109 trillion, the amount of borrowings 2016 to 5.0-5.5% now. The current FY has started on a great through gold bonds is less than 0.5% of Hence, if we compare with fixed note. In May 2021 Series-1 has mobilized total debt. deposits, gold bonds have given better `25 billion, which is the 2nd highest returns. Moreover, the gain on gold bonds monthly mobilization ever in the history of How has gold as an asset class performed also attracts lower tax than fixed deposits SGB Series since launch. over the years, say in the last 3 or 5 years, @ 20% with indexation, as compared to a Anil Gupta: As much as 68.6 tons of compared with other asset classes and fixed deposit, which is at marginal tax rate. gold or units of gold bonds have been issued investment options? Tax adjusted returns for Nifty will be since November 2015. The total value at Santosh Shetti: Gold has performed better than gold bonds, as long-term capital issuance cost comes to `282.36 billion. very well in the last 3-5 year perspective, in gain on equity is lower at 10%. However, view of regular market uncertainties over equity investments do come with higher Do you think the authorities have been these periods. In the calendar year 2018, risks also. successful in attracting customers to 2019 and 2020, gold had generated highest Although, the performance of one of the invest in gold SGB? return compared to other asset classes. series of gold bond may not be a reflection Santosh Shetti: Yes, last year was However, one should not invest in SGB of future returns, as the domestic gold bond a defining year for SGB. There are or gold purely based on past years’ returns. prices typically outperform during periods customers, who have bought it as an It has to be more from the perspective of of depreciating Indian rupee apart from alternative to physical gold or just as a asset allocation. It would be prudent to international gold prices. pure investment to be held till maturity. ensure the allocation to gold (preferably Recent gold bond issuances have also There are some, who have bought them through SGB, etc) should not be more been at lower rates than in the past because from a hedging perspective during the than 5-10% of the total asset allocation (ie of decline in domestic gold prices. pandemic times to take benefit of gold equity, debt, cash, gold). [email protected]

Banking Frontiers June 2021 59 N E W S Capex

NPCI lines up `180 bn capex Bosch to cut capex Nuclear Power Corporation of India Bosch India is expected to have a capex plans to spend about of `1.6 billion to `2 billion in 2021-22. `180 billion as capital The group comprising 16 companies used expenditure in 2021- to spend `4 billion to `6 billion and for 22. Elaborating the FY22 its mobility division will spend `1.6 plan, an official of the billion to `2 billion for plant expansion company said the first and localisation. The company derives pour of concrete for the 80% of its revenue through mobility construction of two more business, said the second wave of covid 1,000 MW units (Units 5 will adversely affect its future plans. and 6) at Kudankulam is expected to happen this year and the 700 MW unit at Kakrapar Atomic Power Station (KAPS) will begin commercial generation in September 2021. He said the funding will be through a mix of internal accruals, central government budgetary support and long-term borrowings. The first two will be about 30% and the borrowings will be about 70% of the project cost. The major on-going projects of the company are the construction of two 1,000 MW units (Units 3 and 4) at Kudankulam, four 700 MW units - two each at Rajasthan Atomic Power Station and KAPS. JSW Steel plans to hike Tata Motors plans `30-35 bn capex Tata Motors proposes to have a capital expenditure of `30 billion to `35 billion capacity to 5 mn tonnes in FY22 for its India business. The company saw a sustained multi-quarter rise in sales especially for its SUVs and cars. The company had provided a guidance in the previous quarters for FY21 which was around `15 billion. It had an actual capital spent of `18 billion for FY21. A company official said there has been increase in demand and the company did calibration of production capacity particularly of petrol engine. The company is therefore looking for a capex plan of `30 billion to `35 billion plan for the current year. Tata Motors was one among handful of outliers in India’s passenger vehicle industry recording a growth in sales during FY21. Wheels India to have capex of 1 bn Wheels manufacturer Wheels India has proposed a capital expenditure of `1 billion in 2021-22 for its wind energy unit and is planning to set up a new plant in Chennai. The company is also investing a ‘good portion’ for the second phase of the cast aluminium plant. A top official of the company said the proposed capex will go JSW Steel has earmarked plans to spend into the wind segment by setting up a new plant near Chennai. The company has `474.57 billion in capital expenditure a built-up capacity of 350,000 wheels, which it proposes to take to 750,000. The in the next 3 years. Through expansion company did well in the domestic segment in 2020-21 where wheels for wheels for of its plants, it proposes to increase its agri-tractors were much in demand. steelmaking capacity by 5 million tonnes per annum at its Vijayanagar, Karnataka, Roca India to invest `500 mn and build mining infrastructure in Spanish sanitaryware make Roca intends to invest `500 million in expansion as Odisha. The new projects will cost the it proposes to have greenfield project functional in 2024-25 in India. The Indian company `251.15 billion, while the subsidiary Roca Bathroom Products is exporting to markets like Australia and ongoing investments, including doubling others previously served by Roca’s plants in China. A senior company official of capacity at Dolvi in Maharashtra to 10 said the amount will be used in the expansion of its faucets and plastic products MTPA, will require `223.42 billion. The production capacities. The company did not stop production during the covid times company plans to expand its capacity and continued to build inventory to take advantage of the demand that would to 38 MTPA by 2024 from the present come when the lockdown is eased. Roca is present in all the segments in the Indian 23 MTPA (including the recently sanitaryware market - luxury (Armani Roca), premium (Roca, Johnson Suisse), acquired Monnet Ispat and Bhushan mass premium (Parryware) and budget (Johnson Pedder). Power and Steel).

