In Conversation with Gautam Samanta, Global Head of Banking and Financial Services, NIIT Technologies
In an interview with Dr. Sanjay Joshi , Gautam Samanta talks about some of the key industry trends, the meteoric rise of fintechs and collaboration strategies for financial institutions, significance of customer experience, looming talent crisis, and the unprecedented potential of Blockchain to transform the financial services space.
Gautam is the Global Head of BFS and Executive Vice President- Europe at NIIT Technologies’ London office, where he is responsible for spearheading the company's growth globally for the BFS vertical and managing client relationships in the Europe region. With over 24 years of experience, Gautam comes with a deep understanding of the technology and business consulting landscape acquired through working in a leading financial services institution, a leading software product company as well as two large global consulting and technology services organizations. He has extensive knowledge in driving business transformation, outsourcing, IT and Ops strategy, innovation and sustainability and is highly experienced in complex large deal structuring, creative commercial models, and deal negotiation.
NIIT Technologies: Banking is no longer what it used to be. Banks are literally on wheels and go to wherever customers are through ATMs, PoS, Digital wallets, online banking and mobile banking vans instead of customers lining up in front of overworked counters in a traditional physical bank. The role of technology in redefining the banking industry has been pivotal in opening up a slew of fresh opportunities for the banks and financial institutions to differentiate themselves. What are some of the key trends that you see are sweeping the BFS industry? What challenges are banks facing in converting these trends into sustainable vectors of strategic growth?
Gautam Samanta: I believe it is an exciting time to be a part of the Financial Services industry right now. Our complex financial world needs fast-paced and accurate responses to threats and challenges that are continuously evolving without compromising optimal customer experiences and talent.
You are right that the Banking and Financial Services (BFS) industry is transforming at an incredible pace. It has moved away from being merely reactive to being proactive and prescriptive in many cases. I like to highlight the emergence of the Millennials as key participants of the financial services market, the blurring of lines between traditional banks and non-traditional competition (Amazon/Google/Ali Pay, Fintech start-ups, telecom, and independent payment companies), and the relentless pressure on costs and regulatory scrutiny as the key trends that have brought the industry to a tipping point ahead of significant disruption.
Technology has also literally upended the way in which customers interact with their banks and financial services while changing the nature and complexity of their challenges along with it. As the world collectively recovers from a catastrophic economic downturn, I see that financial services is at a unique crossroads, as they are mandated to balance the demands of their shareholders, investors, customers, employees, and regulators; while dealing with the ever-mutating threats of fraud, security, compliance, and data theft.
NIIT Technologies: You have often said that digital has now become the mainstream. We can notice that the relentless momentum from the digital transformation is felt from the most mundane to the most complex of banking activities. Just as easily as it opens up external banking interfaces to customers, it optimizes and strengthens critical internal activities in the areas of security monitoring, process automation and regulatory reporting. Fintech as a sector has emerged alongside traditional banks by innovation in banking and financial services through technology. What mutually beneficial models between banks and Fintech do you foresee in terms of emulation of or collaboration between each other?
Gautam Samanta: If you look beyond the hype, you can see that FinTech is disrupting and replacing age-old financial processes with better, faster, and more automated processes by putting technology in the forefront. Technology disruption is leading to disintermediation in the value chain and business model of traditional banks. According to a report published on Canadian FinTech, the number of FinTech companies has grown by a whopping 26% year-over-year with global investment on track to reach USD 8 billion by the end of 2018. FinTech startups are targeting the customer pain points and profit pools with innovative, advanced, easy-to-use, and cost-efficient solutions, which are helping to create a vibrant environment for businesses to thrive. I see that the possibilities here are enormous!
In a bid to drive innovation and comply with the regulatory standards for emerging technologies, the mantra for the Financial Services ecosystem players (banks, FinTech players, service providers, and regulatory and governing bodies) is collaboration.
In terms of partnerships and alliances between the Financial Institutions and FinTech, there are three different strategies prevalent in the market today:
- FinTech and Financial Institutions as Standalone Entities: wherein each has its unique strengths and weakness—larger institutions have data, resources, and market trust.
- Partnership between FinTech and Financial Institutions: wherein the uniqueness of each undergoes some compromise but, can be effectively managed collaboratively.
- Captive FinTechs: wherein a financial institution bringing a FinTech in-house reinforces the strengths and eliminates weaknesses inherent in each entity. However, this strategy can make the joint entity inoperable if any newer complexities like conflicting goals, incongruent culture etc. were to crop up.
We often see banks and FIs (Financial Institutions) choosing either strategy 2 or 3. FIs are going all out to partner with FinTechs to stay relevant. If they cannot partner, they are ready to buy out startups challenging crucial lines of business in the financial services industry.
NIIT Technologies: With growing innovation in the financial services industry and the blossoming of Fintech as a growth area, there is a huge emphasis on customer experience. When all things are equal, one who offers richer and smoother experience often seems to be the winner. What do you think will be the best technologies/toolsets to drive these winning experiences in a field rooted in traditional models for so long?
