Commentaries and insightful analyses on the world of finance, technology and IT.

March 30, 2018

Innovations in the Blockchain pipeline for 2018

It's hard to believe that, just a few years ago, cryptocurrency was viewed as a fad with Bitcoin being the new kid on the block. Only a handful of people could have predicted the degree of disruption that was in store: By the end of 2017, there were over 1400 cryptocurrencies in circulation with a total market value of over US $500 billion! Today, Bitcoin itself has a market valuation of over US $200 billion.  

While we have Bitcoin to thank for giving us blockchain, the technology has evolved significantly since its nascent years. Today, everyone is talking about blockchain, predicting its growth and looking for ways to leverage it. Blockchain-driven innovation is mushrooming across industries and we can certainly expect it to have a significant impact on the financial services industry. 

Many financial services companies are concerned about public blockchains such as Bitcoin and Ethereum because of issues related to permissions, governance, privacy, transparency, performance, and throughput. In my view, this calls for strategic collaboration between established players and start-ups to develop innovative solutions either on available platforms or using new protocols. The value to be gained through disruptive start-ups cannot be underscored enough. Consider how the equity investment in blockchain start-ups grew from US $98 million in 2013 to nearly US $1 billion in 2017[1].

The good news is that many innovative solutions are already underway. In 2017, Ripple and 3 banks deployed a cross-border payments service for corporate payments and retail remittances. The IZNES blockchain platform for fund administration developed by SETL and four asset management firms went live in January 2018[2]. This year, we can also expect a leading American post-trade financial services company to implement a blockchain solution for credit default swap settlement[3]. Finally, the B3i consortium will also go live with a blockchain solution for property catastrophe excess-of-loss reinsurance contracts. 

Blockchain helps companies streamline processes such as reconciling data across various market participants, auditing records for regulatory purposes, authenticating counterparties, verifying origin of transactions, and reducing record duplication across businesses. However, its greatest benefit is the staggering operating cost reduction that it delivers. The above mentioned project by the American post-trade financial services company has already reported savings of 20-30%, the B3i project for reinsurance contracts has achieved productivity gains of up to 30%, and an industry-wide commodity trading project reported 33% increase in trader efficiency. 

Clearly, blockchain has a lot to deliver to financial services companies. So, why aren't we seeing an increase in adoption? The reasons for this are many. For blockchain to work, there should be collaboration between multiple participants across the value chain. Some companies may face technology-related issues when implementing blockchain across their landscape. Further, the general lack of understanding about blockchain and uncertainty about its return on investment can lead to poor management buy-in.

So, if you are a financial services company, here's what I recommend:
Stay updated with new developments in blockchain
Ensure that senior management is up-to-speed on developments
Study your business processes to understand which ones are likely to be impacted by blockchain
Explore partnerships with other financial services companies
Develop a broad range of internal capabilities around blockchain technology

A look at some of the emerging use cases for blockchain reveals how it can be leveraged across the banking and financial services industry. For instance, EdgeVerve, an Infosys company, is partnering with 11 banks to create a permission distributed ledger system that simplifies and accelerates the adoption of blockchain for banks[4,5]. Infosys has also published the Blockchain Revolution Report that provides deep insights into the applications, value and impact of blockchain. The report is a useful resource for companies looking to further their understanding of this innovative technology. With the right understanding, strategy and insights, financial services companies can position themselves to win big and sustain their edge with blockchain.


1. Blockchain Investment Trends in Review", CB Insights, October 2017
2. SETL and 4 asset management firms are launching IZNES, pan-European fund record-keeping platform based on blockchain technology",
        SETL Press Release, September 2017,
3. DTCC Selects IBM, AXONI and R3 to Develop DTCC's Distributed Ledger Solution for Derivatives Processing", 
        DTCC Press Release, January 2017,
4. Reference: "Infosys Finacle Launches Blockchain Based Trade Finance Solution", Infosys Press Release, November 2017
5. DTCC Selects IBM, AXONI and R3 to Develop DTCC's Distributed Ledger Solution for Derivatives Processing", 
        DTCC Press Release, January 2017,

September 18, 2017

Potential of AI in Fraud Detection

Technological innovation is the new normal in today's world. How many would have imagined a drone could be used for advanced pitch analysis in cricket matches, which has been tried out at the recently concluded Champions trophy in England. Though Artificial Intelligence (AI) has existed for decades yet it is being widely accepted and tried out in the Banking industry now, more than ever. In the Banking Industry, AI is already making inroads be it in Customer Service like introducing Chat-bots, or in AML, or be it Fraud Detection. AI has been and is helping Banks in being more proactive in their approach, like identifying a potential fraudulent transaction even before it happens.

What Potential does AI hold in fraud detection for Banks?

