NEW DELHI: Digital technology is transforming the banking sector, improving customer experience, improving operational efficiency and reducing costs amid a turbulent economic and regulatory environment, says Oracle’s executive vice president and CEO. Sonny Singh, General Manager, Financial Services Global Business, said at Oracle. cloud world event. Edited excerpt:
What new technology challenges are global banks facing? Are Indian lenders different?
Since the COVID-19 pandemic, banks have seen momentum to push their modernization efforts more aggressively. Regulatory oversight has increased, leading to changes in capital adequacy regimes. As central banks rushed to raise interest rates to curb inflation, they used instruments that relied on long-term interest rates to strain their balance sheets. As a result, several banks went bankrupt. While large banks had control mechanisms, local and specialized banks were affected by low interest rates, abundant capital, and rising interest rates. Another development is the increase in projects related to generative AI. While Indian banks are introducing new technologies to take advantage of the expected growth, the regulatory landscape will largely be shaped by policies implemented by the Reserve Bank of India. Different jurisdictions have implemented different measures, with some being more proactive. Regulatory oversight will increase as a result of bank failures due to lack of capital.
When it comes to technology adoption, are the challenges different from those faced by non-financial institutions?
Banks have unique challenges because they are primarily technology companies and technology adoption is always a priority. India has done a great job with its UPI framework and Aadhaar identity-based payments infrastructure. We are seeing an increase in electronic activity. As a result, banks and financial institutions generally account for a very large portion of technology spending.
Are you integrating AI and analytics into your banking products and services?
We used AI models to make credit decisions and fight financial crime. Generative AI is being used for customer service interactions and personalized recommendations. This is used to create compliance agents that mimic bad actors and test them against control systems. This is critical for detecting or responding to threats in cybersecurity. Banking is increasingly automating repetitive tasks through narrative generation, such as generating financial reports and suspicious activity reports.
But generative AI also comes with risks. How do you manage security risks within your company?
We have unique capabilities that make us stand out in the industry, allowing us to build a scalable computing environment for generative AI. Large language models require large amounts of training data, often reaching terabytes. The more data you provide, the more powerful your model will be. However, this requires a significant amount of computing power. We address this challenge by employing remote direct memory access (RDMA), a networking technology that enables ultra-fast information transfer between computing units. Our collaboration with NVIDIA enables enterprises and startups to quickly train models by clustering up to 32,000 GPUs in a single cluster. They can bring their own data, use our high-speed computing resources, and maintain control of their data. We prioritize data privacy and do not transfer data between customers.
How does Oracle’s Oracle Cloud Infrastructure (OCI), SaaS, and other industry portfolios support customers’ overall digital transformation efforts?
Our extensive capabilities give us a truly unique position in the market. We have developed industry-specific applications for numerous sectors including financial services, telecommunications, retail, energy, water, healthcare, and more. These applications are not only diverse, but also tailored to specific roles within each industry. For example, we offer financial applications for CFOs, human capital management applications for CHROs, CX applications for CMOs and chief revenue officers, and a wide range of information systems for CEOs. Even within horizontal applications, we incorporate vertical functionality to enhance functionality. For example, financial services have integrated product ledger and risk management functions into financial systems. In the healthcare field, we added provider scheduling functionality to our talent management system. Supply Chain Management provides provisioning and management of hospital cards for operating rooms. These are just a few examples of how we not only offer a portfolio of vertical applications, but also bring true vertical capabilities to our horizontal applications. We deliver these applications to our customers on his OCI, taking full advantage of the platform’s capabilities in data management, analysis, integration, etc. We ensure that our computing, memory, and storage resources are optimized to meet the specific needs of various industries. This applies to both traditional transactional applications and intelligence-driven elements such as AI-specific applications. We have meticulously engineered these capabilities right down to our infrastructure, and this dual focus sets us apart from others in the industry.
How do you work with regulators such as the RBI to ensure fair practices, innovation and risk management?
Our team of product managers actively monitors various regulatory bodies and anticipates future requirements. However, our main source of knowledge comes from our customers. They keep us informed about new regulatory developments. For example, 23 years ago, we recognized the importance of ESG (Environment, Social, Governance) in the financial services sector and began working on it. We knew that Scope 1, Scope 2, and Scope 3 would eventually become mandatory. Therefore, we have been actively developing solutions in this area. Additionally, in the event of demonetization, we worked quickly with banks to equip them with the necessary technical capabilities to meet specific requirements imposed by governments and regulators. Our approach is multifaceted and aims to stay ahead of the market while leveraging customer feedback to continually enhance and expand the capabilities of our products.
What are the top technology priorities for the financial sector in 2024 and beyond?
The main focus is on effectively leveraging cloud-native applications to modernize core infrastructure. The second priority involves strengthening regulatory capacity to deal with significant changes, whether geopolitical or economic in nature. Cybersecurity is his third priority, which is critical given the increasing importance of data as a critical asset and the need to protect it. The fourth priority is financial crime, which can lead to reputational damage and fines and negatively impact shareholder value. Therefore, you should carefully monitor all transactions that pass through your financial institution. Finally, we need to leverage AI to improve our overall capabilities. This has become an important topic for board discussions.
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