Gautam Samanta: A winning customer experience is a great differentiator for an organization. It may be counter-intuitive but, it is not about mastering any specific technology. When multiple technologies are synergistically combined with the associated business processes, operating models, and the culture of innovation, a holistic and wholesome experience will be an attractive outcome.
Finally, the organization that masters the ABCDE will stand out in the end: Automation/AI/APIfication, Blockchain, Cloud/Cyber-Security, Data Analytics, and Experience/Eco-system.
NIIT Technologies: It is often said that Tools, Processes, and People are the three legs of a tripod that provide stability to any organization. Unlike processes and tools,people can be its smartest and the most flexible assets. While banks manage their technical asset portfolios and their streamlined and automated process suites, there is an apparent talent crisis brewing in the Banking and Financial Services industry. Industry reports say that 25% of the financial institutions are struggling to find and retain skilled workforce. What is your perspective on the gravity of the talent problem and your views on handling it?
Gautam Samanta: Skill availability and shortage of qualified talent are really serious issues for the Financial Services industry today and in fact, they are the primary reasons for slow adoption of digital technologies in the industry.
In order to close the talent gap and adopt promising new technologies in earnest, Financial Services stakeholders should collaborate with pockets of expertise wherever available. They should also foster talent by improving the skills of the existing workforce, attracting fresh talent to the industry, and actively promoting new technologies.
In the long term, Financial Institutions must strategically plan talent supply and demand, improve in-house learning and development programs, and adopt new technologies to improve overall productivity and job satisfaction. Companies must also update their work culture to appeal to younger workers and become more diverse, by increasing the percentage of women, for example.
The industry should target prospective new pools of talent by encouraging moves from other industries like gaming, establishing common bodies of knowledge, making career paths more transparent, and collaborating on training with academia and vocational training providers.
NIIT Technologies: The banking industry is a veritable minefield today due to the rising customer expectations of high convenience, the constraints of politics and fair trade and the realities of cross-border movement of money with anti-national and criminal leanings. A maze of regulations has come up to manage various ramifications of these issues. Market pundits claim that Blockchain as a technology which is poised to grow to anywhere between USD 12 Billion – USD 19 Billion by 2025 holds the key to addressing a number of these issues. How does Blockchain help in financial crime monitoring, regulatory reporting and meddle-proof ledger keeping and reconciliation for the BFS sector?
Gautam Samanta: Blockchain is an exciting technology that has a huge untapped potential to transform the financial services industry by making transactions faster, cheaper, more secure, and transparent.
The disruptive potential of Blockchain is widely acclaimed to be similar to what early commercial internet had in the early 1980s. There is a crucial difference, however. While the Internet enables the exchange of data, Blockchain facilitates the exchange of value; by enabling users to conduct global trade and commerce activity without the need for a complex network of payment processors, custodians, and settlement and reconciliation entities.
Blockchain will help create efficiencies by establishing a single, irrefutable version of digital truth. It will go a long way in automating processes, reducing data storage costs, minimizing data duplication, and enhancing data security over time.
Take the case of Fraud Reduction. Though Blockchain is a nascent technology, its potential to reduce fraud in the financial world is attracting a lot of attention since 45% of the financial intermediaries such as stock exchanges and money transfer services are adversely impacted annually by economic crime. Most banking systems in the world are built on a centralized database that is more vulnerable to cyberattack because of its single point of failure i.e. once hackers breach the one system, they gain full access. A Blockchain based anti-money laundering system can leverage the decentralized, cryptographically safe, and irreversible nature of this technology to detect and stop all suspicious transactions effectively.
Similarly financial institutions spend anywhere from USD 60 million up to USD 500 million per year to keep up with Know your Customer (KYC) and customer due diligence regulations, according to a Thomson Reuters Survey. Blockchain would allow the independent verification of one client by one organization to be accessed by another eliminating redundancy. The reduction in administrative costs for compliance would also be significant.
Decentralizing document verification basis smart contracts would allow companies to execute the latest documents and verify their authenticity without errors. Applying Blockchain, on the other hand, to clearing and settlement might help clear trades in minutes/seconds instead of the usual 2 to 3 days required for settlement. Actually, Blockchain-driven trade networks can considerably benefit various stakeholders by minimizing friction from the operational and logistical inefficiencies across the trade finance value chain.
NIIT Technologies: Thank you for your perceptive views on the mega trends sweeping the Financial Services sector, attractive collaboration models with FinTech, the role of technologies such as Blockchain and talent in creating winning experiences for enterprise users. From your unique vantage point, what do you think will be critical for mid-tier IT majors like NIIT Technologies in the next 3 years?
Gautam Samanta: The two things that would make a lot of difference are the customer centricity and the agility to respond to customer need. Gone are the days where scale will make a difference but what really matters is the ability to understand the customer scenario and respond to it. Mid-tier firms have very limited and niche focus on certain customer areas and I think they are uniquely positioned to address this market and bring advantageous solutions to the customer. Mid-Tier firms are not heavily invested in the legacy where they have to protect their ongoing revenues or interests, but do what is in the best interest of the customer focusing entirely on the emerging technologies. Their focus will entirely be on being agile without being distracted with balancing the act with protecting legacy business and growing digital business. Mid-Tiers are more of a digital disruptor and enhancer.