Banking is one industry that deals with a huge amount of data, which could be leveraged to do advanced analysis and come up with meaningful insights. There is a range of activities being carried out by banks in using AI for customer service, for personal financial services, etc. However, there is huge scope for banks to utilize AI techniques in fraud detection. For example, Banks have started using AI techniques in identifying the fraudulent transaction patterns in a card and use the data to prevent frauds. Banks could have a software which could raise a red flag if a customer has accessed his account from 7 to 8 different IP addresses in a span of a week, however the customer could be an artist/actor/tourist who could be doing shopping while he is travelling. So here, an AI software would be vital in looking and analyzing the spending pattern closely. The AI technique here makes the machine to think like a human. Another potential use of AI would be to analyze the user profile based on transactions done and then try to determine whether there is reasonable suspicion. This way the Banks can avoid a fraudulent transaction even before it occurs. Some banks have already started replacing passwords with voice recognition for some of their services which uses AI. Now, this can only be achieved if the system is fed with the historical data of the fraudulent patterns as well as the historical data of verified transactions. Recently MasterCard announced an AI fraud detection service, which helps the FI's reduce the false decline and increase the accuracy of real time approvals for genuine transactions. This would be a great relief for customers. Nothing is more frustrating for the customer than to have their transactions declined for no fault of theirs. The use of AI, which could analyze their spending pattern in order to identify fraudulent transactions, would be truly beneficial to the banks in better understanding their customers. Having said that, every technology comes with its own limitations and that should not deter the banks from trying out AI for fraud detection.

Banks that do not keep updating or taking steps to track suspicious transactions are at a greater risk. Banks have been slow in adopting AI for Anti-fraudulent activities. And it is just a matter of time before more banks adopt the AI techniques for not just fraud detection but aversion too.

September 14, 2017

Future of ADM in the Digital World

Background - Technologies Enabling Digital Transformation

There is a lot happening in areas of robotics, Artificial Intelligence, machine learning, and IOT as businesses turn digital and there is much discussion around how future IT would look like with fast evolving digital landscape. Application development and maintenance (ADM) engagements have been mainstay of IT outsourcing. This blog covers how ADM engagements landscape would change in the wake of digital transformation.

Before one makes an attempt to chart out future of ADM engagements in the next decade, it would be good to summarize the futuristic technologies that have been enabling digital transformation.

  • Pervasive Technologies such as Connected Autonomous Vehicles (CAVs) and predictive analytics enabling customer experience.

  • Cognitive Intelligence and Machine Learning are being applied to enable many business and technology functions. Future applications will be built with intelligence to learn and change cognitively, rather than execute on fixed instructions.

  • Wearables and fashion electronics have become popular and businesses offer multi-channel customer connect across various channels including wearables.

  • Disintermediation platforms have removed the middleman and have provided direct connect with the new partners.  Blockchain technology is providing a secure platform for partners to conduct business seamlessly.  

  • Robotic Process Automation (RPA) is quickly changing the concept of workplace.  The future workplace would offer increased co-existence of the robots, virtual personal assistants, conversational systems and humans

Application Programming Interface (API) & Micro services, Data Analytics and Cloud are changing the technology architecture of IT systems.

From Financial Service perspective, Banking on Cloud, Blockchain, Fintech, and Open Banking are trends shaping the industry.

Changing Expectations of Our Clients

In the digital world, clients value a combination of domain and technology skills, and are focused on outcomes rather than wanting to pay based on effort spent.  In this context, the service providers would need to -

  • Offer outcome management capabilities as against pure technical capabilities.

  • Offer single interface to deal with Business Technology rather than providing multiple experts to clients to reach out to. For convenience we call these professionals as "Business Technologists" as against "System Analysts" who brought in IT architectural view or "Business Analysts" who brought domain/industry view.

Changing ADM Engagements Landscape

Discrete design, development and delivery methods will fall short for Digital "Business Technology" projects.  The business technology engagements would require "Design" thinking.  "Design" thinking would remove the boundaries between software and infrastructure development. "Design" thinking process is more customer centric and iterative. It would assist in developing creative solutions when the problem itself is inadequately defined. 

Digital projects would be perpetual in nature and would require ongoing development.  Maintenance work would shrink. 

Digital Enterprise applications will be multi-layered. The schematic representation provides a snapshot -


  • Increased self-service layer with applications such as mobility solutions, future branch

  • Limited assisted service applications that can work with third party applications.

  • Third-Party applications such as "Open Bank"

Security Layer - Enterprise security framework that can control access at organizational level

Applications Layer Customer Relationship Management (CRM) and Business Process Management (BPM) layers 

API Layer - API layer and Enterprise Service Bus (ESB) connecting the Applications (CRM, BPM) with products/Services layer.

Products/Services Layer -Products such as Core Banking Platforms, Payment Engines, Anti-Money Laundering, Loans packaged products as well as products offered on Service are part of this layer.

