Future of banking: Streamlining end to end processes

Thomas George and Sunil Rajguru met Mashreq Global Services Managing Director Santosh Mahalingam in a free-wheeling interview and discussed the future of banking. Mashreq Bank was the first bank in the UAE to issue ATM, debit and credit cards.

Mashreq Global Services is developing their Bangalore centre in the areas of advanced analytics and investing heavily in the areas of Artificial Intelligence, Machine Learning, Cloud Computing and Robotic Process Automation.

Though not yet blockchain as they still have a long way to go and don’t want to jump into it.

Mahalingam gave his views on a variety of subjects...

On automated clearing of cheques…

We have a startup based out of Chennai that is working with us on cheque clearance. They have developed a unique capability of reading patterns of signatures and OCR. So clearing is still heavy for us in spite of thinking that cheques will fall away at some point in time because there are still SMEs that issue cheques. Cheque clearing is still a volumes game.

We want to completely automate it. Initially, the established players couldn’t get the logic completely right. We realized that the human brain is validating 38 parameters in various departments and doing it quickly… like this isn’t matched… this is not crossed here etc. So today 60% of clearing is now automated. Validation is not the problem but the signature is. It is interesting to note that each of us is not signing the same every time. It takes many variations, so the system is learning all the time. And so far our journey has been from 0% to 60%. We can go up to 80% even if 100% may not be possible.

On digital banking and universal bankers with tablets…

Two years back Mashreq went on a project of digitizing the entire branches. We cut down on 50% of our branches. We realized that 90% of our transactions originated digitally. So we didn’t need 52 branches for the remaining 10%. However, customers still were coming for cash deposits, financial advisory and a few things they didn’t know.

So then we invested in digital banking. We went in for cash recyclers, interactive walls, remote advisories etc. We now have less staff and moved the entire transactions to digital channels. We have universal bankers who don’t have desks but roam around with tablets and can interact with customers while standing. So there is no need for a teller too. Of course, a few brick and mortar branches will remain. You will always require some degree of human intervention.

On the future of banking…

We have also gone in for a high level of mobility for our employees. We have been working on tablet-based solutions, so they get a 360-degree view of their customer and they conduct transactions and give financial advisory. Earlier it was a form filling affair where the employee had to return, but now it’s all done on the tablet immediately with a digital signature.

We launched a digital bank called Neo where we don’t want the customer to walk into the branch for which we got a great response because of the fact that customer behaviour is changing. You may soon have a breed of customers who have never seen a branch in their life. It will no longer be plain vanilla, but you will have custom made products for banking customers.

So to sum it up, a combination of investment in mobility, in the branches and in digital a platform like Neo, coupled with back end solutions like ML, RPA and AI is what is streamlining our end to end processes.

On the possibility of doing away with physical signatures altogether…

Interestingly in the Middle East, one country has got away from physical signatures. Qatar doesn’t need your wet signature. They are OK with a digital signature. Singapore has implemented that. In India, you still need a wet signature. That’s a law. RBI insists on that. The day that is gone, you won’t even meet a customer. The future of banking is moving towards digital and primarily mobile banking.

On the integration of corporate ERPs and banking systems…

On the corporate side I think what will happen over a period of time in that market, there will be an integration of their ERP systems to the banking systems through APIs. The day is not far off. Today they have an internal ERP system, but for any banking transaction they have to come to the online platform and tomorrow the integration will take place.

However, there is a security threat too. The more you open up to APIs, the more you have cyber threats and data theft threats. But this is an evolving situation and I can’t tell you anything right now. We have a very high level of awareness and we will maintain data privacy in the future too. When we have a clear cut solution, we will build in those into the integration.

On the Internet of Things and banking…

Unfortunately, banking is probably one of those industries which handles someone else’s money and that is why it has to implement more safeguards to maintain trust. If the customer is not comfortable for banking to be linked to an IoT device, then we will say that security is paramount. We cannot have a situation where you simply tell an Alexa type device to transfer money as 10 things may have to be done first to avoid fraud.