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The Trajectory of Technology

Murali Rajagopalan, Banking & Financial Services Leader at GBM Dubai explains the accomplishments, the priorities, the development paths and the top concerns of bankers as the technological driven momentum continues.

Having the right cloud strategy and making the right decisions on cloud infrastructure and workloads, are vital to keeping business competitive says Muralidharan Rajagopalan, Banking & Financial Services Leader at GBM Dubai

What are the current technological priorities or essentials for banks in the region?

The banking industry is experiencing rapid transformation and continues to lead in implementing digital initiatives across the region. According to IDC, banks in the META region are poised to increase technology investments by 6% this year, focusing on critical areas such as security, data modernisation, big data analytics and AI and machine learning solutions.

These changes are driven by the evolving technology landscape, shifting customer expectations and the need for banks to grow their customer base and enhance profitability. As a result, banks are prioritising embracing various emerging technologies in their digital transformation journey, to offer secure and innovative digital services, streamline operations and enhance customer engagement.

Within this, cloud migration and security are a key focus for improving trust, agility, scalability and cost-efficiency. Adoption of intelligent platforms utilising automation and GenAI are also a focus for enhancing customer experiences. This is specifically to cater to “Digitally Native” consumers who demand convenient mobile-based financial transactions. Furthermore, the rise of Neobanks, or digital-only banks, is also noteworthy, leveraging cloud-based technologies to deliver fully digital services.

How do you see Open Banking developing over the next few years?

Open Banking is poised to undergo significant developments over the next few years, shaping the future of the financial industry. APIs are enabling banks to experiment with cutting-edge technologies and novel use cases, creating new business opportunities and microservices, particularly in enhancing customer experiences and establishing digital ecosystems. Some regional banks are providing API sandbox environments, allowing Fintechs to experiment and develop real-world applications and services. Ultimately, these collaborations between traditional banks, FinTechs and other third-party providers will further drive competition and open up new avenues for innovation, creating diversified financial solutions for consumers.

One major trend that will continue to gain traction is embedded finance, where we see financial services increasingly integrate into everyday applications, offering consumers greater accessibility and convenience. We will also see GenAI and predictive analytics play a bigger role in Open Banking, offering personalised experiences, tailored products and recommendations.

Moreover, Banking as a Service (BaaS) and Variable Recurring Payments (VRP) are two other trends that we’ll also see in the future of Open Banking. BaaS allows non-banking entities to offer financial services, erasing the boundaries between traditional banking and other industries. VRP, on the other hand, enables flexible and variable payment schedules, offering consumers greater control over their finances.

Furthermore, as Open Banking expands, there will be a heightened emphasis on security measures. To address expanding attack surfaces, comprehensive and innovative security approaches including proactive API security and governance will continue to be crucial.

Are we now seeing tangible instances where the use of AI has brought enhanced benefits to banks?

Conversational, personalised banking experiences are becoming the norm, where banks are now able to reach out to customers proactively with timely advice and offers. This is made possible through enhanced online and mobile banking, as well as AI and ML-based customer service tools like chatbots and smart branches.

Using AI and automation, banks are also deriving invaluable benefits through real-time and contextual customer experience and centricity. These applications are transforming banking by offering more personalised experiences through the analysis of customer behaviors, trends and patterns, and by customising online and mobile banking services. The introduction of voice and facial recognition, along with other biometric data, is further refining personalised and secure offerings in banking.

AI is also enabling banks to achieve more with less, increasing productivity and consistency by optimising business processes and automating time-consuming, mundane tasks. This shift is freeing employees from repetitive work, allowing them to focus on higher-value tasks.

Do you foresee any limits to the abilities of or to the usage of AI in banking?

AI is already proving to be a versatile technology that can be applied across a wide range of business functions, and there are various opportunities for banks to re-imagine how AI can improve their operations.

However, although most banks are undergoing digital transformation, they are not all at the same level of maturity when it comes to AI implementation and deriving meaning out of their data. To navigate this journey effectively, banks must address organisational and technological barriers and have a clear vision for the future. These include concerns around data privacy and security, regulatory compliance, ethical considerations and the potential for algorithmic bias. Upskilling employees with necessary tools and abilities is crucial, as is effective data management to ensure efficient use of the right data. Thus, working with technology partners who possess the right capabilities and industry understanding is crucial.

Looking ahead, banks should aim to leverage the potential of cognitive computing, positioning themselves at the forefront of technology with AI platforms that enable innovations like image recognition and new customer experiences. This approach can lead to faster time-to-value, supported by lightning-fast infrastructure and efficient AI tools that handle larger data models and deliver faster insights.

Which cloud use preferences are emerging amongst regional banks – Public, Hybrid, Private or a combination?

When it comes to cloud, there are many different solutions available, offering various levels of performance, scalability and efficiency. Having the right cloud strategy and making the right decisions on cloud infrastructure and workloads, are vital to keeping business competitive. With this, regional banks have fast-tracked their adoption and use of cloud and are increasingly adopting a combination of cloud use preferences, often leaning towards hybrid and private cloud models. While public clouds offer scalability and cost-efficiency, concerns about data security and regulatory compliance drive banks to prefer private or hybrid clouds.

This trend is highlighted by forecasts from Gartner, indicating that in 2024, the MENA region is expected to see the highest growth rate in spending on data privacy, with a projected increase of 24% year-over-year. Additionally, Gartner predicts a 17.4% increase in spending on cloud security for the current year. Hybrid clouds, combining on-premises infrastructure with public and private clouds, allow banks to maintain sensitive data in a secure on-premises environment while utilising the scalability of public clouds for less sensitive operations. This approach offers flexibility and cost savings, making it an attractive option.

What currently keeps the region’s bank CTO’s and CIO’s up at night?

Cybersecurity remains a top concern for CTOs and CIOs in the banking sector, given the industry’s monetary nature and the increasing complexity of digital threats. There is a growing urgency for Zero-Trust architecture to take center stage and guarantee more robust security from all angles. Ensuring the 24/7 security and availability of applications and data is paramount to meet customer expectations.

This include striking a balance between maintaining safety and accessibility, while still implementing new technologies around AI, blockchain, and cloud computing to enhance customer experiences and competitiveness. Accelerating efforts to bring digital resiliency and innovation to the heart of the digital transformation journey, while managing legacy systems alongside these new technologies adds to the complexity faced by CTOs and CIOs. Regulatory compliance is another significant challenge, requiring banks to navigate a complex regulatory landscape while maintaining operational efficiency.

Success hinges on a strategic, long-term approach to technology adoption, prioritising initiatives that align with core business goals and avoiding the pitfalls of deploying multiple new technologies without clear alignment to business objectives.