Regulations in financial services key to ensuring customer protection

Even though compliance with regulations in financial services can be costly, they play a critical role in ensuring that the industry has sufficient safeguards for customer protection, highlighted industry leaders at a panel discussion of the Business Standard Insight Summit 2024, titled ‘Navigating the future of financial services in India: Tech road map”. Girish Krishnan, director-Payments and Merchant Services, Amazon Pay India; Saurabh Tiwari, chief technology officer (CTO), PolicyBazaar; Ashish Sehdev, vice-president & head Asia PAC, Everest Group; and Srikanth Subramanian, MD & CEO, Angel One Wealth, said tech adoption had to evolve, keeping in mind the demand from the new generation. Edited excerpts:  

What is the road map for the financial services sector? 

Krishnan: The customers now are more demanding. When you look at the landscape and how it is evolving, the building blocks can be disruptive. For example, it's blockchain or UPI. Fundamentally, the building blocks are changing. That's a very important part where disruption happens. When that disruption happens and the network gets created, you also have customer expectations change rapidly. Applications of that building block manifest as new solutions or applications for customers, which cater to a new set of unmet expectations. This also has to function within all the regulatory guardrails and all the compliance requirements. From a company perspective, it's very important to embrace these trends and then plan ahead in terms of how we are going to solve these customer requirements. 

Sehdev: The new generation requires speed, convenience, completeness of transactions, and continuous support. There are different pieces of the ecosystem, and then that's enabled by tech. We see that the customer is no longer just looking at a standardised transaction. They are looking at being able to access finance, payments and lending, and all kinds of financial products in any platform that they are engaging with, whether it's a social media platform an e-commerce platform, or it's a ride-hailing app. They want to make sure that they're able to quickly access that, and, therefore, APIs (application programming interfaces), microservices, and Cloud, all the technologies can enable that. 

Subramanian: Wealth management is a very highly personalised service because you're dealing with one of the most sensitive ingredients, which is money. One will have to recognise the fact that it's a very high emotional quotient transaction, and nobody likes to part with money without having established trust and credibility. Twenty years ago, trust was defined by conduct, by the brand, by governance. Today, trust means all of that, besides that if you push a button, the transaction should go through end-to-end. If you do a purchase transaction, or a redemption transaction, it should not get stuck in the middle. So, if you jump on an app, and you don't get completeness of transaction, then the Gen Z or the Gen Alpha is not going to wait too long, and they're going to be jumpy, they're agile, they want the transaction. 

Tiwari: I wish something like an account aggregator did exist in insurance. One of the biggest challenges is there are various products and providers, and it has been a traditional journey, that is being converted into a modern digital landscape. It has taken a long time. We have spent almost 15 years automating certain processes where people can come and buy and have the insurance digitally available on an online platform. It has not been a smooth ride. The work which used to take two or three days now can be done in a couple of hours. A lot of effort has been put into using AI to automate the process of anomaly detection where we flag cases. There have been scenarios where people are dead and in their name someone has tried to book a policy. So, those things can only be done using AI and GenAI. 

How has the role of a CTO or a CIO changed in an organisation? 

  Krishnan: With all these different stacks coming up, and new technologies, we are getting into an era where there is a lot of interconnectedness and dependencies on systems, on concepts. The role of the leader who understands technology really well is probably the most important in organisations. Now, the CEO has to be very close to the CTO, and CIO more than at any other time in the history of businesses. 

Sehdev:  Between the CIO and CTO, there are two different roles depending on the organisation. In some places, they can blend together. CIOs may be more of running the business with incremental improvements, whereas CTOs would be looking more at the technology stack, disruptive building platforms. If three years ago it was all about ESG (environmental, social, and governance), now it's all about GenAI and that's a question directly being asked to the CIO or the CTO. 

Subramanian: A considerable portion of your workforce has to be an engineering workforce. One clear trend I am seeing in Indian corporate boardrooms is that the nature and the colour of the workforce are changing, from non-tech with a skew towards tech team. There are progressive discussions on should you have a lean tech team where you can have an overlay of technologies like GenAI, or should you have a larger tech team. That's a matter of a very unique behavioural aspect of each business. The second trend is cybersecurity. Today, we are living in an era where, if technology has given us 10 convenience features, it has also given us 10 different hack mechanisms. 

Is it now easier for the tech team to convince the CEO to invest wherever they are asking for? 

Tiwari: My CEO takes full interest in what's happening in technology. Because a lot of problems you can't solve at scale in an offline manner. You have to get involved and understand how your business issues can be resolved using AI/ML. Our management team has started taking a lot of interest in how technology can help them in doing business. The last five years have been amazing for such kinds of investment trends. 

How has the regulatory space changed with the evolution of new technology? 

Krishnan: Regulation and compliance are very important for businesses because at the heart of it is to, at least in the payments space, protect the customer… The regulator has done a fabulous job in terms of understanding the key challenges and enforcing them, and then helping the entire ecosystem to mature to a totally different level of servicing. 

Do you think compliance has a very huge cost and stifles innovation? 

  Sehdev: In the research that we did, almost 50 per cent of respondents said that they have disproportionate investments going into compliance and security. Compliance and security are critical for the business. Innovation is also important to compete in the marketplace and build new products or services. That is a balancing act. In the survey, the majority of them did not feel that compliance was holding them back in a major way. 

Subramanian: While most of the credit goes to early fintech companies for financial inclusion, it was also paved by much more progressive regulations and the work that the government did in terms of innovating technology.