January 2015

Technology Tools for Financial Inclusion

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Chet Kamat,

Chet Kamat
MD & CEO, Oracle Financial Services
Software Ltd,

Technology can play a significant role as an enabler for banks to achieve their financial inclusion goals, says Chet Kamat, MD & CEO, Oracle Financial Services Software Ltd, in an interaction with Souvik Goswami of Elets News Network (ENN)

Give us an overview of Oracle’s operations in BFSI sector world over.
Oracle is the leading provider in the BFSI space. Globally, we have over 9,000 clients like banks, investment management institutions and insurance firms. Oracle offers an end-to-end software spectrum for financial institutions, including vertical specific solutions, cross industry solutions, middleware and database as well as hardware. Our solutions are available for both on-premise deployments as well as for the cloud. We aim to help financial institutions reduce complexity and cost, and focus on innovation.

Oracle’s Financial Services Global Business Unit provides an integrated suite of standards-based industry-specific applications for banks, insurance companies and capital market firms. Our solutions for the financial services market empower modern financial institutions to enhance customer intimacy, build competitive advantage, reduce costs and mitigate risks.

“Financial inclusion is one of the pillars of progress for any economy. Technology can play a significant role in helping banks meet their goals in a cost-efficient manner”

What kind of opportunities India offers to Oracle with regard to the BFSI sector?
Oracle set up its first India development centre in 1994 and expanded applications footprint with its investment in i-flex in 2005. India is one of the most exciting markets and we see several opportunities in the BFSI sector.

Various aspects contribute to the growing opportunities in India. First, a burgeoning middle class population has initiated a digital revolution in India. Several sectors such as communications and e-commerce have already undergone tremendous change and we believe that the financial sector is on the cusp of change with the surge of digitisation. This is a huge opportunity for banks as well as Oracle.

Globally, fraud is one of the fastest growing crimes in the banking industry. Electronic payments fraud is on the rise and is multiplying by the day. Risk, Regulation and Compliance govern the banking sector, and therefore, the need for technology. Banks in India will need to take cognizance of these global trends and invest in the right technology to address these issues. Oracle Financial Services Analytical Applications (OFSAA) helps financial institutions measure and meet risk-adjusted performance objectives, cultivate a risk management culture, lower the costs of compliance and regulation, and improve customer insight to prevent fraud and ensure safe lending.

Furthermore, the future looks extremely bright with the gush of the digital wave endowed by the new government and the new impetus to financial services growth provided by the Reserve Bank. We believe that the financial sector will undergo metamorphosis while SMEs and other related industries will prosper.

Shed some light on Oracle’s solutions and services for the banking industry in India?
Oracle has a rich portfolio of applications and technology which can help banks in various initiatives. In order to help banks drive customer intimacy with digital and social banking, we offer solutions for end-to-end customer experience management, which include our leading solutions for mobile and internet banking. To help banks differentiate themselves with rapid product innovation and scale for growth, we offer rich capability to cater to their product configuration and processing needs with Oracle FLEXCUBE. As I stated earlier, for risk and compliance, we have a leading solution in OFSAA. Our solutions for Customer Relationship Management and Enterprise Resource Planning offer rich customer service and business operation management capabilities. Our middleware, database and hardware product lines facilitate building robust, scalable and secure infrastructure.

Besides, we back all these solution capabilities with a large pool of experts who can provide the required implementation and support expertise needed to run the bank. In essence, Oracle is the only company which can claim to have the largest portfolio of products and services for banks in India.

Given your worldwide presence, how do you think the best global models/solutions can be implemented in India, where banking sector is huge and growing every day?
Oracle’s methodology is to build solutions for the global market place and then adapt it to regional and country-specific requirements. Our product strategy, management and development processes have been refined over the past three decades, whereby we take global best practices, regional trends and anticipated global banking shifts into account and build out a spec for solutions for global applicability. For example, one of our first variations of text-based banking (SMS Banking) was evolved from a need in India in early 2000, and developed into a global solution. Our solutions for fraud and risk management leverage some of the best global statistical models and are available to banks in India.

The Indian banking customer is today a global consumer who is on social media, who is hooked to online shopping and used to an online lifestyle. The key for banks in India will continue to be to uptake software and business practices from global players and drive for innovative solutions. At the same time, we also know that there are specific needs for Indian banks in sectors like the priority sector lending and financial inclusion where we can help bring in innovation and cost advantage.

The Government of India has launched ambitious Jan Dhan Yojana for effective financial inclusion in the country. What is your opinion on this?
Financial inclusion is one of the pillars of progress for any economy. This plan puts new demands on banks in terms of scale and reach. Technology can play a significant role in helping banks meet their goals in a cost-efficient manner.

How can Oracle fit into the scheme of things with respect to the government’s new financial inclusion initiative?
We have worked with a number of institutions globally on financial inclusion and have learned a lot in the process. There are a few key aspects of achieving financial inclusion:

• Reach: This is the first pillar wherein banks need to leverage new technology, mobile and tablet platforms to be able to reach every corner of our vast country.
• Products: Financial inclusion calls for a different product set than what one would be traditionally used to. For example, in a number of geographies we find that banks have evolved schemes like group loans which are not backed by security but by the promise of the group.
• Origination and collection processes: These processes need to be treated differently and need to be optimised if the bank has to make the business work profitably.
• Regulatory requirements: As the processes and frameworks for inclusion are widened, the changes in regulation, KYC and reporting, in particular, will need banks to be ready to respond quickly.
Technology can play a significant role in helping banks achieve the goals and help in realising the true potential of a financially-integrated nation.

What is your vision for Oracle with respect to positioning in India?
We at Oracle are very excited by the developments in the Indian banking environment. We are supporting private sector and public sector banks with software, which is helping them innovate on a daily basis. We are also working with a number of global banks who have set up operations in India. We are also working with a number of mutual fund companies and transfer agencies for their investor servicing solutions.
There is immense potential for growth in the banking sector and the Indian consumer is going to be the ultimate driver of transformation.

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