Enterprise Data Lakes - Offers common data across above layers

IT project delivery would follow Agile/DevOps principles - design, development, testing, infrastructure and deployment would preferably come from a single self-organized team to deliver projects.  Cloud native applications can be developed easily using containers/micro-services.  Containers would bridge the gap between new services and legacy applications.

There is a myth that the legacy applications cease to exist in light of new Digital applications.  The legacy applications would continue to co-exist along with new digital applications as customers need to retain the existing IT while they introduce digital transformation. 

The three plateaus of IT that the businesses witness would continue to exist, but the proportions would see a shift with legacy applications maintenance getting optimized, and making way for ongoing modernization and more development.  Digital development of today, considered complex would become the business-as usual.

Legacy is a relative term.  What is "Legacy Modernization" and "Digital" today would become Business as Usual "Legacy" in near future.

Conclusion - Vision for ADM Engagements - Key Priorities

Based on changes in ADM landscape discussed above, some of key priorities include -

Broaden and Deepen ADM reach - Examine each portfolio against our experience/service offerings and penetrate in white-spaces through extreme offshoring and extreme automation propositions. Distributed agile and SAFe methods should be deployed to enable extreme offshoring.  Extreme automation should be considered across onboarding, transition, development, production release, maintenance, and production support.  Also, areas such as Augmented/Virtual Reality (AR/VR), though sound engineering oriented, would easily leverage the programming skills in ADM team and be of interest to our programmers. 

Upskilling/Reskilling - Technology adoption, learnability and understanding of Business and technology is critical for ADM than ever before. Business analysts would need to be well-versed with technology and Developers, Testers and Managers would need to be more well-versed with business/domain knowledge. This expectation fully aligns to Infosys Zero Distance Philosophy - Every developer, project manager, analyst and architect should be at "Zero Distance" - to the end user (Desirability), to the underlying technology (Feasibility) and therefore to the value (Viability)".

The trainings should be on-demand and can be leveraged through partnership.  In addition, there should be increased focus on certifications/skill assessments as part of the training. 

Introduce Infosys Artificial Intelligence Platform (NIA) to ADM clients - Creating a NIA power-programmer team is a key priority.  Programmers should be upskilled in Machine Learning and Artificial Intelligence areas to implement NIA for ADM Clients. Some of the FS-ADM specific use cases of NIA include -

  • Understanding customer purchase behavior across retail channels

  • Data relating to credit history, KYC, fraud prediction, customer churn prediction, etc.

  • Analysis of tax relief at source and exception reports

  • Policy document knowledge and multi-channel chat-bot support

Roll-out Nextgen Delivery Model (NGDM) to enable at any scale, closer connect with clients and teams, enable multi-shift/multi-zone presence with clients.  The computing infrastructure could be state-of-the art with all machines web-cam enabled.

Offer multi-channel and chat-bot support - ADM service line should create a platform for multi-channel/chat-bot support for rapid development and deployment across multiple platforms

Renu Rajani, Vice President, FS ADM, Infosys Limited.

Supporting Authors:
Sastha Prasad Viswanathan, Group Project Manager, FS ADM, Infosys Limited.
Viral Thakkar, Senior Principal Technology Architect, FS STAR, Infosys Limited.

July 4, 2017

Blockchain in banking: Bitcoin and beyond

'Blockchain' has become the buzzword in the financial world since the time it debuted in 2009. Blockchain is thought to be so impactful that it is considered to be the next big thing after the internet.

Till date, the most prominent use of blockchain is for payments of bitcoins. Though bitcoin has the advantage of being transferred instantaneously, it has not made significant progress as a well-accepted currency. Bitcoin has neither caught up as a preferred means of transaction, nor is it expected to replace the existing currency system.

Though banks, customers and regulators have largely stayed away from bitcoin, the underlying technology used to conduct bitcoin transactions - blockchain, and the concept of distributed ledger has started getting industries thinking on how this new technology can be used to their advantage. Though its wide stream application is still to be seen, banks have started realizing the power of blockchain and are contemplating investing in the technology. Banks are now betting on blockchain as a reliable alternative to processes that are intermediary-dependent and effort intensive.

What is Blockchain?

Blockchain is an electronic distributed ledger for all bitcoin transactions where completed transactions are added in a chain-line linear chronological order as "blocks" of records. Transaction information that is once verified and recorded as a block cannot be removed or modified, thus making them secure and tamper-proof. Each block is linked using a hash address of the previous block, thus sequentially recording the transactions. This ledger is shared by all members (nodes) participating in the ledger network and uses cryptography to protect against any tampering of information.

These cryptocurrency networks can be 'permissionless', meaning, anyone can perform a transaction or a validation anonymously. There are several risks in this type of blockchain due to the presence of users who are no completely trustworthy.

