Alok Bansal is the Managing Director of Visionet India and the CEO of BFSI Business. Over the last 20 years, Mr. Alok has been instrumental in leading massive technology transformation initiatives and implementing scalable outsourcing and delivery services. He is experienced in managing strategy, global operations in the BFSI industry. He has a strong track record of scaling up businesses. In the last five years, he has grown the BFSI business by 5x, and the employee base has grown by 3.5 x. This is a testimony to his skills in steering and scaling a business and his leadership ability.
In March this year in Sydney, during the virtual Gartner Security & Risk Management Summit, the keynote address by Peter Firstbrook, research vice president at Gartner, articulated that security and risk management leaders globally must reinvent organisations in response to COVID-19 and meet the challenges that are now confronting traditional cybersecurity practices. Even though as Firstbrook said, 80% of organizations have a hard time finding and hiring security professionals, the need of the hour is a rapid response to the risks being faced by industries due to mercurial regulations, migration of workspaces and threats like ransomware and business email compromise.
The pandemic has undeniably altered the way we work, live, interact and do business. The engine of the BFSI (Banking, financial services and insurance) sector too has had to deal with the aftershocks unleashed by COVID-19 and as the 2021 Gartner CIO Agenda Survey specified, remote working models now entail a total reboot of policies and security tools. Endpoint protection services will need to be cloud delivered and data protection, disaster recovery and backup policies will have to be rebooted. Gartner also predicts that by 2025, 50% of large organizations will adopt privacy-enhancing computation for processing data in untrusted environments or multiparty data analytics use cases. The point being that industries will have to adapt to new realities and interpret change in creative and constructive ways to be future ready.
In the BFSI sector in particular, I see the following trends defining the future.
Prescriptive Security: The pandemic has made it essential to speed up processes with minimum human effort and delay and so a blend of multiple technologies will be employed for increased efficiency and protection from the danger of cyber security threats. It goes without saying that artificial intelligence (AI) and automation will play a big part in not just detecting cyber frauds but preventing them. Prescriptive security predetermines security controls and procedures based on potential risks and forms premeditated strategies to protect and seal institutions against possible cyber attacks. Given the increasing dependence on digital transactions, it can get overwhelming to analyse the voluminous data that is generated each second but customised and prescriptive security measures can predict and mitigate suspicious behaviours, risks and dangers even before they can unfold. Data generated by businesses is a sensitive resource that must be protected in an increasingly porous world. How data is collected, processed and shared needs to be systemised and streamlined so that leaks can be plugged by the smarter algorithms of prescriptive security, even before they spring up.
Emphasis on managing credit risks: In an economically volatile atmosphere, how can financial institutions minimise credit risk? But the basic question first. What exactly is credit risk? This refers to the potential loss caused by a borrower’s failure to repay a loan or meet contractual commitments. The danger in such a case is that a lending institution may not receive the principal amount or the accrued interest. A smart way to prevent this eventuality is to create intelligent and predictive analysis models that can determine the possibility of fraud or the risk of default. Given the number of bad loans afflicting the banking industry in India, it is critical that institutions invest in smarter, and increasingly intuitive technologies, machine learning and analytical models to safely weed out risks. Faster inspection of financial statements, credit scores and inherent flaws and loopholes in the lending system can protect institutions from massive setbacks.
Emphasis on fraud analytics: With faster business transactions, the risk of transactional data mismanagement has also increased. Error-proof, reactive and proactive, manual as well as automated response systems and advanced analytics can identify risks, detect and prevent anomalies and frauds. What fraud analytics achieve most effectively is the identification of the possible reasons that facilitate frauds. This is done through data integration after a painstaking and thorough analysis and mining of structured and unstructured information, records and the sampling of every scrap of relevance so that anomalous patterns and gaps can be identified. Experimental testing methods that assess risks, employ prevention mechanisms and offer remedial measures are now crucial for the health of our highly regulated industry. Analytics that protect against tampering, cash, billing and financial statement fraud and practices like site cloning are now the norm rather than exceptions.
The importance of quantum computing: Fully scaled quantum technology is going to be the future of the banking industry. Technology that does not just optimise regular activities but presents statistical probabilities by processing, analysing and crunching unstructured reams of data more quickly than ever before. Quantum technology hence saves time and speeds up decisions, refines customer service and simplifies encryption-related tasks. During the pandemic, the skill to assess risks well in time is becoming invaluable and necessary even though it has still not developed to a point where all institutions can access it to make faster and more accurate decisions.
The age of open banking: What exactly is open banking? Well, it is a system that allows banks to open up their application programming interfaces (APIs) and enables them to synergies with fintechs and third party entities. Through open banking, banks allow third parties to access financial information they need to develop new and better personal finance management (PFM) applications. APIs are the key to this synergy as they connect developers to payment networks and also improve the service component of the banking system. Open banking increases customer reach, strengthens revenue streams and helps banks to monetise their infrastructure and with time, we will see it growing and gaining more currency.