Technology for Finance,

Marketing, Operations
TVC - Sessions 9-10

Dr Anil Vaidya

Dr. Anil Vaidya Courage . Heart

 Our Coverage
• Banks

• Insurance

• Payments

• Exchanges – Stock & Commodity

• Cryptocurrency and Blockchain

Dr. Anil Vaidya Courage . Heart

 Banking Scenario

Dr. Anil Vaidya Courage . Heart

 Banking
• IT as Value Creator
• Current status of technology in banking
• Future banking

• Future of Work in Banking

• An attempt to have a peek into future of banking

A Suggestion – As we talk about current status & future pl. keep an eye on
competencies required in Current & Future Banking. We can discuss later.

Dr. Anil Vaidya Courage . Heart

Dr. Anil Vaidya Courage . Heart
 Michael Corbet, CEO

I wouldn’t rule out branch openings, but first

it’s going to come from digital engagement

Dr. Anil Vaidya Courage . Heart

 Citi’s Digital First Strategy
Bagged $2billion Deposits in Q3, 2019
• Citi‘s U.S. consumer bank took in about $2 billion of deposits in the third
quarter, largely by offering such perks as points and cash back to credit card
customers who opened accounts via digital channels .
• Year-to-date, the digital-first approach has brought in some $4 billion of
consumer deposits — two-thirds of which have come from outside of its
traditional branch footprint.
• It’s a different tack than the one taken by rivals JPMorgan Chase and Bank
of America, both of which depend on opening branches in select markets
where they previously had no retail presence.

Source: American Banker, Oct 16, 2019

Dr. Anil Vaidya Courage . Heart
 E&Y view –
Future of Talent in Banking
• Technology and broader trends are reshaping bank workforces
• Automation impacts workforce
• Regulation forces banks to rethink business models
• Banks are in the early stages of planning for workforce transformation
• Preparing workforce for disruption
• Retraining & reskilling existing workforce
• Managing impact on customers
• Identifying skills necessary to stay competitive
• Talent strategy has become a critical issue for boards

Dr. Anil Vaidya Courage . Heart

 SoFi is an online lending platform that allows users to apply for
student loan refinancing, mortgages and personal loans

Dr. Anil Vaidya Courage . Heart

 Besides SoFi there are many others

Dr. Anil Vaidya Courage . Heart

 Available 24/7, Djingo is the first
point of contact for customers
and prospects with the bank.
Every week, almost 24,000
conversations are performed by First mobile bank in France with a customer relationship model
Djingo. Nearly 20% of these based on AI technology
conversations take place outside
traditional working hours, to
meet strong demand for a
continuous service.
As of November 2018

Dr. Anil Vaidya Courage . Heart

 Banking
A Peek in Future

Dr. Anil Vaidya Courage . Heart

 Banks of the Future

1994 as
Chairman • Invisible? Mobile only?
of
Microsoft
• Cognitive Bank?
Orange?

• Co-Innovation

• Partnerships

Dr. Anil Vaidya Courage . Heart

 Goldman Sachs Group Inc. has featured
prominently in the chatter about cutbacks

Source: Bloomberg, Oct 22, 2019

Dr. Anil Vaidya Courage . Heart

 Traditional Banks Under Attack
Is this true representation?
Payment companies
Wallet companies
Ecom
Telecom

Now even tech

companies

Dr. Anil Vaidya Courage . Heart

 Moynihan was asked about the various
models that BofA could adopt as fintech
becomes more tightly wound up with
traditional players.

The company would consider many approaches, but added that he resisted one
that other banks have chosen: becoming the all-but-invisible banking
engine behind a fintech’s “banking” services, especially if it involved
taking on assets originated by others.
Typically notice of such arrangements appears on disclosure pages, in footnotes, or
way at the bottom of a web home page. To the public there is no bank equivalent of
the “Intel Inside” branding that the chip maker uses to make its presence known.
Dr. Anil Vaidya Courage . Heart
 Payments
Banks Risk Losing US$280 Billion in
Payments Revenue by 2025
• As much as 15% of banks’ global payments
revenue, or $280 billion, is likely be displaced
• Global payments revenue will likely grow at
an annual rate of 5.5%, from US$1.5 trillion in
2019 to more than US$2 trillion by 2025.
• Only banks that change their business
models to adopt the latest technologies and
focus on providing value-added services to
customers will capture a share of the US$500
billion in incremental revenue growth.
Source: Accenture Newroom, Sept 16, 2019

Dr. Anil Vaidya Courage . Heart

 Some interesting Observations –
US, China, India
• In the US the mobile payments haven’t caught up as in China and India
(Mercator, 2018, mobile payment adoption in US, Customer Monitor Survey Series)

• Two non-banking apps hold 94% share of mobile payments in china

(Jacob, 2018, Business Insider May 26, 2018)

India 2018, HDFC Payments Market – China

presentation   Alipay WeChat pay Others
(Tenpay)
Mobile based customer
initiated transactions Market share 54% 40% 6%
grew from 3% in 2008
Active users 500 million 900 million Not available
to 85% in 2018

Dr. Anil Vaidya Courage . Heart

 HDFC Investor Presentation 2021

Dr. Anil Vaidya Courage . Heart

 JPMorgan’s shareholders,
President and CEO
Jamie Dimon,
in 2015, alerted

“Silicon Valley is coming.”

Finance industry is all set to be disrupted by technology

Tech in Finance – PWC: 6 Priorities for Fin. Institutions

Dr. Anil Vaidya Courage . Heart

 Goldman Sachs Equity Research,
May 2018
• Tech companies, such as Amazon, continue to expand into financial
services given their brand and broad customer base.
• “Their focus on eliminating frictions in payments and expanding their
offerings to the under-banked,
• Partnerships with banks versus outright competition are likely to remain the
preferred approach, at least in the near term.”
• “We see WFC, BAC, and JPM as likely beneficiaries, given they have
the largest legacy branch networks, the largest expense bases to
amortize increasing tech costs over, and the best ability to gain
market share”.