The 'permissioned' blockchain networks, on the other hand, are those which permit only approved persons or parties to post transactions or validate the network.  Many risks that are present in the permissionless blockchain are done away with, in these permissioned blockchain. Hence this is the preferred choice of banks and regulators alike.

Which industries can be benefitted by Blockchain?

Blockchain is a database and contradictory to popular belief, it is not a finance specific technology. It can be used in any industry where there is a need to store data.

This technology has particularly caught the fancy of financial institutions, but now more and more non-financial sectors like retail, real estate, insurance are taking the baton. To generalize, it can be said that blockchain technology can be used in any industry that has a lot of record-keeping and repetitive documentation.

In banking particularly, though blockchain technology can be used in any banking process, it is thought to have a greater impact on the back-end clearing and settlement process than the front-end processes.

The potential of blockchain need not be limited only to one industry. Cross industry implementation of blockchain is another way this disruptive technology can be explored.

Regulatory aspects

Though it has the disadvantage of being slightly risky due to the absence of regulatory bodies, there are currently no regulations in place for the use of blockchain technology. European Securities Market Authority (ESMA) is currently taking a 'wait and see' regulatory approach to blockchain, while Financial Institutions Regulatory Authority (FINRA) has warned that mismanagement in blockchain could increase the vulnerability in markets. Whether multiple regulatory bodies or a single entity would regulate and govern the blockchain use, is yet to be decided. The presence of a regulatory body would definitely help as they would then mandate standards for interoperability as well as sharing of costs/revenues.

Banks must not overlook the regulatory uncertainty that is still prevailing in this area and hence must exercise caution when experimenting in blockchain.


Blockchain is not just a new technology, it is a very exciting technology to begin with. It can improve as well as disrupt several industries. It is also something that banks and other industries still have to explore deeper. Industries need to partner and collaborate with technology providers/start-ups and regulators and ideate on how this new disruptive technology can be leveraged to its true potential. Demonstrating this successfully can not only help organizations cut on infrastructure and processing costs, but also improve customer experience.

However, organizations should not rush to adopt Blockchain, without establishing a solid business case and benefits. They must carefully strategize and identify the area of operation that would most benefit from this technology. Remember, blockchain is not the answer to everything!

June 28, 2017

Artificial Intelligence and Regtech: The changing face of compliance in banking

Regtech is often referred to as the "little brother of Fintech". Little wonder then that much like Fintech, Regtech is rife with action. While Fintech was born out of the need to redefine customer experience that traditional financial services offered, Regtech rose after the financial crisis of 2008, when several banks faced heavy fines.

Financial institutions of today are grappling with a complex regulation and compliance landscape. They need to store and provide data to regulators in ways that are faster, reliable and cost efficient. And technology is increasingly becoming the default answer to this complexity.

Artificial intelligence in banking, though it has been around for some time, is finding several applications in the risk and compliance space. This is mostly because AI cannot only sift through massive amounts of data in seconds, but it can also establish connections in totally unrelated or unstructured data sets. Case studies of AI being deployed to smoothen the compliance process are emerging rapidly. Deutsche Bank recently deployed AI to sift through volumes of recordings - both voice and video - to ensure compliance. The technology can automatically search for terms that auditors monitor, saving the bank hours of manual intervention.

One of the biggest regulation challenges that AI is helping financial institutions deal with is completing regulators' "stress test". This involves modelling, scenario analysis and forecasting and is both a time and cost intensive process. Citigroup recently deployed an AI system from Ayasdi, a Stanford University spinout, to help it go through the US Federal Reserve's stress test. This system uses topology to recognize data patterns and identify complex relationships.

Another important area that AI is addressing for financial institutions is managing customer identity. AI based systems are helping banks onboard customers faster, and bringing in more accuracy in Know-your-Customer (KYC) processes. By automating these processes and achieving orchestration between siloed processes like client on-boarding, legal, technology and compliance, financial organizations can achieve a reduction of 60-80% in their client on-boarding time.

Risk-data aggregation is the other compliance area where banks are deploying AI. Since this involves real-time analysis of huge amounts of data, AI seems like a perfect solution. Machine learning algorithms can help financial institutions identify repayment patterns and predict the chances of default. A good example here is the Aidyia hedge fund, which uses AI to drive all its trades, without any human intervention.

Apart from helping financial institutions improve several compliance processes, AI is also acting as a bridge between Regtech startups, regulatory bodies and financial organizations. The entire ecosystem is coming together to collaborate on not only making compliance effective, but also to drive data driven decisions. Since compliance processes require collection and aggregation of a huge amount of data, Regtech startups are going a step ahead and helping banks derive value from this data.