60 Banking Frontiers June 2021 Research Notes - Textiles & Apparels 25% decline in credit availed by textiles industry A sector study brought out by SIDBI and credit bureau CRIF Highmark states the pandemic has indeed impacted the textiles and apparels industry:

he Indian Textiles and Apparels 29.59% in September 2018 to 15.98% in Textile & Apparels Regions in India Industry has availed a total credit of September 2020. NPAs in December 2020 T`1620 billion as of December 2020, increased by 0.94% which is nearly 8% which is a yoy decline of nearly 20%, says lower than NPAs in December 2019. the third edition of Industry Spotlight Observing that over the years, apparels that analyzes this industry brought out by have contributed to a majority share of SIDBI and credit bureau CRIF Highmark. exports, followed by home textiles and The decline is due to the suspension of fabric, the report states that export credit manufacturing activities in the immediate as of December 2020 stands 25% lower aftermath of the lockdown in the wake of yoy, largely attributable to a decline in the pandemic in March 2020. exports due to the pandemic. With 95% of The report mentions that the number the overall credit by volume of the sector of active loans (volume) in the sector stood concentrated in MSME borrowers, the at 426,000 as of December 2020. Also, the industry has a presence of close to 500,000 industry observed a quarterly decline in borrowers as of December 2020. NPAs (proportion of credit value delinquent The report states that at the state level, by 90+ days) over the last 2 years, from Maharashtra has the largest share of the

Financing Pattern - Market Share

credit portfolio at 25% of the credit book to the sector. The 13 regions rich in textiles and apparels manufacturing accounted for 80% of the credit portfolio of the sector as of December 2020. Nearly all states have districts manufacturing textiles and apparels, having several credit active units. Some districts such as Mumbai and Surat have more than `100 billion credit portfolios as of December 2020. The report also mentions that the sector contributes 7% of the country’s manufacturing production, 2% of the country’s GDP, 1.2% of the country’s export earnings and there are over 45 million workers in the sector with another 6 million in the allied industries. Public sector banks are the dominant lenders for the sector with a share of 62.61% in volume as of December 2020. The share of private banks, NBFCs and foreign banks were 23.49%, 8.66% and 1.41%, respectively. By value, private banks have the largest share at 40.54% followed by public sector banks with 36.59%, foreign banks comprising of 9.14% and NBFCs with 8.47% as of December 2020. [email protected]

Banking Frontiers June 2021 61 Research Notes - Post the Pandemic Technology inseparable from an enterprise

