Transformation without disruption
Banks have a grave need to cut costs but their competitive position relies on their
ability to compete on customer service. Can cost reduction and innovation go hand
in hand? TCS Financial Services president NG Subramaniam says yes.
 The crisis in the banking market has
made it more vital than ever to
cut back on costs, but at the same
time banks must continue to come up
with innovative products and processes.
Another pressure they face is the need to
expand their global reach, given that many
developed markets are already saturated
and the oppor tunity for growth lies in the
emerging economies.
The challenge is to deliver novel ideas
and grow into new markets at a time
when banks are restructuring and trying
to control costs. These changes need to be
made without compromising the quality of
customer service. It is no wonder that many
banks are looking for outsourcing partners
that can not only cut costs but also deliver
change across the global market.
‘Traditionally financial institutions have
adopted technology as the differentiator
and enabler to create or harvest market
opportunities,’ says N G Subramaniam,
president of TCS Financial Services.
‘Their overall IT spend has come under
pressure in the current climate and most
have looked for opportunities to create
efficiencies and deliver more for less.
‘As the uncertainty of the economic
outlook in their respective home and
foreign markets increased, it posed
cer tain key organisational and operational
challenges.
‘These include relentless cost
management and reprioritisation of their
Run the Business and Change the Business
initiatives, and the expectation of quantum
improvements in efficiencies as opposed
to incremental or marginal benefits, which
means cutting across organisational silos
and achieving efficiencies across IT and
operations. They have also had to ensure
business as usual for their clients and meet
their demands in a tight environment,
while fighting to retain their talent and
develop the right product mix strategies
for the future,’ he adds.
TCS Financial Solutions, part of Tata
Consultancy Services (TCS), is helping
banks to address these challenges by
enabling transformation with an integrated
suite of solutions – the TCS BaNCS family.
Its Co-Innovation Network develops
partnerships that enable the sharing of best
practices and innovation. It services banks in
more than 80 jurisdictions and is embedded
not only in the developed world but also in
emerging markets.
Subramaniam understands that change
in the clients’ industry means change for
service providers.
‘From a vendor perspective, it has
become essential to demonstrate real
value and provide strategies for sustaining
the benefits over time. Our global network
delivery model and transformational cost
optimisation paradigm have helped our
customers to look at Run the Business
and Change the Business Portfolios in a
balanced manner,’ he remarks.
The need for change
Banks are faced not only with competitive
pressures but also a rapidly evolving
regulatory landscape, in which compliance
may add to the cost burden.
‘Regulatory compliance is something that
most banks have always prioritised and the
quantum of such changes has been on the
increase. One important mindset change
that has happened in the industry is to look
at these as enablers rather than as mere
reporting and compliance.
‘There are banks that have leveraged
their investments in regulatory compliance
systems to achieve the desired business
transformation as well,’ notes Subramaniam.
‘For example, IFRS reporting, MiFID and Basel
II have been used to improve control systems,
and through proper implementation some
banks have achieved significant benefits.’
Fundamental to unveiling this value is the
coherent implementation of technology.
Globalisation demands that banks adapt
their IT to suit new products and markets,
so investment in systems remains a priority.
Market conditions, however, mean that
there is far greater pressure to ensure
that all technology decisions deliver the
anticipated benefits as quickly as possible.
Subramaniam believes there are a
number of key areas in which wise
technology investment is vital. He highlights
the segmentation of customers, in
recognition of the differing needs of senior
citizens, Generation Y (usually those born
between 1976 and the early ‘90s), women
and students.
‘As customers’ expectations of
convenience and enriched experiences
become more varied, customer experience
or channel agnostic service unification
become key elements,’ he says.
This is one reason why more banks are
looking to external IT service providers,
as the outsourcing paradigm has matured
to deliver significant value and efficiencies
through services with well-defined SLA s
and OLA s, which provide better variability
and pricing models.
Another important trend is the growing
importance of risk management, data
privacy, confidentiality and compliance,
in which banks are moving towards
surveillance rather than preventive and
analytical risk controls.
‘Innovation has become a key theme,
which in turn creates the need to tap
into vast pools of global talent, product
differentiation, product bundling, preferential
pricing and coopetitive product distribution
to acquire the market share,’ says
Subramaniam. ‘Consequently technology
has become even more important to
accomplish all these objectives in a faster,
better and cheaper way.
‘Transformational outsourcing is all about
achieving synergies, and enabling a globally
distributed work paradigm and a 24-7
capability,’ he adds. ‘It creates a culture of
continuous improvement and ensures that
new ideas are seeded. This creates a unique
competency within a bank to standardise
products and services, as well as the
capacity to mass customise, which is key to
improving client service and experience.’
The perfect partner
Choosing to outsource IT services to
achieve process transformation is one thing,
but choosing the right service provider is a
challenge in itself.
‘A transformation partner must have
the right skills, competencies, global
reach, scale and undisputed financial
domain and technology expertise,’
explains Subramaniam. ‘TCS has been at
the forefront of delivering such business
transformation to many clients, and
is ranked as one of the global top ten
financial technology providers in banking,
capital markets and insurance domains.
We have further strengthened our
capabilities by acquiring Citigroup’s
back-office operations in India.
‘A hand-in-glove approach is required,
whereby the bank and the partner
champion the initiatives with a focus on
end-client benefits. This
requires an inside-out and
an outside-in scenario
to be considered, with
the resulting operating
model relying on business
intelligence and realtime
analytics to deliver
enhanced stakeholder
value. All this makes TCS
one of the leading partners
for achieving and sustaining
business transformation.’
Another key strength
of any reputable service
provider is a commitment
to R&D to address the
evolving technology
challenges banks face.
The TCS BaNCS product
suite has grown through
more than 2,000 person
years of R&D, and TCS
continues to invest heavily.
‘We looked at this
initiative as a consolidation
of our knowledge base
and as an oppor tunity to work closely with
our customers,’ remarks Subramaniam.
‘We adopted an object orientation
development paradigm in the 1990s and
have built a component architecture with
very careful consideration of functional
and non-functional requirements such as
data security, performance, throughput,
scalability and 24-7 applicability.
‘We are happy that we have been able to
install the product successfully in platforms
ranging from Intel Windows/Linux to midrange
Unix servers and mainframes, as well
as in banks of various sizes and shapes in
emerging and established markets. We have
a product-management process that closely
involves our customers and we have been
delivering continuous upgrades and new
releases year on year,’ he adds.
This approach has resulted in TCS being
engaged by large institutions, such as State
Bank of India, BNP Paribas and Société
Générale, as well as credit unions including
Community Alliance and banks with a
microfinance focus, such as Capitec.
‘The product has been able to successfully
support the variations of savings, loan and
investment products across 80 financial
markets and has scaled up to very highvolume
processing. Our functional breadth
– with focus on core banking, channels,
wealth management, securities processing
and corporate actions, extreme scalability and
a strong architectural design – sums up our
universal financial platform,’ says Subramaniam.
Independent analysts including Gartner
and Forrester agree, having awarded many
accolades to TCS in recognition of its insight
and vision in the banking sector, as well
as for its products and talent base. Most
important of all, however, is that TCS knows
what banks need to meet the challenges
they face today.
As Subramaniam says: ‘Banks want
partners that can deliver on their promises
in terms of the quality of the software
and real business benefit. They need us to
maintain the quality of customer experience
during the project of transformation as
well as when the project is complete.
Our customers are sure we can deliver.’ |