May 31, 2017

5 ways in which artificial intelligence is redefining banking

Artificial Intelligence (AI) has become an oft heard buzzword in the financial services industry. Be it improving customer interactions, analyzing millions of data points in seconds or detecting fraud. As I attended Infosys Confluence 2017 in San Francisco last week, and interacted with several banking and financial services leaders, one thing became stark clear- AI in the banking industry is no longer about pilot projects or enthusiastic experiments. It has established its value as a technology that can significantly improve the banking experience in the near future.

As AI adoption gathers pace, several aspects of banking are set for a makeover. Here are the 5 key areas that I think will be most significantly impacted with the rise of AI:

The banker bots: The bots are everywhere. And they are redefining the way banks are delivering customer experience. Be it Swedebank's Nina or Mizuho Bank's Pepper, virtual assistants have made their way right up to the customers in the banking ecosystem. As more and more banks adopt chat-bots, the technology behind them- Artificial Intelligence- is set to learn, evolve and become more agile and efficient. As a result, we are likely to see even more bots becoming bankers.

Catching the fraudsters: PayPal, which processed $235 billion in payments last year from over 4 billion transactions by more than 170 million customers, uses a deep-learning system based on AI to detect fraud. Not only does the system flag unusual transactions, it also profiles these frauds as a "feature," or a rule that can be applied in real-time to stop purchases that fit this profile. This has helped keep PayPal's fraud rate remarkably low, at 0.32 percent of revenue--a figure far better than the average of 1.32 percent that merchants see, according to a study by LexisNexis. As AI adoption gains traction, more and more banks are likely to utilize AI technologies for detecting and combating fraud.

Smartening the back-office: While the customer facing side of AI technologies is well elucidated, we often miss out on the impact that AI is having in the back-office operations of banks. AI is removing thousands of man-hours from banks' sheets by reviewing loan agreements, identifying repayment patterns and bringing in Robotic Process Automation (RPA) to populate data entry and increase processing speed, especially for structured data. This part, according to us, can be real game changer for banks in saving costs and increasing efficiencies in the near future.

Making data-based, real-time recommendations: Banks have often struggled to make relevant recommendations to their customers about their products and services. The model that traditional banks have been following is creating standard recommendations for a set of customers and flashing them at various point-of-contacts, without any real targeting metrics. AI engines are set to change all that. These self-learning systems are cultivating user data based on their behavioral patterns, banking history and in some cases even their public profiles to make suitable recommendations to users. In recent times, banks have been utilizing these recommendation engines as a key tool to upsell and drive incremental revenue.

Bringing Fintech innovations to customers: A lot of AI innovation is happening in the Fintech space. Companies like Anki and are reducing human intervention in customer interactions. These innovations are propelling banks to integrate specialist third party services from niche start-ups in a very flexible way and bring these services to their customers. New tools are facilitating integration and cognitive agents are making it faster to train and activate a customer facing agent to sell these services to all clients. Thus, collaboration, rather than competition, is booming between banks and Fintechs, thanks to technologies like AI. While banks have the edge of an already established customer base, and their ability to scale offerings quickly, Fintechs are bringing in the innovation factor to the banking party!

As AI adoption accelerates, we see more advanced use cases emerging for banks, such as identifying opportunities from data and actively suggesting intelligent, dynamic policy changes. The speed and scalability of cognitive technologies will result in a slew of growth opportunities for banks which incorporate these approaches into their strategy.

May 19, 2017

Artificial Intelligence in Capital Markets: a tale of opportunities and Fintech collaborations

According to a recently released IDC spending guide, worldwide Cognitive Systems and Artificial Intelligence revenues are forecast to surge past USD 47Billion in 2020. According to another research firm, Opimas Research, in 2017, financial firms alone will spend more than USD 1.5 billion on artificial intelligence (AI) related technologies and by 2021, USD 2.8 billion, representing an increase of a whopping 75%.

Capital Markets, like every other space, is seeing a surge in technological solutions that are coming of age and delivering increased performance- especially in areas of advanced analytics, real time trade-processing platforms and improved regulatory compliance. These technological solutions in a way, have come as a panacea for Capital Market firms, which are grappling with increasing compliance costs and shrinking bottom lines.

Thanks to these macroeconomic factors, Capital Market firms are increasingly looking towards advanced technology solutions like AI to increase employee efficiency and aid faster decision making.

As a technology, AI already has established use cases in areas of client relationship management, trade execution, reconciliations, transaction reporting, tax operations, and several other areas.

We see initial implementations like robotic process automation for reduced manual errors and improving process speeds by automation of repeatable IT tasks. Even as the Capital Market firms explore more advanced use cases for AI, a few areas that we are seeing pilot adoptions include speech recognition, machine learning platforms and virtual agents.

However, the siloed legacy infrastructure that most of the capital market institutions have, coupled with lack of a cohesive, top-driven automation strategy are acting as impediments in the way of effective AI implementation. In such a scenario, many Capital Market firms are taking the route of small, targeted phases of adoption, which can scale in sync with their IT infrastructure.

