In recovery mode, technology will build resilient banking

This year saw an unprecedented and drastic transition in the banking sector.

In Bangladesh too, the banking industry has been heavily disrupted by prevailing business challenges.

With such disruptions, traditional banks have been compelled to rethink their processes digitally, with strong social distancing rules forcing banks to shut down their branches and offer limited services.

In such a context, both traditional and digital banks have taken necessary steps to provide solutions for customers to address their needs from an economic perspective.

This new situation will require prudent management of resources and significant improvement of operational efficiencies.

Banking sector needs to act quickly to build on the recent experience of rapid digitisation and unprecedented momentum for change.

We anticipate a shift in the way banking and trade finance is transacted and settled, institutions will need to re-engineer business processes in the current business environment.

With the government announcing a stimulus package of Tk 20,000 crore for small and medium enterprises (SMEs), Bangladeshi banks are relying on digitalisation to ensure smooth banking operations for local citizens.

Globally, many banks have taken similar measures to ease the burden of their customers.

In Australia, banks have also announced credit-easing measures for small businesses that extend repayments for six months, as the government there prepares to expand its stimulus package to weather the economic storm.

While there is a heavy focus on how banks are doing their part to help customers ride through this difficult time, banks themselves also require support to cushion the impact they are facing.

MOUNTING PRESSURE ON BANKS 

The finance industry has its fair share of ups and downs, but it has never experienced the current level of uncertainties.

To face these challenges, banks are making deeper organisational and operational changes to help keep pace with customers' needs and stay ahead of the recovery curve.

Traditionally, banks' chief financial officers (CFOs) have relied on preliminary estimates and approximate figures when it comes to risk management.

However, this type of analysis is no longer sufficient in today's economy of uncertainties.

Moreover, CFOs who want to drive digital sophistication in the finance function are often slowed down by their own hairball architecture and legacy processes that are costly and tough to maintain.

With the emergence of remote working, the reality for most major banking players is that they are simply unable to deploy the right remote-working architecture overnight because it is just not how their systems have been set up. 

Once thought to be more secure and stable, the decentralised operating model between finance and risk functions does not offer the transparency, effectiveness and cost-efficiency needed to function.

Instead, the processes require extra costs and time, hampering banks' ability to manage operations seamlessly.

Banks now understand the urgency to digitise their finance operations as this is the only -- and fastest -- way to manage risk, improve controls and enhance insights to create more resilient and adaptable businesses.

The use of cloud technologies is now a must-have on banks' technology roadmaps and in business continuity plans.

OPERATIONAL PROCESSES GOING DIGITAL

Moving core business systems to the cloud has proven to be even more valuable today as it enables bank employees to work remotely -- a change in operational management that was once impossible with the decentralised approaches and disconnected systems.

This represents a shift in CFOs' mindsets because banks are now starting to rearchitect their core finance processes and explore remote capabilities that benefit its business and ultimately customers.

In Bangladesh, BRAC Bank leverages Oracle Cloud Enterprise Resource Planning (ERP) and Oracle Cloud Human Capital Management to simplify, streamline and automate their business processes to get faster access to information.

Recognised as one of the youngest and fastest-growing banks in Bangladesh, BRAC Bank has digitally transformed itself to adopt the modernised business processes.

Oracle supports the bank's back office, which, eventually, helps the bank to increase the speed of their business activities and financial transactions as well as their human resource operations.

In another instance, WestPac, a financial services company, will use Oracle Cloud ERP and Oracle Cloud Enterprise Performance Management (EPM) to reduce their cost and complexity while helping to meet regulations for the New Zealand business to operate independently from their parent company in Australia.

Westpac has also leveraged Oracle Banking Platform for its unified customer service hub to provide bankers with a single view of all customer interactions.

As an established bank with a long history, Westpac turned to the cloud to simplify its IT infrastructure and create a consistent customer-centric experience across the multiple brands they operate in Australia and New Zealand.

This gave Westpac the edge it needed to position itself better in an increasingly regulated and competitive industry.

BUILDING RESILIENCE THROUGH DIGITISATION

Presently, banks are struggling to mitigate costs, margins and perform better to exceed customer expectations.

New age technologies have been contributing a pivotal role in forecasting business risks, analysing data and taking optimum decisions.

These testing times have led businesses to predict and evaluate the future of the business and its operations.

Artificial Intelligence (AI) and Machine Learning (ML), which are embedded into the cloud, are two technologies that help banks to predict the future outcomes, profitability and trends based on past behaviour.

These technologies further help bankers to make better decisions and drive innovation, enabling them to stay ahead in the new normal.

With change becoming a constant in these unpredictable times, banks need more significant changes to sustain the prevailing economic downturn.

To build resilience as the economy starts to improve, banks have to integrate digitalisation into their blueprints to mitigate the business impact.

The writer is the managing director of Oracle Bangladesh