EP967: Transformation in banking is inevitable and existential

Karthik Sethuraman, Chief Delivery & Risk Officer, audax Financial Technology

Banks now view failure to modernise core systems as an existential risk. In APAC, 93% of banking leaders admitting the right platform is critical to future success – presumably the remaining 7% are contemplating career change! Robin Amlôt of IBS Intelligence talks banking transformation with Karthik Sethuraman, Chief Delivery & Risk Officer of Singapore-based digital banking solutions provider audax. Banks must address their core infrastructure to compete effectively while meeting customers’ increasing digital expectations.

Transcript

SPEAKER_00 0:00

I'm Robin Amler of IBS Intelligence. You're listening to the IBSI Views podcast. With me today, Kathik Sithraman, Chief Delivery and Risk Officer of Audex, based in Singapore. We're talking about banking transformation. Transformation is unavoidable. Not evolving poses an existential threat. Whether banks are ready or not, there is more change coming, is there not, Carthik? Yes, absolutely.

SPEAKER_01 0:33

Philosophically speaking, uh, you know, change uh is happening, whether we acknowledge it or not. And uh certain industries, the change happens at a much faster uh pace than certain other industries. Banking, especially the financial services sector, uh you know, uh large part banking and uh you know insurance is also following on, is going through a huge transformative phase. And uh uh and there the banking and financial services space is so wide that uh people are picking off paths by paths, certain elements that are given more priority than others. So, for example, payments have uh uh you know uh took the lead in terms of payment space where a lot of new players came in to transform and disrupt the whole thing. So the incumbent banks are also uh you know catching up on all that to ensure that they are uh you know uh still staying competitive in that space, right? So it it's it's not a choice anymore. Absolutely.

SPEAKER_00 1:34

Uh I'd put it even harsher than that. 93% of APAC banking leaders say choosing the right platform is critical. Presumably the other 7% are looking to change careers. Yes, yeah. That is true, that is true.

SPEAKER_01 1:51

Yeah. That is true. Yeah, uh, there is uh uh and and and it's reflecting, see, while uh the percentages are uh, you know, keeping aside the percentages, I think every you if you if you talk to every finance institution, they are uh uh you know they have plans, they have ideas, and they are acknowledging uh or recognizing the fact that they have to uh definitely make changes. Uh they cannot stay the same way. Even uh there are a few institutions, uh you know, some of Audac's clients where they are they're used to the pen and paper way of doing things, uh uh just the old, old, uh old uh school methodology. Even they where they have multiple layers of approvals and stuff like that, even they are acknowledging that if they don't digitize, if they don't change themselves, they're going to be played out of the market completely. 100%, yeah.

SPEAKER_00 2:45

There's a gap, though, between that recognition that something needs to be done. I'm sitting there as a banker and I'm thinking, yeah, I need to embrace this. But there's a gap between that recognition and actually taking action, fear of getting it wrong.

SPEAKER_01 3:01

People typically look at transformation as a uh as a in somewhat uh a one-dimensional manner, right? So they mean transformation, transformation needs to fill out everything, unplug everything, completely redo the plumbing, you know, uh change the whole uh you know facade, everything, right? So that is one thing, right? So because that's how transformation has been looked at in the past, in the last 10, 15 years of in large banks, uh uh where they have taken up transformation initiatives. It is invariably multi-year, multi-million dollar, uh, where they commit a huge scope of work. And then as they go through the journey, they will realize that it takes uh there are lots of unknowns or unplanned uh things that starts derailing. And by the time they complete the program, they would have invariably overspent both time and money, and then probably gotten uh you know less than what they actually bargained for at the beginning of the journey. So if we continue to look at that as a uh in that dimension, uh it becomes a challenge. And then that's why the uh recognition versus action is a key thing. While there is recognition, this this fear of uh you know having to commit themselves to long-term uh you know chain cycle is one thing, okay? And and there is uh and and it's a rightful fear because there are scars. They have enough experienced people who are in this industry, have seen enough large and small and medium organizations uh you know declare a huge transformation journey, go through this, and then find that they've overspent and not gotten the value that they got for. So so and that is where it is important to uh you know look at uh this as an all not as an all or nothing stuff, but as uh uh look at it a bit differently. Look at a two two-phase strategy, right? Uh and that is where uh you know uh someone like Audax uh comes into play, really, right? So what we are saying is we will enable the uh financial institutions, you know, from a customer-facing experience standpoint, help them launch new business models without having to go and completely undo their core and completely transform their core. So if the the important thing is to, you know, for uh all the leaders who are looking at transformation is to look at it as uh you know at least a two uh two-pronged strategy in terms of the transformation that will allow them to uh you know move forward with the transformation in small increments rather than just trying to commit themselves to uh you know uh multi-million dollars where they don't know the uh the the results of it for another two years or three years maybe.

