Data: The new currency in financial services sector

Today, customers are demanding better experiences from every industry and the BFSI sector is no exception. A couple of minutes may not seem like a lot, but they represent the difference between an essentially fluid customer experience versus one where it feels like we are stuck in the Stone Age

By Sanjay Motwani

Can a couple of minutes really matter when it comes to choosing the right financial services provider? Is a seamless experience overrated in terms of how it really affects the customer? While getting a home loan, Rajeev Bajaj (name changed) had to choose between going with a bank that had integrated investment and savings accounts and a bank that offered attractive terms like the earlier one but with no integration between accounts. In the end, Bajaj went with the former.

Consumers are seeking more simplified personal financial services across multiple channels – 76 per cent of consumers buy more from companies that make it easier to do business with them, according to Cisco; and are willing to lend more personal information if it helps them to manage their finances better.

The need for instant gratification has led to the creation of a new generation of consumers who continue to raise expectations in the industry. Long-winding queues and limited customer service options are giving way to mobile apps, peer-to-peer transfer service, digital wallets, online banking and open banking. The convenience of digital alternatives is fast replacing branch visits and has also led to the rise of self-service alternatives. While more than 40 per cent of consumers prefer using Chatbots for customer service interactions, 56 per cent use AI-supported voice assistants.

All these trends are driving massive changes to the infrastructure and processes in the BFSI sector as companies strive to create an omni-channel experience that spans across all touch-points, provides fast, consistent and superior service without the wait. Superior customer experience will be the only long term sustainable differentiator.

The foundational step is the merging of the physical and digital worlds and power it through data and cloud. Technology solutions such as AI, chatbots and social media generate, rely on and store huge amounts of data about customers. Many banks are experimenting with the Open Banking model and publishing their APIs, leading the transformation from product-centered thinking to Banking as a Platform. UPI and BHIM are great examples of Open Banking platform in India. Such trends are important as they heighten the competition by enabling more personalised comparisons between accounts held at different providers. Consumers will be able to better manage their finances, make better financial decisions, and gain access to innovative financial solutions.

The government’s twin thrusts of using Aadhaar as a unified identification system and cashless transactions have major implications for the BFSI sector. Also, while domestic players have been allowed to set up payment banks and small finance banks, they have been asked to ensure data localisation in six months to ensure “unfettered access to all payment data for supervisory purposes.”

Rising expectations among the consumers, the digitisation push from the government and increasing competition from the new-generation fintech players are pushing BFSI sector companies to build secure, scalable and operationally efficient data center architectures to be able to respond quickly and securely to their customer demands.

Data centres are the backbone of the BFSI sector
Banking, finance, insurance are tough markets that call for speed, reliability and robust security of data. Consumer confidence stems from security and companies have their work cut out to keep cyber security vulnerabilities in check. There are KVM solutions that can protect information by managing access and data transfers based on a computer’s security classification level.

Increase in data storage capacity to store the customers’ financial data is becoming a necessity for financial services organisations. Customers need speed to connect cloud resources to the data centre’s applications or to accommodate their onsite cloud users, and data centres need cloud resources to stay cost-effective. WAN-cloud exchanges can help with connectivity as they serve as connectivity hubs between different cloud service providers and enterprises. They are easy to set up, agile and secure and since they are virtual, data centres can set up many more of these than direct connections.

Besides, there is more demand for faster and denser data centre networking. Data centres located in faraway location and in co-location settings store large database of information that are required immediately. Lags in the relay of data, especially in the BFSI sector, can be detrimental to business. Hence, data centres have started connecting at the edge to cloud providers’ networks through co-location facilities, either physically or through a point of presence, increasing capacity while decreasing lag time. Technologies like Direct Connect (from Amazon Web Services) or ExpressRoute (Microsoft Azure) are driving edge connectivity. This kind of edge computing is projected to grow and change the flow of information through data centres. (source: Raritan)

As BFSI majors struggle with increasing data complexity and rising costs of managing the data, the trend towards high density environments, third party data centres, and virtualisation will gain further impetus. Indeed, a few minutes can be the difference between a world-class financial services provider and run-of-the-mill company.

(The author is Vice President, Asia Pacific, Raritan-a brand of Legrand)