Ey Banking in The Age of Disruption PDF

Banking in the age
of disruption
February 2017
Digital innovation
04
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2 IBA Technology Awards

Foreword
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Ź Tackling cyber risks in the digital age:L`][qZ]jl`j]YldYf\k[Yh]ak]ngdnaf_oal`l`]]e]j_]f[]g^f]ojakck

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IBA Technology Awards 3

01
Digital innovation
transforming the ÔfYf[aYd
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World over, the pace of digital innovation has dramatically increased over the last
decade: from the introduction of contactless payments to the advent of mobile banking,
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witnessing rapid adoption of digital, driven by a greater push from the Government to
promote a cashless economy. Moreover, the Government’s recent demonetization drive
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There is tremendous potential in India for the emergence of new-generation banking,
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services in the country and has also approved the setting up of specialized payments
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systems are expected to further strengthen the banking infrastructure in the country.
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population, who will join the workforce in the coming years and create millions of new
banking customers who are tech-savvy and handy with smartphones, hence allowing
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as payments, alternate lending and wealth management.

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Challenges associated with digital transformation3
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Digital to drive innovation and help banks reinvent operations
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Technology-enabled trends that support innovation 7
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Way forward: critical themes to consider while developing a digital transformation strategy18
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02
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Rise of analytics
In recent years, data analytics has risen to the top of the business agenda for banks.
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value in banks’ own proprietary data by leveraging insights obtained from external as
well as internal frontiers.
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competition, burgeoning NPAs across corporate and retail sector and increasing
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use of analytics facilitates effective decision making for banks and also helps banks
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promise of data analytics has led to almost all banks investing in analytics to optimize
decision making. Moreover, with enhancement of technology, particularly cloud
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accessible for even small and mid-sized banks, and not just large banks with potential
for huge technology investments20&:Yfck[Yf\]hdgqYfYdqla[k^jYe]ogjcklgaehjgn]
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cross-sell, enhance acquisition effectiveness, drive marketing campaigns, optimize
distribution network and product portfolio and ensure effective risk management21.

Digitization is expanding the scope of data
Multi-structured external data Petabytes-

Social media, publically available data sets and data sources, Zettabytes
purchased data sets and data sources, internet of things.
Usually not governed or governed externally
Multi-structured internal data Terabytes-

Documents, chat-logs, phone-logs, photos, web-clicks, Petabytes Text
mobile/geo-location, etc. From various collaboration tools,
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capturing each customer touch-point. Graphics Data
Emails
Structured data
Gigabytes- CRM
From tables in databases. Usually governed as data sets
Terabytes
per application or globally (master data). Generated mainly Databases Presentations and
in operational, process-oriented, systems. Spreadsheets
Accounting system
20% Of Internal 80%
Source: adapted from Gartner
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Key drivers of adoption of analytics
Explosive growth of mobile devices and Increasing competition, and cost and
machine sensors is dramatically increasing regulatory pressures are motivating
the data that organizations need to consider. Explosion C-suite leaders to apply analytics to derive
of data agenda insights for key business operations.
Drivers of
Falling costs associated with data storage analytics Next-gen platforms will combine
and processing are making it possible to transactional data, into a single,
handle the explosion of data. The power Lower tech Next-gen coherent set of services that has
of analytics is now in the hands of many costs tools l`]hgl]flaYdlgaf[j]Yk]l`]]^Õ[a]f[q
more individuals. and effectiveness of real-time analytics.
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every decision/action
Manage Perform Drive Improve

Data Analytics Decisions Performance
Relevant Insights
$$$
Data
Appropriate Business
data intelligence
sources and reporting
Transaction / Behavior history Manage

Continuous feedback loop Risk
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Analytics maturity curve23
Prescriptive analytics
to determine which decision and/or Maturity
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The IT risk landscape is evolving with the emergence of several types of risks related to
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Moreover, as Indian enterprises are increasingly going digital, there has been a notable
increase in the number of cyber attacks targeting India Inc., especially small and
medium businesses, as most of them have weak cyber defenses. Notably, in the past
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hosts and bots,+.
Cyber attacks are becoming increasingly sophisticated44

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Increasing sophistication of cyber attacks
unsophisticated sophisticated Corporate espionage Organized crime State sponsored

attackers attackers (hackers) (malicious Insiders) (criminal gangs) attacks Advanced
(Script kiddies) You are attacked because Your current or former You are attacked because Persistent Thread (APT)
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intellectual property
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around the world45
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Data and
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infrastructure in India. There has been a convergence of interest of various
stakeholders, which has created an enabling environment for the development of
digital payments, including the government’s focus on a cashless economy, the near
universal coverage of Aadhaar as a digital identity, the innovations across payment
systems, the regulations on payments banks and the rapid penetration of smartphones
in India. Mobile as a platform has a unique set of capabilities to drive growth of digital
payments in India. Mobile can uniquely combine digital identity, digital value and digital
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digital payments will depend on institutional initiatives, product innovation, supportive
regulatory environment and healthy competition.
Payments landscape is evolving rapidly driven by innovations67

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Global payment revenues (US$ billion) 2,138
CAGR: 7.8%
CAGR: 7.4%
1,534
CAGR: 8.9%
1,009
751
604
258
2013 2023 2013 2023 2013 2023

Retail Wholesale Total
Transaction revenues Account revenues Credit card spread and penalty fees

Payment preferences are evolving with Smartphone penetration by country:
customers moving to digital channels top 10 countries and India70
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References
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Acknowledgements
For more details please contact EY Team
Abizer Diwanji Digital
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Banking in the age

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