Another aspect that we find interesting, is the alternate route that these organizations are looking to leverage for bringing in AI and other automation technologies into their ecosystem -- partnerships with Fintech players. Capital Market firms, much like banks, are partnering with Fintech players for things like AI driven post-trade processing platforms and advanced analytics. The most prominent model of these engagements as of now is via accelerators and labs, and the next phase can bring in investments and acquisitions.

As Capital Markets gradually move up the AI value chain, we can expect more Fintech collaborations, advanced use cases for areas like fraud detection and prevention and anti-money laundering activities.

Keep watching this space for the latest in banking technology and trends!

May 8, 2017

ATMs - celebrating a remarkable half-century milestone

Automated teller machines (ATMs) are celebrating their 50th birthday this year. The first ATM was invented by John Shepherd-Barron on 27 June, 1967, and was first installed in Enfield Town branch in north London. Within 50 years, it has evolved from a simple cash dispensing machine to an all-in-one digital banking outpost. Simultaneously, the ATM Industry Association (ATMIA) is also completing 20 years. So, this year marks dual celebrations for both 50 and 20 year milestones!

There were three million ATMs operating worldwide as of 2016. By 2020, the number is expected to reach four million. In fact, the world is going to witness around 37 percent growth in ATM installations between 2014 and 2020. This includes 50 percent growth in ATM cash withdrawals despite the presence of online banking.

It is no surprise that ATMs are the preferred banking channel, allowing customers to directly access their money. During India's demonetization drive, ATMs were the most visited machines. Most of us had to queue in front of them to get the first glimpse of the new 500 and 2,000 rupee notes.

Over the last five decades, ATMs have transformed from cash withdrawal machines to self-service channels, complementing branch, mobile, and Internet banking.

Today's ATMs are providing a wide range of banking services, as follows:

1.Card-less - With growing demand for near-field communication (NFC), personal identification number (PIN) and plastic cards are slowly becoming redundant. Several banks across the globe now support the use of smartphone for cash withdrawal from an ATM using NFC technology. Customers can download banking applications on their smartphones and wave their smartphones to get instant access to their money and other services. Such card-less ATMs can reduce customer data-related fraud which account for 30 percent or US$2 billion losses annually. Many leading banks across the globe have started launching an emergency cash service on card-less ATMs.

2.Multiple functionality - Thanks to rapidly evolving technology and smart innovations, ATMs now perform multiple functions including simple cash dispensation, instant loan provision, live video advise from tellers, among others. Banks are rapidly modernizing and innovating their ATM banking interfaces with simplified touch-screen user interface and advanced cybersecurity protection. The remote ATM monitoring software with advanced analytics are attempting to reduce the downtime of machine and operational costs, while improving utilization and customer satisfaction.

3.Cash recycling - These make cash deposited by customers for cash dispense operations by other customers thereby reducing the cost to banks for cash deliveries to ATMs. Chinese ATM vendor, GRGBanking has estimated that cash-recycling machines can decrease the daily cost of ATM operation by 18 to 25 percent, and could save as much as US$948,000 per 100 ATMs annually. This green solution is widely accepted by Japan -- in fact, 100 percent of new ATM installations in Japan are cash recyclers.

4.Biometric authentication - According to a survey, 40 percent of banking customers feel PIN is not a safe way to withdraw cash at ATMs. Biometrics are emerging as more reliable method of authenticating user's identity. With biometrics, banks can ensure only authorized customers who go through the fingerprint, palm and finger vein patterns, or iris scans can get access to their accounts.

The recent biometrics technique of customer authentication includes using customer's heartbeat rhythms, being tested by Canada's largest bank.

Let us browse the following key innovations:

1.Face-recognition ATMs: Customers can be authenticated based on facial recognition. Some leading ATM manufacturers have started offering this mechanism.

2.Loan-dispensation ATMs: Based on predictive analytics, banks can cross-sell through ATMs. The user interface can be personalized to offer most frequent transactions and next best offers. It can offer pre-approved personal loan to customers too. Customers can get loan approval in a few minutes and start accessing the loan money! Financial institutions (FIs) in Russia and Poland have started offering instant personal loans to customers through ATMs.

3.ATMs with video conferencing capabilities: Customers can have a video conference with teller through these ATMs. The teller can control the machine and its functions, helping customers to complete the banking transaction.

4.ATMs with aerial imaging plate: This is a contactless ATM with holographic floating interface. Customer can see the ATM user interface floating in midair. He can perform hand gestures to make a selection like pressing a button without touching the actual screen.

5.Apple's virtual ATM: Apple has recently filed a patent for iTunes-based ATM network. The apple phone user can launch the application and borrow instant cash from nearby iPhone users. The borrowed money will later be settled through iTunes accounts.

