Technology for Next-Gen Banking

Zahid Afzal, Former CIO, Capital Bank (NASDAQ: CBF)

The past decade has witnessed a gradual shift from traditional branch office transactions to digital and mobile banking. The idea of digital banking spans various demographics and age groups and is perceived as beyond mobility generally misunderstood as a millennial factor. Over the years, we have seen significant adoption of digital banking across various groups of people. The adoption prerequisites are based on how mobile products are leveraged, the usage, convenience, and overall features and functionalities involved.

The dominance of mobile and digital banking has caused the wane of branch traffic for cash transactions. Functioning with a new purpose, these branches offer financial advice and complex services such as investment and mortgage among others. Interestingly enough, the growth of mobile banking has surpassed PC banking or online banking, which is taking a back seat currently. Lately, it has been noticed that mobile transaction volume is greater than web transaction volume, and also, the number of transactions per customer is higher on mobile than online.

Digital banking particularly relies on technology partnerships and during the hunt for the most suitable partners, our primary parameters are their quality of strategy and whether they are exclusively into mobile app development or have a broader spectrum of focus. Apart from that, we contemplate the capabilities they provide, the trends emerging in the industry and how they are in tune with the trends. With the rise of technologies such as Google Home and Apple’s SIRI, there is a ubiquitous search for similar technologies that can be seamlessly integrated into our overall strategy to harness the impact of artificial intelligence for our future technology endeavors. The third and probably, the most important aspect that turns out to be a deciding factor is the technological architecture; how flexible, scalable, and integrable the architecture is while being cost-effective, efficient, and secure.

It is important that technology leaders should not just play a technology leadership role but a business leadership role as well

In the wake of recent cybercrimes, security continues to be a matter of concern for both the banking industry as well as its customers. Though our ultimate focus is on protecting the customer assets as well as our assets, the inevitable point is that customer’s mobile devices and PCs could be compromised. Each day, there are cases of identity theft, social engineering, and so on. Beyond just merely creating awareness for customers, we believe there is ample scope for improvement in the area of security. Security being a primary challenge for us, we have to also contend with the technological side that still relies on the continued use of old architecture on the backend, which is a core environment for banking. Legacy systems have been in use for close to three decades, and we constantly work with our partners to evolve out of legacy systems, failing which our ability to integrate with mobile devices and other functionality is heavily hampered. As we try to bolt newer capabilities on older architecture, we are faced with great complexities, which greatly slow down the developmental process.

For the road ahead, we see a huge potential in the idea of voice banking. In the evolving mobile arena, we can foresee the use of bots to provide instant services to customers while proving to be cost efficient in an automated fashion. The impact of artificial intelligence throws light on the emergence of new products and services that can be integrated into mobile products in the lending and investment arena besides traditional banking. Among our endeavors is to find new banking technologies, for example, being able to activate and deactivate debit or credit cards, or alter settings based on who uses the card, the purpose of usage and the days of usage, particularly while sharing the card with family members. Card providers have built these capabilities with API, but the integration into our overall environment takes a lot of time behind the scenes. Among all the possible initiatives, we would like to have a lot more plug and play capabilities in order to leverage all the innovation that is going on in the industry.

The Rungs on the Success Ladder

It is important that technology leaders do not just play a technology leadership role but a business leadership role as well. A technology leadership role could lead to significant advancements in technology but if it does not connect the dots with the rest of the company and its mission, then it becomes technology for the sake of it. My advice to my technology counterparts is they have to understand the business they are in. They do not need to be an expert; however, it would be important to know what banking is, how customers are served and how shareholder values are created. Also, nurturing and training talent is important as it is difficult to acquire and retain talent especially on the technology side. Money is usually not the deciding factor in an employee’s decision to leave an organization; the deciding factor could be the unavailability of opportunities or challenges within the organization. It is important to have an environment where people know that they have a continued career growth and an assurance that they are continually learning and growing.