The Thought Leader's Voice Podcast
Intelligent Banking Operations: Strengthening Resilience and Accelerating Transformation
As part of our Thought Leaders Voice podcast series, we are thrilled to be in a conversation with Samir Agarwal on ‘Intelligent Banking Operations: Strengthening Resilience and Accelerating Transformation.’
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With over 20 years of experience leading Technology, Vendor/Procurement, Sales Operations, Product, Operations, & Risk Management, Samir Agarwal is an Experienced Financial Services Senior Leader with a substantial track record of running businesses and joint partnerships.
Samir is an accomplished strategic visionary with a clear sense of purpose and urgency when faced with diverse challenges He is effective at building high-energy and motivated teams with excellent business acumen and technical skills.
- The biggest challenges that banks have faced over the past 12 months, particularly from the operational side.
- How have Financial Services and their sub-sectors gone about this change management, from the normal physical architecture to a digital transformation?
- Will Automation and artificial intelligence, already an important part of consumer banking, penetrate operations far more deeply in the coming years?
- What are the roles with AI and automation within banking institutions both from a product or services play, but also creating an employee workflow?
- How can the use of predictive analytics improve the management of operations?
- What kind of challenges could be faced in the next couple of years in integrating technology & digitization?
Full Transcript of Podcast with Mr. Samir Agarwal
Gurpreet Purewal: Welcome to this week’s episode of The Thought Leader’s Voice. My name is Gurpreet Purewal, Associate Vice President of Sales here at iResearch and your host for today’s episode. Our topic for discussion today is Intelligent banking operations: Strengthening resilience and accelerating transformation. To help navigate this topic, I have the pleasure of introducing our guest, Samir Agarwal, vice president of Banking Compliance Solutions at Wolters Kluwer. Welcome Samir.
Samir Agarwal: Hey, thank you Gurpreet, glad to be here today.
Gurpreet Purewal: Brilliant. So I think to kick off Samir, why don’t you tell us a little bit about yourself and your role at Wolters Kluwer.
Samir Agarwal: Sure, you know, I’ve been in the banking industry for a little over 20 years, maybe even over 25 years, if I’m really counting, at Wolters Kluwer, I am managing a suite of products that serve community banks, credit unions in the United States. We basically support these institutions through mortgage, consumer, commercial, and deposit verticals. So all types of lending, as well as deposit accounts and any type of retirement account you know, So I’m here to help you guys, understand a little bit more around what it means to be resilient and how to accelerate some of the transformations that we need in today’s world.
Gurpreet Purewal: Brilliant and we really appreciate you joining us today for this and we find It’s going to be a really interesting conversation. So let me set the scene, over the last 12 months, we’ve seen a seismic shift in customer and consumer behavior, which is predominantly been driven by the pandemic. As a result, we’ve seen businesses trying to pivot and adapt to these changes more than the banks. So from your perspective, what have been the biggest challenges that banks are faced over the past 12 months, particularly from that operational side?
Samir Agarwal: Sure. So, you know, from a traditional sense of banking, it’s been, you know, either I’m offering a product to loan money out from offering a product that a consumer wants to put money in and see it grow. So, investments or even just deposit and checking type of accounts and the challenge has been is how do you serve those customers? And whenever there’s been a change in the industry, it’s been okay, I have product one or I have product two and my delivery mechanisms are A or B. Sometimes we have multiple delivery mechanisms and what is happening in banks is that they’re traditionally coming up with the way of thinking of how serve the customer and not necessarily always taking the customer input. I think what the last 12 months have dictated to a lot of banks is that’s not going to work in this situation.
The pandemic itself has kind of put more burdens into how to operate from both physical and digital means. Physically, can customers go into a bank branch and that’s the distribution model for a bank. With the governments taking control and putting lockdowns in place, you can’t necessarily can transact that way. So, you know, it takes a open ear and a higher listening level of how does a customer want to transact? How can they physically transact? A lot of banks have now gone into the digital world where they’re saying, okay, this is the place where I can offer a product and a customer can interact with me and conduct business. I think a lot of it is about listening to the market and there were so many different types of fin-techs they’re showing up in order to assist banks in it, but the comfort zone isn’t there. So a lot of banks need to get comfortable with it and start to understand how to change and how to transition into serving their clients through a digital means, and that it’s a big change because the brick and mortar branches are what the traditional distribution market is, or how to distribute to the market. It’s a physical and digital ultimately, entity that needs to be now flipped a little bit. You may not need as much presence in a physical space as you will with a digital one.