Enterprises of the future will be highly technology-oriented with leaders more tech-savvy than ever:

he world is hungry for a new kind of leadership and this becomes evident #techvision2021 Twith more companies than ever embracing the axiom that every business is a technology business, and they have ignited Technology Vision 2021 a new era of exponential transformation as technology continuously reshapes industries and the human experience. This is the broad Leaders finding in a research paper on Technology Vision 2021 titled ‘Leaders Wanted - Masters Wanted of Change at the Moment of Truth’ by global Masters of Change at a Moment of Truth consultancy firm Accenture. And Accenture says “Now, as we begin shaping our post- pandemic reality, companies must learn to master change.” Stating that enterprises across industries have accelerated their digital transformations all at once, it is technology global leadership. It says: “TheFrom gap insights between to action, the pathtoday to extraordinary success value isstarts coming here. to those with the that has come to change the world, the digital leaders and laggards grows by the audacity to reimagine it all, states the report asserts that the era of the fast day and committing to a wait-and-see report pointing out further: “In the last follower is effectively over and perpetual approach will land companies on the wrong year enterprises were forced to confront change is here to stay. “And leaders must side of that gap. Leadership demands that deep-seated assumptions about how fast not only embrace it, but catalyze it,” the enterprises prioritize technology innovation the organization can pivot, where or how study adds. in response to a radically changing world. work gets done, even what they sell and to Small pilots and incremental scaling are an whom. While some froze, watching their CLOUD IS SUPREME obsolete luxury, and the friction between old convictions crumble, others shattered The report found that 82% of IT executives research, development and large-scale the bureaucracies and assumptions holding reported ramping up their use of cloud deployment must diminish or disappear.” them back - becoming the leaders that technologies in direct response to the crisis, The report recalls the maxim that the best everyone will follow. and 66% of the respondents reported that way to predict the future is to invent it and The report cites instances of an they will continue to grow their use of cloud states: “Prioritizing technology is essential to organizations rising to the occasion and for the foreseeable future. ensuring the enterprise doesn’t fall behind. getting things done: “Before the pandemic, On the other hand, 95% of companies However, true leadership will come from if you asked an executive how long it would said they are seeking new ways of engaging companies embracing radically different take to deploy a new communications customers as a result of covid. “From food mindsets and models. The world has been platform across the company, doing it in less delivery platforms that kept restaurants beset by sweeping change and demands than a year would feel like a stretch. But in connected to customers to the rise of leadership that thinks boldly in response.” March 2020 the United Kingdom’s National telehealth services and e-commerce, the It adds: “Thriving in this moment will Health Service dispelled perceptions of just pandemic opened enterprises’ eyes to a require ambitious leaders not content to how fast technology transformation needs new reality. Cloud is now at the core of rehabilitate the business to what it was, but to take. In a matter of weeks, they rolled out the company, not just the periphery, and willing to upend convention and wield their Microsoft Teams to 1.2 million employees. technology is no longer just one vehicle for vision for the future.” “If you had asked a manufacturer what success - it’s the vehicle all possible success it would take to pivot from producing depends on,” it adds. LEADERS WHO STAND OUT power and propulsion systems to medical While from the workforce to supply chains equipment, they likely would have argued NO WAIT AND WATCH to technology to operation, and business it was nearly impossible. But when the The study also points out that rapid digital models, leaders have spent decades UK faced a critical shortage of ventilators, acceleration during the pandemic has building systems for static purposes, where Rolls-Royce demonstrated the true capacity cemented technology as the cornerstone of change happened slowly and expectedly, enterprises have for change. The luxury car

62 Banking Frontiers June 2021 #techvision2021 Introduction 1 2 3 4 5

Stack Anywhere, From Me Completing 2021 Mirrored World I, Technologist Trends Strategically Everywhere to We the picture

Accenture’s Technology Vision report comprises a three-year set of technology trends, currently including trends from The I in The Dilemma of Robots in the 2020 and 2019. 2020 AI and Me Innovation DNA Trends Experience Smart Things Wild

It’s important to recognize that each year’s trends are part of a bigger picture. Tracking how they evolve over time offers a glimpse into how they may continue to grow in the future.

