The COVID crisis created some unique challenges for the Indian banking industry, posing such questions as how do we continue to serve customers in a contactless world? How do we manage operations and performance with a reduced and remote workforce? How do we optimize costs while ensuring operations continue uninterrupted? Can our systems even handle the increased loads of online transactions? Are we secure enough? However, even as banks grapple with these questions, the pandemic has given them a unique opportunity by disrupting business as usual and opening doors for innovative thinking. 

Pre-COVID, there were two main areas of focus for Indian banks: enhance digital to improve user experience and business outcomes and contain costs to mitigate margin pressures. These continue to remain the levers on which banking innovation in the new normal needs to happen. And technology will play a key role in addressing these concerns. 

Does your IT strategy align with business goals?

This is the right time for Indian banks to ponder the question, “How well is our current IT strategy working to deliver long term business transformation and innovative operating models?”   

Technology investments should be prioritized around front-office transformation, back-office responsiveness, enterprise-wide data management, and a flexible, robust, and scalable IT that delivers on business KPIs.  

In the quest for quick wins, we often forget to focus on the long game. It’s easy enough to deploy point solutions to solve a specific problem. You can do sporadic cloud engagements, a contact center upgrade, or even a work from home solution specific to the pandemic. However, that would probably leave you with a complex mess of systems that don’t talk to each other. A holistic transformation requires a deep dive into all business areas, and one of the first steps toward such a change is to identify what’s core to the business and what’s not. For Indian banks, this means looking into the business’s KPIs and what needs to change to deliver on those KPIs. 

Setting the right priorities

The McKinsey's Global Banking Annual Review 2019 advised banks in India to begin their journey of reinventing their business models by outsourcing non-differentiated cost drivers to third parties. 

Think of it this way. Normally, a large bank would spend hundreds of millions of dollars buying, deploying, and managing IT assets through a multi-vendor strategy. That’s a non-core activity because banks are not supposed to run IT shops. This approach leaves them with disparate IT systems that drive up costs, time, and effort to maintain. 

Can this be done better? Of course! 

IT assets needed to run the business can be streamlined by taking a total outsourcing approach with an end-to-end picture in mind. Getting an IT outsourcing partner on board can significantly reduce the total cost of ownership while improving efficiency and performance. Often, the decision to outsource is hindered by the desire to protect existing investments in IT assets. However, there are business models in place that can help banks monetize these non-core assets while outsourcing the run. At Wipro, we work with our clients on a unique business model, investing in their existing IT and non-IT infrastructure and recovering the cost over time. Consolidating the vendor landscape can also reduce cost overheads significantly. We’ve delivered a 15-20% cost advantage for our customers and helped our private banking clients in India to compete better and achieve operational excellence. 

Building competitive advantage with zero-based budgeting

The current IT landscape has a significant cost takeout potential. Still, it needs a bold step – such as reframing the IT strategy and outsourcing for efficiency – to free up the capital. This capital can now be used to make new investments and fund change initiatives to build resilience, improve responsiveness, and move toward total digital banking. 

Is your bank ready to take the transformation leap? How is your digital journey shaping up in the new normal? I’m hoping you will discuss with me at https://www.wipro.com/contact-wipro/.