Gurpreet Purewal: So I think I agree Samir, I think the point that you alluded to earlier was that we saw some of this transformation previously, and that’s kind of the acceleration of the FinTech market. And I think that came about from this idea of customer experience and having a much more customer centric approach. I believe that over the last 12 months, the pandemic has really shifted us into that digital banking space, and like you say, it’s the collaborations now that these banks may need to achieve with these FinTech partners. We’ve known the banks have always been a bit known as traditionally slow to change. How have they gone about this change management, from the normal physical architecture they used to, to this more digital transformation.
Samir Agarwal: So there’s a huge push and I think where it gets into is a lot of third party management. The first piece of it has been, you know, how do I manage a FinTech and what are the right fin-techs for me to do business with? So what we’ve seen is, you know, some of the larger institutions have, have given birth or to a consultancy that takes place where they’ll, they’ll, they’ll tell a third party consultant to say, Hey, go run an RFP for me and tell me who the best practice companies are, or the best financially viable companies are for me to do business, because I need to make sure that these transactions are secure. I need to make sure that I’m taking care of my customer first and that they provide products that will allow me to extend to an online presence.
That can be pretty groundbreaking of a shift in mindset just for the traditional way of doing banking and they feel that by using a third party consultant, there’s a little bit of leverage and protection from making a decision where they may not have expertise. So I think that that’s one way that we look at how fin-techs are coming alive. There’ve been some aggregators for the large, for very large institutions, as opposed to independent contractors that are coming about and applying a request for information or request for proposal type of consultancy and what they’re doing is they’re collecting all types of information around vendors. Um, one of them I believe is called true site that that’s pretty popular out there and a lot of national banks are using them to aggregate information so they can make better decisions about products and services.
That’s one avenue. The other Avenue I’ll bring up is differentiation in the FinTech world, by products for the customer experience. You know, we’re, we’re in some hard times. What we’re seeing is, the traditional actual loan products are changing. And so when you look at companies like so five, where you can get financing at the micro level and you can get, and you can have different types of terms that traditional banks don’t normally have. Many of those, many of those companies are banks themselves, but they also partner with banks. They say, Hey, if your customer is going to come to you, we’ll be your FinTech, we’ll be your front end.
You know we’re an established bank ourselves, but we’re also an established, provider of technology services for banks. And they’ll be your customer the whole way. So if they use our technology and you can then get a revenue share on the product type that we offer. So there’s, I think what we’ll see in the next year, maybe plus, a new set of differentiation of products based on how customers really want to experience banking. It’s not just going to be around; Can I get to you on a mobile device or can I kind of interact with you in a digital way?
Gurpreet Purewal: Yeah, I totally agree. I totally agree with that. I think to take that to a, I suppose, to step back, because I suppose it’s that differentiation between this idea of banking as a service, and also allowing your priority technologies to set you a field to offer those services to other fin-techs. I suppose taking that back a little bit, where is the starting point is on this strategic pathway? So, when a banking institution looks at themselves and they’ve needed to pivot, are there a number of strategic points of the embroidered maps I need to go to, to facilitate this thought process?
Samir Agarwal: We can start at that level. I think the first, the first portion of it to make a conscious decision that we’re going to go digital and that commitment needs to be there because it’s not going to be an easy one. It changes the way that you serve the client and it changes your operation as well. So, you have to settle on a technology, but then you also have to settle on an operating mode. Your customer service needs to be, you know, very phone oriented or, you know, around the chatbots that people use for live help. That changes the way that you think about, serving a customer. So it’s a pretty big endeavor. It’s not just let me buy some technology and put it into play. You now have to have an operations manager that will also stretch capability and experience into a new world where customers are very demanding and we want instant gratification and problem solved right away.