Secure DARQ Get to Human+ 2019 US to MyMarkets Power Know Me Worker Trends Secure ME

manufacturer redesigned its entire supply agree that their organization’s business there will be no room for enterprises that chain to begin producing this desperately and technology strategies are becoming cling to the past. Will you watch the world Technology Vision 2021 | Leaders Wanted needed medical device. Within five weeks, inseparable - even indistinguishable. change around you? Or be the one leading20 the company had secured the new parts The study says there is a unique moment it? People are ready for something new and needed from across 100 different suppliers, to rebuild the world better than it was before it’s time for enterprises to join them. Let orchestrated operations across 3 sites, and the pandemic, and realizing that goal will there be change,” advocates the report. production was underway.” mean expanding our definition of value to The study predicts 5 technology trends include how well people thrive, the impact for 2021: REINVENTING, REIMAGINING left on the environment, growing inclusivity, u Stack strategically, meaning a scenario Accenture says there is a temporary vacuum and more. where companies compete on their as people, employees, customers and architecture partners all continue to establish a new set of BUILDING VISION OF FUTURE u Mirrored world, which is the creation preferences for the next normal. “Boundless The study observes that companies are no of a new generation of business and opportunity lies ahead for the enterprises longer strictly competing for market share; intelligence with the investments in willing to break from the mentality of “that’s they are competing to build their vision data, AI and digital twin technologies how we’ve always done it” and become part of the future faster than the competition. u I, Technologist, resulting from the use of of crafting what comes next. This could be Success will depend on their ability to natural language processing, low-code reinventing the customer experience in accelerate and master change in all parts platforms, robotic process automation your industry, reimagining how data flows of their business, which in turn will be a etc, which is democratizing technology, across the enterprise and its partners, or direct function of the technology decisions putting powerful capabilities into the fostering the advantages of a virtualized they make today, it emphasizes. hands of people all across the business workforce - even when social distancing is “But make no mistake, transforming the u Anywhere, Everywhere, where no longer a necessity. But the wide-open enterprise into a technology leader cannot enterprises have to transform remote opportunity also means competition has be contained to the oversight of the CIO or work from an accommodation to an never been fiercer. Every company, from CTO alone. To be successful, a digital-first advantage startups to traditional competitors, is facing approach must be fostered by the entire u From Me to We as the pandemic has those same disruptions, and introducing C-suite and manifested across all areas of ignited a scramble for enterprises to their own vision of the future all at once. It’s the organization, it cautions. reimagine their partnerships - and not enough to keep pace anymore - to lead, It forecasts that a new future is on the multiparty systems gained newfound enterprises must become pioneers,” it says. horizon - one that’s different from what the attention. The study found that 83% of executives world expected. “As this future takes shape, [email protected]

Banking Frontiers June 2021 63 Neobanks Chime’s secret is unique products Chime is a huge success as a neobank because of its sheer imagination about the needs of the customers:

hime is a fintech and the No 1 as of 2020, $1.5 billion in private funding. neobank in the US, but it says It has also received funding from Cit is not a bank. Responding to investment firms like Dragoneer, Menlo complaints by the California Department Ventures and Cathay Innovation. of Financial Protection and Innovation Last valued at $5.8 billion, its it agreed to stop using the term ‘bank’ in valuation may have touched anything marketing. The regulator acted against between $12 billion and $15 billion as the neobank because it does not have of now. It has a 35% share of all digital a state banking license. In terms of the bank checking accounts in the US. Its ruling of the regulator, Chime describes immediate competitors are Ally Bank itself on its website as a fintech and with 9% of the digital banking market, Chime for all purposes is well ahead of that it is partnering with its parent The and Varo Money with a 6% share. its competitors. Many industry watchers Bancorp Bank and Stride Bank to offer say it will hold steady as the industry banking services. EARLY DISBURSALS leader. It will have 13.1 million US In April 2020, in response to the financial account holders this year, up 30.7% over UNIQUENESS IN OFFERINGS strain resulting from the pandemic, last year. By 2025, it is expected to reach Chime has more than 8 million users, Chime announced a pilot program to 22.7 million account holders, increasing accounting for a 2.4% share of the US provide users who e-filed tax returns its lead over competitors through the end banking market. It offers various fee- with the IRS a $1200 advance on the of the forecast period. free banking products, which comes Economic Stimulus Payment via SpotMe. Chime’s Co-founder and CEO Christ with features like get paid early, online Subsequently, it said it had successfully Britt had said once: “You can either have banking, fee-free overdraft, no hidden processed over $375,000,000 in stimulus product structures that are aligned with fees, mobile banking, automatic savings, payments 1 week ahead of the scheduled the consumer’s best interests, which is mobile payments and security and government disbursement date. what we strive to do, or you can have control. It also has accounts such as a products that are adversarial and profit spending account, credit builder and FEATURIZATION STRATEGY from people’s misfortune. That’s what big savings account. How Chime got into the hearts of banks do and that’s being exposed.” Its SpotMe is a fee-free overdraft Americans is by evolving a strategy experts service where customers can overdraw describe as ‘featurization’. Customers OUTAGES HAPPEN their accounts up to $100 without no doubt can be attracted by providing Chime obviously derives its strength from incurring an overdraft fee; once the a good user experience or by providing its technology backbone. But sometimes, overdraft limit is reached, purchases will no-fee services. However, Chime appears this can falter. In October 2019, it faced be declined but no traditional negative to have used non-traditional methods like an outage that left its 5 million customers balance fees charged. Its Credit Builder is early access to customers’ money - 2-day without access to funds or the ability to a credit card designed to help consumers early access to their direct-deposited make purchases. Customers did not have build their credit history. All account pay cheques; early access to government the option to physically go into a branch holders are given Visa debit cards and stimulus and tax refund checks; its Spot and talk to a banker. This had been some have access to an online banking system Me product allowing customers to make sort of a reputational damage and loss of accessible through chime.com or via the debt card purchases that overdraw on trust for the bank, but it quickly recovered mobile app for Android or iOS. their accounts with no overdraft fees; and regained the lost space. Chime’s revenue is primarily from and the credit-builder credit card, Chime is confident it will continue to the collection of interchange. It has no which is held by all the primary banking deliver banking as simple and low-cost as physical branches and does not charge customers of the bank. possible, along with new complementary monthly or overdraft fees. Bank accounts Two-thirds of Chime’s customers are services. To retain its position as the are insured up to the standard maximum under the age of 40. leader, it will look to lead the way with deposit insurance amount of $250,000. While it is predicted that neobanks game-changing products that cater to Founded by Chris Britt and Ryan King in the US will have 20.2 million multiple customer segments at different in 2013 in San Francisco as an alternative accountholders by end of 2021, more than stages of life, from students to retirees. to traditional banking, Chime has raised double the number just two years ago, [email protected]

64 Banking Frontiers June 2021 Country Report - Open Banking Indonesia readying for open banking foray Indonesia is taking initiatives to usher in open banking as the country’s central bank has recognized the definite advantages of the system in creating a digital economy:

t was in 2016 that Indonesia made products in certain categories for different its first move towards modernizing/ use cases, such as account verification, Idigitizing its payments systems payment initiation, real-time balances, when the country’s central bank, Bank historical transaction, and others. Indonesia, announced the setting up of the Indonesia Payment Gateway System FOCUS ON PAYMENTS or Sistem Pembayaran Indonesia (SPI) One clear use cases of open banking in the and a regulatory sandbox for fintechs. country has been in the payments domain. Subsequently it came out with a blueprint Payment has been a major focus within the for SPI 2025, containing 5 initiatives. One open banking strategies and there is no of this was the implementation of open dearth of tech companies like Midtrans, Bank Indonesia plays a catalyst role in bringing open banking to Indonesia banking in the country through open API Xendit and Brankas, which enable the open standardization, which would include the banking payment system to be adopted by digital players reduce technical costs by technical, security and the governance sides merchants that use their services. There sharing KYC metrics or loan affordability of the initiative. are also firms that focus on financial data metrics in an API. The initiative may Another financial services regulator APIs for data verifications and account reduce borrowing costs for MSMEs as in the country, Otoritas Jasa Keuangan, aggregation. These fintechs are catalysts banks could access MSMEs’ data provided meanwhile, has granted licenses to some in the implementation of open banking by by digital firms. 150 Indonesian P2P or fintech lending providing other companies with services, Experts, however, feel that the platforms until December 2020. Now like integrating key APIs. central bank should be extra vigilant alongside SPI 2025, OJK has launched its As the financial ecosystem is getting about cybersecurity risks while framing Financial Sector Master Plan 2021-2025 digitized, there are bound to be customer regulations on open banking and the and one of the 5 main priorities of the plan demands in terms of payment initiation, system will need to be tightly regulated to is to support innovation and digital financial online loans and e-commerce utilization. ensure security. transformation, including open banking. Banks can meet these demands only with innovations and open banking is key in A STRATEGIC PARTNERSHIP DATA PROTECTION the scheme of things to maximize business In a recent development Brankas, an Indonesia has in fact put in place data growth and financial inclusion in Indonesia. open banking technology provider in protection measures way back in 2016 when And the country is moving in the right Southeast Asia, has concluded a strategic the country’s Ministry of Communications direction as it is expected to fully implement partnership with Southeast Asia-based and Informatics had come out with what a standardized open API system in 2025. payments company, 2C2P to introduce its is termed as Perlindungan Data Pribadi latest open banking solution to Indonesia. (PDP) to regulate and ensure protection SECURITY A CONCERN Through Brankas’ API integration, of data in the context of data retrieval, Meanwhile, Bank Indonesia has called on customers of 2C2P’s merchants will be collection, analysis, broadcasting etc for the financial services industry to develop directly connected to major Indonesian entities that provide gateway systems or an open banking system to boost financial banks including Bank Central Asia (BCA), open banking enablers. inclusion. However, what is of concern for the Bank Mandiri, Bank Negara Indonesia and As in other countries, where open regulator, the banks and the customers is the Bank Rakyat Indonesia. The partnership banking has matured, in Indonesia too lack of security standards and data protection enables Indonesian businesses to offer market-driven initiatives from banks, regulation. Experts feel this can indeed hold customers a direct debit option during fintechs and other non-regulator parties up a full implementation of the initiative as the checkout process to make payments play a key role in the implementation of also the efforts in creating a digital economy. from their personal banking accounts open banking. It is a fact that from 2015, But the central bank is in the process with the banks immediately. Since the top banks like BCA, BRI, BNI, Mandiri, of creating regulations on open banking payment is authenticated directly between Permata, CIMB Niaga, Bukopin, BTN, standards, which will oblige banks to the consumer and the bank, merchants BTPN and Panin Bank had started to share their data with fintech companies can avoid higher transaction costs, and offer open access to their APIs for fintech by creating their own APIs from their own chargebacks generated due to fraud or an companies to explore with. Most banking systems. It is expected that open banking inability to capture funds. institutions have segmented their API platform will see traditional banks help [email protected]

Banking Frontiers June 2021 65 Country Report - Blockchain Russia makes major advances in blockchain, DLT Russia is now employing blockchain technology and DLT in major segments of activities:

