The Future of the Financial Services: Interview with Shanker Ramamurthy from IBM

IBM is an established and trusted partner across the financial sector, what does your position entail?

I am responsible for leading the banking consulting practice across IBM’s Global Business Services, concentrating on the bank’s digital transformation, core banking, and payments.

I am also the President of the IBM Industry Academy, an energetic and diverse community of IBM’s industry experts, thought leaders and consultants aiming to shape new solutions that will support our customers as they navigate to win in a rapidly changing future industry landscape. The Academy offers IBMers the opportunity to work cooperatively and collaborate with industry experts from every part of IBM.

Since my career began almost three decades ago, I have been fortunate enough to work across six different continents in various consulting and leadership roles in the financial services sector. This, combined with my current role and involvement with the IBM Industry Academy, provides me with a unique perspective and overview of the trends affecting other sectors, which helps me think outside the box for our financial services clients.

Are you able to tell us more about your recent appointment to BIAN’s Executive Board and BIAN’s role in the industry?

BIAN is an organisation of institutions and professionals from the financial and technology industries, standing for the Banking Industry Architecture Network. It is a collaborative, not-for-profit eco-system of leading banks, technology providers, consultants, and academics from all over the globe, who are committed to lowering the cost of banking and increasing the speed of innovation adoption in the industry. Members combine their industry expertise to define a revolutionary banking technology framework that standardises and simplifies banking architecture to overcome limitations preventing growth and encourages ease of management in their existing environments.

The invitation to become a member of the BIAN board was an opportunity I could not refuse. I am truly honoured to be part of BIAN’s executive board to offer counsel and support their work in helping financial institutions navigate this period of immense opportunity and disruption. Now, more so than ever before, BIAN’s open framework, services-oriented architecture, and standards model are essential to the financial services industry.

The banks that succeed will be the ones who have a technology and business strategy to support the ‘bank of the future’ in which much of the middle and back office get completely automated and more of the focus, investment and innovation gets applied to customers and customer value-adding functions.

Having worked in the financial services sector for a number of years, what makes you so passionate about the industry?

There are numerous reasons why I am so excited about present and future opportunities across the sector. However, one reason that stands out to me is the impact it has on people's everyday lives.

I am a strong advocate for financial inclusion and make it part of my practice to highlight its importance. Financial well-being and access to financial services should be available to all, no matter where you are in the world. So, I am continuously committed to supporting banks around the globe to expand the availability of banking services and reduce the cost point in doing so.

Financial inclusion is obviously incredibly important. But what measures can global banks take to increase the availability of banking services and reduce the cost point in doing so?

There is still a lot to be done to achieve inclusive banking globally. Although incumbents, FinTechs and TechFins have made massive investments in technology and innovation, there is still scope for more. Globally, billions of people still lack access to basic financial services. Critical areas such as payments - particularly cross border payments - continue to be expensive and access to credit remains a challenge for so many.

The combination of regulatory efforts, banks creating technology and business strategy that supports the bank of the future, and the prioritisation of innovation powered by hybrid cloud and artificial intelligence will inspire the transformation of the entire banking and financial services infrastructure.

Although a great deal more needs to be achieved, it is very encouraging that the combination of technological innovation – coupled with the emergence of new business models – is democratising finance like never before.

What can banks do to prepare for the future?

COVID-19 and changing regulatory environments has driven an evolving landscape which banks and FinTechs are navigating, while the financial services industry is being shaped by new consumer trends – from the rise of a cashless society to the pandemic-driven shift towards online banking and mobile payments.

There will be a continued focus on technological development to accommodate these changes. The banks that succeed will be the ones who have a technology and business strategy to support the ‘bank of the future’ in which much of the middle and back office get completely automated and more of the focus, investment and innovation gets applied to customers and customer value-adding functions.  This requires rapid digitisation and the adoption of exponential technologies to innovate, powered by the hybrid cloud and artificial intelligence. BIAN has an essential role in helping banks do just this.

With the move towards digital banking, including the increasing use of mobile contactless payments by customers, what will this mean for the bank of the future?

Digitisation is on the one hand driving innovation, new business models and efficiency while at the same time enabling extreme competition from both traditional and non-traditional competitors. In tomorrow’s banking eco-system model, more and more of the value is accruing from customer-facing functions supported by platform-based business models. By extension, this has meant competition from both FinTech and importantly TechFins (large technology companies that are moving into the less regulated aspects of financial services such as payments, electronic wallets, BNPL – buy now pay later models and more).

Banks in the future will increasingly not only automate extensively, but they will also likely extend their business models to create ‘beyond banking platforms’ to help their customers in a much broader context beyond the traditional banking value chain. The future of such models is being written in Asia by banks such as DBS in Singapore, SBI in India and many more as they change their business models to blunt the onslaught of the ‘super-apps’ such as Alibaba, Tencent, Grab, Gojek etc in that part of the world.

How can the industry find its footing after such a change?

Banks have several natural advantages that come from incumbency, customer loyalty and material regulatory barriers preventing non-traditional competitors from rapidly breaching their businesses. Regardless mastering the future will require banks to ask themselves three questions:

1. Is our strategy ambitious enough?
2. Are we executing fast enough? and
3. Do we have the talent and capabilities to win?

Answering these questions honestly and then putting in place programs to execute relentlessly is the only way for the industry to continue to thrive and take advantage of the huge opportunities that are presenting themselves in the coming decade.