So, you have to worry about phone calls and accessibility. You have to worry about online help that’s available, and you have to make sure that the experience of the actual product itself applies enough self-help and enough self-information for customers and consumers to navigate appropriately. There are many different things that you can think about feature-wise in there, but those are the basics. Once you’ve noted down, Hey, I want to administer my own help. I want to have a third party administer help, that’s when you can start to say, okay, these are the things I want in my, my request among vendors out there and fin-techs out there to be solved for. Clearly, you know, you have to make some conscious decisions also on what your expectations are and how you are gonna market it because every part of the business at the end of the day, it is a business, needs to be looked at in terms of, can you acquire new customers this way, or is it really going to be just about saving the current customers that are there and they don’t get attracted by your competitors?
Gurpreet Purewal: Yeah, exactly. I suppose who has the responsibility of setting that strategy say, is that a collaboration with the chief operating officer with the business unit heads to identify the product to services and how you mitigate those changes? Or is it, is it driven just at that business unit head level within these banking institutions?
Samir Agarwal: No, I think it’s a collaboration as you mentioned, between the technology officer, the operations officer and the head of the business unit.
Gurpreet Purewal: So I think that takes us nicely into the, into how technology is playing a pivotal role within all industries, especially into the banking industry. We’ve talked about how working with FinTech partners who are creating proprietary technologies to utilize for banks. What are the roles Samir that you’ve seen with AI and automation within banking institutions both from I suppose, a product or services play, but also creating kind of the employee workflow?
Samir Agarwal: So, great question. I think it’s going to have a very large play. I think it’s just starting right now. It’s really around auto-decisioning. It’s taking domain expertise that was once in humans and, you know, it’s a craft that’s kind of like fleeting in the banking industry actually. Where domain experts understand credit risk and understand all the different facts that go into the parts of lending to ensure that the banks making good decisions about where it’s distributing its funds and collecting interest on. What we’ve seen is a rise in a need for personnel that have that expertise in, in larger institutions, you have an underwriting department, they can build the expertise in smaller institutions, you have to go to industry to get that. And There are not so many individuals available that are experts necessarily at underwriting or experts all the way through with credit risk.
So what we find is that we need people, right? If we’re, if we’re institutions operating in a mid to small level institution, we need people there. The reliance is now going to, Hey, technology partner, or FinTech partner. Do you have auto-decisioning capabilities? I have a credit risk officer, but they can’t make decisions on every deal coming in, and I want to make really good decisions on my, risk in the portfolio. So we need AI tools to do auto-decisioning. It’s slowly becoming, I think, a standard and want to do it in a compliant way and in a way that we get comfortable with, and you can see this kind of coming into banking over the last few decades, actually. If you go back to the, to the nineties to get a credit card, you would fill out a piece of paper and you’d send it in and then a decision would be made somewhere within weeks, for you to get a new credit card, you’re getting a letter back saying you were denied, or you’re getting a letter with a package associated with it, with the new card.
Today, If we wanted to do the same transaction, we go online, we apply for the credit card. They gave us the temporary number and I say the true physical hardware is going to come in the mail. Right, and in some cases like Apple, they’ll just load it to your Apple wallet immediately. So that is what we’re talking about for all types of lending and we’re AI gets involved. We were able to apply static rules in the role of an unsecured debt. When we start talking about secure debt, what are the different facets that, that, that technology will play a role. Also, you know, go into how to forecast what will happen in a transaction over time. So when we, we look at commercial type of lending, those deals are typically complex, or they have very specific nuances with them, you know, if you’re familiar with the term ticker, it’s a, it’s a reminder of something that needs to take place on the deal on an annual basis, or insert some certain timeframe, and, they sometimes have financial impacts. So you’re gonna use AI to assist in the workflow and assist in the evaluation for say, you know an automated result or valuation.
Gurpreet Purewal: Oh, it depends I suppose, on that, I think that’s a really interesting piece and AI is obviously clearly playing a huge part in automating services and help in using credit where required, whether it’s from a consumer level or even at that higher degree in the high-level investment level, but like you, like you mentioned, I think looking if we’re looking future gazing a little bit there is a challenge that’s been highlighted with AI, in relation to its governance. So the exposure of how does it introduce who should receive credit or loan attribution, is this investment viable? how do you perceive perhaps banks trying to overcome that issue? Have we got a policy and compliance?