Dr. Anil Vaidya Courage . Heart

 Gartner – Market Implications of AI
We can predict, with confidence, the employment dynamics up to 2025 .

• We can tell for sure that AI-related jobs will steadily grow starting in
2020.
• Our research also tells us that in 2021, AI augmentation will generate $2.9
trillion in business value and recover 6.2 billion hours of worker productivity.
• In the long term, AI will reduce labor costs as a percentage of revenue. But a
portion of that revenue will keep translating into new jobs, albeit different
jobs, that command a higher salary than those which AI rendered obsolete.

Dr. Anil Vaidya Courage . Heart

 Goldman Sachs Equity Research,
May 2018
• The current wave of digitization with electronic payments, straight
through processing and AI is generating real scale and efficiency
benefits for the largest US banks.
• Estimated to give 3.5% to 8% efficiency improvement over 5 years
• Resources can be shifted from operating the business to:
• Developing new tech to drive revenue growth (e.g., Singaporean DBS’ tech);
• Or reducing cost.
• The decreasing importance of a physical distribution network also
appears to be driving market share concentration
• US has 33 branches per 10,000 people, Global avg. - 28, Nordic - 16

Dr. Anil Vaidya Courage . Heart

 SBI has large Footprint
17,385 branches of State Bank of India and its six
Associate Banks running on the TCS BαNCS system.
ATMs; 262 million accounts;
37 million peak transactions per day;
and 205,000 employees.

Oracle Cloud Machine is at the heart,

providing private cloud from SBI own premises

Dr. Anil Vaidya Courage . Heart

 Environment has Changed

Industrial Era

Consumer Experience

Mobile only Vs Traditional

Payment Bank Vs Traditional
Dr. Anil Vaidya Courage . Heart
Dr. Anil Vaidya Courage . Heart
 Group Presentation
NFT

Dr. Anil Vaidya Courage . Heart

 Payments

An Industry now riding on back of Technology

Dr. Anil Vaidya Courage . Heart

 Payments in India –
Progression and rapid evolution
Value of UPI based transactions continue to grow exponentially reaching Rs.542 billion in
Aug'18 (source: India Macro Advisors September 10, 2018)

Traditional Payment systems & Digital Payment systems Wallets, Payment gateways,
instruments e.g. Debit/Credit cards, IMPS Pre-paid instruments etc

UPI

Dr. Anil Vaidya Courage . Heart

 Card
Card Usage usage
in India in India
(source: India Macro Advisors September 10, 2018)

Dr. Anil Vaidya Courage . Heart

Dr. Anil Vaidya Courage . Heart
 National Payments Corporation of India
NPCI – a not-for-profit org set up in 2008
• NPCI an umbrella organisation for operating retail payments and settlement
systems in India, is an initiative of
• Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions
of the Payment and Settlement Systems Act, 2007, for creating a robust Payment
& Settlement Infrastructure in India.
• The ten core promoter banks are State Bank of India, Punjab National Bank,
Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank,
HDFC Bank, Citibank N. A. and HSBC.
• In 2016 the shareholding was broad-based to 56 member banks to include
more banks representing all sectors.

Source: NCPI webpage accessed on Oct 22, 2017 at 6 AM

Dr. Anil Vaidya Courage . Heart

 There are four types of
electronic clearing services:
• National Automated Clearing House (NACH) • Local ECS
from NPCI is a centralised system, • Regional ECS
• launched with an aim to consolidate multiple ECS • National ECS
systems running across the country • NACH
• and provides a framework for the harmonization of While the Local ECS, Regional
standard & practices and removes local ECS, National ECS are
barriers/inhibitors. controlled by the Reserve
• NACH system will provide a national footprint Bank of India or by the
and is expected to cover the entire core banking designated commercial
enabled bank branches spread across the banks, NACH functions on all
geography of the country irrespective of the India platforms managed by
location of the bank branch. the National Payments
Corporation of India (NPCI).
Dr. Anil Vaidya Courage . Heart
 Marketing Information
System

Advt. & Brand

Sales Logistics MR
Promo. Mgmt.

Systems that account for all products

Systems that
gather info
on 1 brand
Note: across other
1. Sales and logistics include relevant transaction sys
processing
2. Advt and MR systems gather much more info on
external world
34
Dr. Anil Vaidya Courage . Heart
 Advertising – Google AdWords

Dr. Anil Vaidya Courage . Heart

 Social Network Analysis

Dr. Anil Vaidya Courage . Heart

 Operations & Supply Chain

Dr. Anil Vaidya Courage . Heart

 Manufacturing
Information System

Production Production Shop floor

Planning Scheduling Inventory mgmt
systems

Typical planning systems working on Transaction

future periods processing QA
systems, record
past events

April 2016 Dr. Anil Vaidya 38

Dr. Anil Vaidya Courage . Heart
IOT Solution
s Accelerators

Let’s check
https://www.a
zureiotsolutio
ns.com/Accel
erators

Dr. Anil Vaidya Courage . Heart

 Production Planning Materials
Sales Forecast
Planning Systems Planning

Transaction Marketing
Interconnected Org Systems
Systems
Sales Mgmt

Costing Financial
Accounting
FG Inventory
Mgmt

Production
Shop Floor RM Inventory
systems Mgmt
WIP Mgmt

April 2016
SCM 40
Dr. Anil Vaidya CourageDr.. Anil
HeartVaidya
 Thanks

Dr. Anil Vaidya Courage . Heart