hile the Russian Government Economy National Program adopted is positive about any new by the government in 2017 and also Wtechnology, it is particularly the central bank’s Main Directions for responsive towards blockchain, especially Development of Financial Technologies DLT, which has seen substantial use in for 2018-2020. The sandbox is targeting the financial services industry in the projects in the spheres of bid data and country. Several DLT-based projects machine learning, artificial intelligence, are being implemented by financial biometric technologies and DLT. institutions and banks, unlike in the US or Europe, where such technologies are DIGITAL CURRENCY largely prerogative of new age banks or In October 2020 the central bank has fintechs or digital only enterprises. come out with a consultation paper on The Central Bank of Russia has the potential introduction of the Central Russia made use of blockchain in the country’s elections been specifically recognizing DLT based Bank Digital Currency (CDBC), or digital initiatives like electronic mortgages, ruble. According to the consultation Bank, PSB, Raiffeisenbank and Ak Bars. digital letters of credit and digital paper, the digital ruble will be a digital Each participant has its own node on the bank guarantees. Similarly, there is a form of the national currency and have network. blockchain based platform for e-proxy all features to serve as money and will Sberbank, a state-owned Russian shareholder voting mooted by the be issued by the central bank to become banking and financial services company, National Settlement Depository, the yet another form of money in addition and telecom firm MTS, the leading central securities depository of the to cash and cashless money. The central Russian telecommunications operator country. The platform takes care of bank is planning to ensure seamless and digital service provider, had earlier blockchain-backed commercial bonds. integration between the CDBC and successfully completed the country’s other payment forms and is planning to first commercial bond transaction USE IN ELECTIONS issue CDBC as tokens on a distributed using blockchain. The transaction was One unique use of blockchain other ledger. It is expected that a prototype placed through a proprietary blockchain than in financial services in the country will be ready by end-2021 and will be network system operated by the National has been in elections. Very recently built on a hybrid platform combined with Settlement Depository (NSD). the government created a blockchain DLT. The central bank said it is moving Alfa-Bank, which is one of the largest based voting platform during the city forward with its CBDC to “help reduce private banks in Russia, is exploring parliament and municipal governments costs for households and businesses, applications based on Blockchain elections. Besides, there is ‘Active Citizen’, increase the speed of payments, and technology to automate services for the government’s platform for public develop innovative products and services freelancers and self-employed workers. It polls, which is created using blockchain. in the financial industry and the economy involves the whole process of registration There are also similar tools used in the in general, and payment for self-employed people, registration of transactions in the real along with income registration and other estate sector. BANK GUARANTEE add-on services. The Russian Federal Tax Service has One notable development in the realm Some of the top blockchain technology created a blockchain-based platform for blockchain is the recent issue of digital companies in Russia include MixBytes, banks to provide interest-free loans for bank guarantee by VTB, a leading which takes up blockchain and DApp payment of salaries to staff of companies Russian bank. The bank guarantee was development, Maxilect, which connects affected by covid pandemic, including issued on the Masterchain blockchain, talented IT professionals throughout MSMEs. which is in production. Masterchain Russia, to take up complex projects, is an Ethereum blockchain variant Edone, an IT outsourcing company that REGULATEORY SANDBOX that uses Russian cryptography. It is helps to bring ideas to life, HWdTech, The central bank has launched a co-developed by the Bank of Russia a software development company regulatory sandbox for testing innovative and commercial banks, and is operated specializing in blockchain and Evrone, financial technologies, including DLT by the Fintech Association. The other an engineering company successfully and services on the financial market organizations on the platform that can delivering high-quality digital products. in 2018. It functions under the Digital issue guarantees are Gazprom Neft, Alfa- [email protected]

66 Banking Frontiers June 2021 People Track Mahesh Kumar Jain reappointed Dy Governor, RBI New role in Citi for BALAJI NUTHALAPADI The Central Government has Citibank has appointed Balaji Nuthalapadi reappointed Mahesh Kumar Jain as as Head of Operations & Technology, the Deputy Governor of the Reserve Citi South Asia. In this role, he will have Bank of India for a period of two years responsibility for India, Bangladesh and with effect from 22 June. Jain, before Sri Lanka. Balaji has over 24 years of joining the central bank, was Managing experience with Citi. He joined India’s Director of IDBI Bank. He also served retail lending business in Chennai in 1997 as MD and CEO of Indian Bank from and went on to lead several roles in the November 2015 to March 2017. The retail wealth management business across other three serving Deputy Governors Asia, India, and the UK for over 13 years. of the Reserve Bank are Michael Patra, In 2018, in addition to his responsibilities M. Rajeshwar Rao and T. Rabi Sankar. for consumer banking operations, he was appointed as the Head of India Citi Solutions Centers (CSC).