6.Gold-dispensing ATMs: One of top Swiss gold refiners in the world has launched Smart Gold ATM in Singapore. This gold vending ATM machine allows users to convert cash into 24 karat gold coins / bars. Likewise, ATMs can be used to dispense other goods, including lottery tickets, gift cards, movie tickets, postal stamps, and other consumer goods as well.

7.Bitcoin ATMs - Unlike traditional ATMs, these act as bitcoin currency exchange machines. They are connected to bitcoin exchange, allowing users to exchange cash for bitcoins or move money to public key on the blockchain. In future, when the regulations on bitcoin currency are formalized, these would be easily accepted by users worldwide.

ATM 2.0, the future of self-service banking, can be envisioned as the convergence of ATMs and smartphones with expanded interoperability.

ATMIA has rolled out the red carpet to celebrate this memorable milestone and urged billions of ATM users to join this mega event to unveil the true power of ATM!

May 3, 2017

Rethinking loyalty programs in cards and payments

- By Siddhartha Chanda and Souna Uthappa

Customer loyalty programs have always been important for any business and financial services (FS) industry is no exception. To understand why loyalty is so important, we can recollect Pareto's principle which states that 80 percent of the business comes only from 20 percent of customers. In other words, loyal and returning customers make a business workable and profitable.

Coming to the FS industry and in particular the card business, when we talk about loyalty programs, the first thing that comes to the mind is the point per spend model or more commonly called cash back program. This can be substantiated by data where in the US, about 91% of card companies offers the cash back program to the consumers at the rate of one point per dollar spent. Historically, cashback programs have been quite successful in customer retention, as they directly offer monetary benefits. CEB suggests that point-per-spend program directly enhances card usage by two times and increases account retention with half as likely to attrite - thereby increasing the length of the customer relationship.

However, the future of cashback programs looks bleak, as tighter margins could make them outdated by the end of the decade. In addition, regulators are incessantly scrutinizing interchange fees, which govern most funding projects. As a result, interchange fees have already started seeing a downward trajectory -- it has been reduced to 50 basis points (bps) or lesser from 175 bps in major markets.. On the other hand, in markets where interchange fees have been cut, issuers have started using higher fees and annual percentage rates to fund rewards, which is driving down customer satisfaction levels. In the debit card segment, where interchange fees were drastically cut in the wake of Dodd-Frank act, leading issuers have stopped offering reward programs.

At this juncture, FIs are moving away from traditional loyalty programs to a model which focusses more on services and features. In terms of services, some of the banks and card companies are looking beyond rewards and are focusing more on pricing features like trimming cash advance and annual purchase rates for best card holders, offering fee waivers for some of the services, and more. Another American financial services giant is putting its money in a coalition loyalty program, where it has collaborated with some of the top-rated retailers in the region and customers can earn and redeem at any of the retailer's locations.

Digital innovations using emerging technologies like big data, analytics, and machine learning are being used to come up with innovative features for customers. For instance, in one of the banks, big data is being used to get insights about a particular growing community, which can be used to create a customized loyalty program. Analytics helped the bank to get data about education levels, home ownership, affluence, and other factors. Based on the bank's geographic footprint, customers were categorized into segments and then their financial needs were identified. By getting these segmentation insights, banks could strengthen customer relationships and increase customer base within this community by 10 to 15 percent.

In addition, innovative digital apps with high-levels of personalization are helping banks earn loyalty of customers in a digital world. For instance, new apps are being built which automatically calculate the average monthly income of customers, helping them plan their expenses and savings better. During months of high-income, the extra amount gets moved to savings automatically. In another mobile app, unimportant transactions and budgets are not shown to customers, instead customers focus on must know information like the amount that can be spent, upcoming expenses, and automatic transfer of money to savings at set intervals, etc. Such intuitive features and much more will be definitely liked by customers.
Reward programs have become a key differentiator amongst financial institutions to foster a more customer-centric brand image, thereby retaining valuable customers.

The traditional model of cashback has become expensive, which comes from the interchange fees is under scrutiny by regulators. Leading institutions should overcome these challenges by discarding reward points in favour of non-monetary rewards and targeted campaigns through digital innovations.

April 17, 2017

Banking - Riding onto Augmented Reality journey

We all know Pokémon Go! The game was downloaded more than 100 million times in the first month of its launch and reported $10 million earning per day with its popularity. This introduction of augmented reality into gaming, added a whole new chapter in the gaming industry. It made players get up from their couches and explore new places in their surroundings. I witnessed this shift when my son explored an unknown temple nearby to grab the Pokémon and also saw some colleagues using staircase regularly to find the hidden Pokémon.