SPEAKER_00 5:39

I'm just gonna belabor this point because it's it's a key one in terms of getting people to untrouser their wallets in and invest. We've said the banking landscape is changing rapidly, it is. How certain can we be? How certain can anybody be that choices made now, whether they're multi-million dollar choices or small ticket choices, how can we be sure that the choices we make now are still relevant in the future?

SPEAKER_01 6:12

There is no guarantee in life, okay? So uh the the way to look at this is rather than trying to choose a platform, see, uh when when we go and make a technology decision like this, where uh especially in the technology space, uh where things are evolving at a much rapid pace than it was, you know, let's say 10 years back or 15 years back. Because 10 years, 15 years back, there were a handful of technology players who were offering some core banking solutions, some channels and so on and so forth. Now the options are aplenty, really. So it is important to uh, you know, look at adaptability and how a platform is able to respond to the uh anticipated changes in the market, in the in the minds of the customer. I think those are the key factors basis which the decisions should be taken, rather than just uh you know pinning themselves to a specific set of architectural, uh locking down the architecture wherein it becomes inflexible for them when they want to make changes, right? And this is uh you know clearly uh you know backed up by uh you know one of the surveys of the APAC banking leaders, where 92% of them uh you know say that choosing the right banking platform is the key as to how they will be able to uh eat on the success of that uh you know, the transformation journey that they are taking. So the important thing is keep the future relevance uh of the platform rather than just being worried about the current architecture, the current state, because what we want is a platform uh that does not just necessarily deliver what you are looking for today, but what how it will be able to adapt itself to the new products that are coming in, the new ways of delivering these capabilities to our customers. So I think that is where the key is, you know, in terms of how they make the uh choice, rather than trying to think of getting a certainty in their decision in terms of platform choice.

SPEAKER_00 8:07

All right, let's turn the focus on to Audacks itself then, just to finish off. What is it that you're doing that makes Ordex special? What is it that you're going to be doing in the future that will keep Audex special?

SPEAKER_01 8:25

Audacks actually enables bands to launch new digital channels, products, uh, and embedded use cases. And we have uh you know live clients who are using this very, very quickly. And we've got very good uh uh uh track record of delivering uh you know these uh you know capabilities in a very short time of six to nine months time, uh, without having to touch the core, without having them to re do the complete replumbing in terms of their core banking platform. Because typically the core banking platforms are connected to multi various places within the organization, and the integration or a replacement of that, replacing all the integrating points becomes a huge challenge. And that is where Audacks uh you know comes into play, where without having to touch that, RDAX will be able to deliver all of this experience. So, so the so what uh this enables the bank is it doesn't have to freeze innovation while waiting for a multi-year core replacement. And this also avoids uh you know uh lock-in of the architecture, which I was uh you know referencing to earlier, because we don't have to necessarily wait for all parts of the organization to move to achieve the transformation objectives. So, in simple terms, Audacks actually helps uh digital channels from core processing through APIs and modular services and makes this whole modernization journey into a repeatable process rather than uh you know one-stop or you know, investment and then wait for the delivery outcome three years later, actually.

SPEAKER_00 9:55

And final question then.

SPEAKER_01 10:05

So it I mean, I just just uh uh you know, uh building upon my earlier uh response, uh 10x is uh uh provides the modern core layer underneath, which takes on the processing and pro uh you know, introducing of new processing and products uh capabilities gradually. So 10x offers uh you know SaaS-based underlying uh you know core banking platform, and Audac can complement that by actually offering the uh the top layer in terms of the channels and the digital products, which can be embedded uh into any financial institution. So this partnership actually brings two complementing uh you know offerings together, and as a package, this can help you know run the two-pronged strategy that I was referencing to uh for any financial institution to take both these things up and then be able to uh you know achieve the transformation objectives.

SPEAKER_00 10:56

Tathik Sithraman, Chief Delivery and Risk Officer of ODAX, thank you very much.

SPEAKER_01 11:02

Thank you, Rob. Thank you very much. Thanks for this opportunity to talk to you. Thank you.