DR BHANWALA is now Rajesh Bansal is CEO, RBIH Advisor, Omnivore Rajesh Bansal is the new Chief Executive Officer of the Reserve Agritech venture capital firm Omnivore has Bank Innovation Hub. Bansal was a member of the founding team appointed former Chairman of NABARD Dr of Aadhaar and previously served at the RBI in various capacities in Harsh Kumar Bhanwala as senior adviser. the areas of technology, financial inclusion and payments systems. He will guide the company in managing At the UIDAI, he was Assistant Director General and had played its portfolio companies, advise on new a crucial role in designing India’s Direct Benefits Transfer (DBT) investments and help develop the fund’s rural system, especially for cooking gas and the electronic KYC (eKYC). fintech investment strategy. Dr Bhanwala He also led the implementation of the world’s first interoperable was Chairman of NABARD between 2013 bank agent system which has become the industry norm now and and 2020. Prior to that, he was the Chairman has come in handy as India navigates the Covid-19 pandemic. He and Managing Director of India Infrastructure has also been a member of various committees of the RBI and the Government of Finance Company (IIFCL). He had begun his India. The Reserve Bank Innovation Hub is key headed by Infosys co-founder S (Kris) career at NABARD and worked there for Gopalakrishnan. almost 3 decades. At present he is holding the position of Executive Chairman of Capital India Finance. Omnivore funds entrepreneurs Brij Mohan Sharma is new ED at Canara Bank building the future of agriculture and food Canara Bank has named Brij Mohan Sharma as its new Executive systems and has backed over 25 agritech Director. Sharma, who began his banking career at the Oriental startups since 2011. Bank of Commerce in 1983, became Chief General Manager, Punjab National Bank, after the merger of the 2 banks. During his 37 years RAHUL BHUSKUTE is CIO of service, he has worked in various capacities - Regional Head of Pune and Bhopal, Cluster Monitoring Head, Branch Business, at Bharti Axa Life Insurance Western India, and Vertical Head of Inspection and Control. He Bharti AXA Life Insurance Co has also has varied experience, including in branch banking, corporate appointed Rahul Bhuskute as Chief credit, retail credit and inspection and audit. Investment Officer. Prior to joining Bharti AXA Life, he had a long stint with the ICICI Group in London and Mumbai leading Hitendra Dave to be CEO of HSBC India significant verticals in asset management and corporate and investment banking. The Hongkong and Shanghai Banking Corporation (HSBC) has His work experience spans investments appointed Hitendra Dave as Chief Executive Officer of HSBC in bonds, loans, convertibles, equity- India. He had been appointed interim CEO effective 7 June pending linked instruments and credit derivatives receipt of regulatory approval. He succeeds Surendra Rosha who is in investment-grade, growth capital, moving to Hong Kong as the Co-Chief Executive of HSBC, Asia- special situations and distressed debt. Pacific. Dave was Head, Global Banking & Markets at HSBC India. An MBA from Jamnalal Bajaj Institute of He has almost 30 years work experience in the Indian Financial Management Studies, he has successfully Markets, including 20 years with HSBC. India is the third largest completed all three levels of the CFA contributor to HSBC’s group profits with Hong Kong and Mainland course by the CFA Institute, USA. China being the top 2 contributors.

Banking Frontiers June 2021 67 RNI REG. NO. MAHENG/2002/9930 POSTAL REG. NO. MCN/70/2019-2021 POSTED AT MUMBAI PATRIKA CHANNEL SORTING OFFICE, GPO, MUMBAI ON 16-17 OF EVERY MONTH PUBLISHING DATE 16th OF EVERY MONTH

Presents NBFC’s

NBFC Awards & Conference 2021

TOPICS

u Transforming the Lending Landscape

u Transitioning to digital Transformation

u Expanding into Newer ecosystems with Fintechs, Big Techs and BFSI relationships.

u Exploring Newer Trust Sentinels.

u Frictionless and Personalized- The New realms of an Experiential World

u Ring-fencing interest with strong stress Mitigation strategies: The Way forward

u CEO Panel – NBFC Tomorrow – Re-thinking strategies for the new world

VENUE VIRTUAL PLATFORM DATE AUGUST 5TH, 2021 TIME 9:30AM – 06:00PM

Please reach out to following Managers to have Please contact for more information: an elaborate discussion on the program. Ashish Verma : 98332 36943 [email protected] Ravi Lalwani : 77382 97946 [email protected] Stalin Saldhana : 91677 94513 [email protected]