We recently caught up with Jay Nair, Senior Vice President of Financial Services at Infosys (NYSE: INFY), a global leader in digital services and consulting. The company has clients in 45 countries who use its services to develop their digital transformation strategies.
The firm has more than 30 years of experience in managing the systems and workings of multinational enterprises. Infosys assists global enterprises with upgrading their IT platforms by providing an AI-enhanced core that helps prioritize the execution of change.
Infosys also empowers enterprises with agile digital at scale that helps them deliver high-performance solutions.
Crowdfund Insider: What impact is the COVID-19 pandemic having on digitization of the financial sector?
Jay Nair: It is accelerating digitization quite significantly. There is a rapid increase across all aspects of digitization which includes the Experience, Automation, and Assurance. On the channel side, financial services (FS) clients are actively increasing interactions with customers through their digital channels as well as contactless payments among other things.
Firms are investing in sophisticated collaboration technologies to improve remote working productivity and effectiveness. On the back end side, which is often ignored, people are automating even faster. Brokerage firms are automating their margin calculations engines to allow investors access to larger funds. Housing finance companies are digitizing the whole buying and home closing experience. Overall, firms are looking at accelerating their move towards Cloud for cost and security reasons.
Lastly, increased online activity also increases fraud which is why firms are investing heavily in enhancing cybersecurity by applying AI to improve fraud detection and building greater controls to enable remote working for employees.
Crowdfund Insider: Contactless payments are becoming more popular- what can/should credit card companies do to compete?
Jay Nair: Contactless payments applies to a wide range of players in the ecosystem. Card networks like Visa and Mastercard are investing heavily in providing tokenization solutions to ensure customers can use contactless payments.
They are also investing heavily in enhancing their AI capabilities for faster transaction processing and better fraud detection. However, contactless payments involve several other stakeholders. Banks need to be ready to consume the token services offered which are an integral part of contactless payments.
Merchants need to enhance their point of sale systems to be able to accept mobile payments. There is also a rapid increase in making mobile payments directly through bank accounts without using a credit or debit card. These are becoming increasingly popular with PayPal taking the lead through the rapid increase in payment volumes since the Covid-19 pandemic began.
Crowdfund Insider: Given the widespread adoption of online banking, what are companies doing to mitigate security risks?
Jay Nair: Banks are having to fortify their services by providing Digital Assurance to their customers by protecting the perimeter, protecting their systems, protecting their data, and early detection of any discrepancy. They have to protect the perimeter to ensure that malicious intent cannot penetrate their firewalls.
They are doing this by enhancing their penetration testing and other capabilities. They have also ensured that even if something penetrates the perimeter, their data is secure both at rest and motion. In addition, there are measures for prevention and early detection by applying AI to flag fraudulent transactions.
Crowdfund Insider: How is the role of cloud computing evolving within the financial sector?
Jay Nair: Cloud is becoming more relevant in the post-COVID-19 world. Organizations that have significant on-premise infrastructure need to have boots on the ground in their data centers for the upkeep of the data center. With a large number of professionals working from home, this was becoming a problem. However, those with Cloud infrastructure could easily scale in the virtual environment.
Further, the supply chains were significantly impacted due to Covid-19. Capital markets clients saw a rapid increase in transaction volumes which required additional hardware. Those with cloud-based infrastructures were easily able to scale up while those who had to rely on supply chains saw some issues in scaling up.
Mortgage originators and servicers are expecting volume spikes and pressure to maintain margins. Cloud computing will be increasingly looked at as a solution to provide scalability as a reduced cost.
Crowdfund Insider: Explain how companies are using AI to predict creditworthiness for those without a credit score.
Jay Nair: Creditworthiness is being determined by combining the transaction history of clients within a bank’s own environment. Banks are looking at various elements such as bill payment, public records, wages to determine creditworthiness. These rich datasets are being modeled to predict the customer’s ability to make payments. A neural network will provide a precise view of the creditworthiness.
AI also helps serve clients with no credit score or those who may have been hastily rejected by the traditional scoring model. In emerging markets where most of the world’s unbanked (therefore people without credit history) reside, that AI is being used as an alternative to collect data points for credit scoring.
There are products that track social media and internet activity, scan the web for background on jobs, criminal history, social status etc. They also track smartphone use and behavioral trait based on usage, activity, locations etc. to build models of creditworthiness
Crowdfund Insider: How are financial institutions utilizing technology to overcome regulatory reporting challenges?
Jay Nair: MiFiD, GDPR, CCPA are driving the need for regulatory reporting over last few months. Regtech or regulatory reporting technology is focusing on digitization of manual processes to ensure availability of reports on demand at lower cost. Large banks and cap market firms are partnering with Fintech firms to drive transformation in this domain. Financial firms will continue to invest significantly in building reporting hubs to create real time reporting to assess the impact of changing regulations.
Regulatory reporting provides two types of challenges to financial institutions. Firstly, the requirements are not clearly defined early on and therefore banks get limited time to prepare the reports. Second, the reports require them to collect large volumes of data from across their enterprise which may not be available in a homogenous manner.
FI’s are responding to this by building a data lake infrastructure using Big Data technology to collect data from disparate sources and transform them into a denormalized form where they can run analytics.
Secondly, FI’s are moving towards Self Service BI applications such as Tableau and Qlikview which allows them to build reports on demand. This is replacing the heavy “canned reports” architecture which required heavy IT effort and time to prepare the reports. In the new age, business users are exposed data from the data lake in an easy-to-understand manner which they can use to build their own reports in a short period of time and provide to regulators.