Virtual reality (VR) is a simulation, giving viewer the impression of a real scene with interactions. However, AR is integration of real-world information with advanced technology enhancements. It brings the digital interactions closer to the real-world by adding graphics, sound, and smell as perceived by the viewer in real world.

World's leading Global Investment firm has reported that VR / AR market across industries will reach $80 billion by 2025. Gartner has listed AR / VR in top 10 strategic technology trends for 2017.

AR has brought in superior customer engagement and there are many ways in which it can benefit banking industry. Mobile is the most favorite channel for financial transactions. Today's customers need personalized services and AR can truly enhance the customer experience by making the customer journey simple and interesting. Banks are investing into AR and trying to adopt innovative solutions to provide enriched customer experience and stand out in highly competitive world.

Let us outline key use cases applicable to banking and financial industry.

Location-based services

Mobiles have become more advanced with built-in sensors to work with AR applications. The handheld AR solutions utilize image linked map (ILM) interface to provide a stylized map for user interactions. Banks have started using these solutions to provide discounted offers, nearest ATM / branch locations, dinning offers, shopping centers, and many other options. These are displayed not just as GPS location on map but with real-time pictures along with detailed information about place, distance, directions, etc. Below are some of the examples where location-based services are provided with AR applications:
1. The oldest and leading foreign bank in China has launched an AR app called 'Breeze Living' on iPhone. It provides location-based services such as discount coupons.
2. The leading private-sector bank in India has introduced AR in its mobile application 'Near me'. It lists all the dining destinations, shopping centers, ATMs, branches, and many other things.

Virtual banking

Banking industry is undergoing a massive change, mainly due to emergence of changed customer expectations driven by technology. End-to-end digital banking is the key to great customer experience. AR app user can just scan his account number and with all displayed options, he can manage his account, make payments, and explore new products. User can hold his mobile camera on a product image and AR brings in the complete brochure alive!! With AR in place, the customer can even expect his personal banker virtually available in his living room, helping in finance management.

Banks in different regions have started adopting AR applications.
1. One of the leading bank in Australia has launched an interesting AR app for iOS devices, making account management possible. Customers can check their card balance, make payments, find the closest bank or ATM branches, etc.
2. Industry leader bank in Poland has enabled AR feature on their mobile app. Customer can point the phone camera at the banner on their website and avail augmented 360-degree product information and avail attractive interest rates!!
3. UAE's largest bank has launched the first virtual bank branch in the world using VR / AR features on new Apple Watch banking application.

Emerging banks or fintechs can adopt AR banking techniques, rather than setting up traditional brick-and-mortar branches . These banks will provide enhanced experience to customers and save the operational cost as well.

Mortgage and lending services

Banks can adopt the AR solutions to provide rich experience to potential lending or mortgage customers. Combined with location-based services, AR solution can help in property searches, listing down all details of property, view properties and display special offers when a device is pointed at it. This can further be enhanced for personal lending services.
Mortgage and lending services with AR applications are provided by the banks across all geographies:
1. Leading Australian mortgage provider has developed iPhone apps which are used for making property search decisions by giving property listings and detailed information on particular properties.
2. UK's largest provider of residential mortgages has advanced property listing with their AR application.
3. One of top financial institution in Spain is offering similar property AR application.


Tech-savvy millennials are the key banking customers. Banks are focusing on them, engaging them more in their financial interactions and ready to provide loyalty benefits. Stockbroking contains huge amount of predictive and historical data. AR solutions can be used to gamify and create realistic world for customers to trade in, zoom in-out the data sets, and easily analyze the patterns.
Below mentioned trading service corporations are providing the stockbroking service with AR / VR application in the different regions:
1. The traders of multinational financial services leader are using virtual Holographic workstations with Microsoft HoloLens. These are augmented to complement existing trading environments, making trading experience interactive and interesting.
2. StockCity on Oculus Rift is introduced by an innovation firm of global financial trading corporation. It allows investors to visualize their investment portfolio as a collection of buildings. The AR aspect creates highly engaged trading experience.

Product training and education

AR / VR has the potential to convert lengthy boring training / education material into interesting gaming content. This can transform the way customers learn about new financial products and services. The virtual trainer can take several avatars explaining different perspectives about product / service. It can as well bring in cost saving by cutting down traveling cost for meetings and trainings.

Few banks have adopted AR / VR application for training on their new products. They are:
1. Switzerland's central bank launched an AR app during the release of new bill. The users can point the camera at the new bill and discover all the information about it.
2. Australia's leading multinational bank has announced first VR / AR learning system aiming at primary school children to teach them financial literacy.
Augmented reality provides new channel for financial service providers to deliver financial content in a novel and easily consumable visual format. Banks and financial service providers should think of AR as an opportunity to innovate and also transform customer experience for millennials and future generations.

Who wouldn't like performing financial transactions in an augmented business or monopoly game where bank notes float across your coffee table?