Samir Agarwal: Yeah, they need to be very careful. I mean, because you start using AI that takes in account some of the demographics of the actors and all the transaction, we’ve seen it actually have a bias. So the advice, I would say, it’s too early to fully employ it for institutions looking at it. But you have to be very cautious obviously with any new technologies and employ it in the ways where you’re not looking at demographic data, right. Maybe today it exists as an assistant to your human being and tomorrow it’s just being trained to be non-biased right. Or we’re finding the right decision criteria is for, it not look at all data, but to look for a very specific dataset in which you can help make decisions on.
Gurpreet Purewal: Yeah, I totally foresee that occurring working with other technology groups and a very precarious question that needs to keep come up, especially over the last 12 months where we’ve seen some bias across diversity groups. There’s always a concern that AI may follow into this bias. So that will need to be kind of this policy-making that allows for us to move forward where this, some of this still proposition is still highlight by governance, by an individual by human being. I think one of the other places I’d like to touch, Samir is how automation and perhaps AI is helping to develop product and services so to allow businesses and banks to crank their decision-making, if one would say, would you be able to delve into that for us a little bit?
Samir Agarwal: Sure and I think where you’re going isn’t to like predictive analytics for and I wouldn’t, I wouldn’t say, you know, AI has a role in that in terms of structuring data and how it’s used, but I don’t know if it’s, if it’s going to be a true artificial intelligence piece of the puzzle. I look at predictive analytics as a, method to, to really forecast or tell us what to look out for in terms of risk. An example for you is, you know, default risk tolerance. If I have better information than I can run some analytics around, they’ll tell me a certain type of borrower or a certain type of product in a specific industry that I’m lending on, will act a certain way just based on the statistics and I can use that to determine whether I want to make a loan.
I think that’s where we find that technology coming into play. Now they AI part of it might be scouring for more, for more background information than what I would buy off of a typical data provider, and then co-mingling that end. And then ultimately being able to inform me when in real time I’m processing that loan. I think that that’s really where the heart of that goes is how do I defend against losses and how do I take advantage of an opportunity where I may not have if I had a conservative, risk rating.
Gurpreet Purewal: It’s a really interesting point there. So if a bank was to employ some of this new technology, when does that take that for the customer? What does it mean for the customer?
Samir Agarwal: What it means for the customer is actually a pretty good thing. Those that may not have been lended to are able to acquire loans for the practices that they wish to, and also for the institution, it should give them a stronger basis for why they’re making certain types of loans. So, I view it as is a good way to employ technology and making better decisions where we, where we started this conversation from. Those better decisions go both way. One, to conduct business and then other times to not. Right now, today, we’re kind of going with, with a bit of human decision-making or, you know, gut. So for lack of a better way to kind of put it together, we use analytics and we use our own intuition to make those decisions. And this makes it more fact based around data and data driving function.
Gurpreet Purewal: So we’ve, we’ve been talking about some of these elements on how it plays out for the customer Samir so on some of the points you’ve just mentioned that takes us nicely into the stair of customer experience. So we’ve talked about customer centricity, being a key way in which banks now need to repivot their businesses for all their products or services that are made by their own intuitions. We’re now looking at creating this kind of more customer experience that, technology is playing a huge role within this customer support play. How are you seeing this transition from previously to now and how it’s now supporting with customers?
Samir Agarwal: Yeah. Great, great question. So, you know, we, we covered decision-making well, and the other side of it is using the same technology to really understand what the customer experience is, right. Can you monitor what customers are doing when they’re interacting with you? So if you’ve made the choice to go digital, then the next part about it is serving on digital and really catering to customers that are, that are on the systems that they’re, that you’re having them interact with you on. There’s an interesting kind of story here in the US you know, many people around this timeframe are completing their taxes, right? And there’s a multitude of software out there that allows you to assist in and get that complete. In this example, I’m gonna give you, you know, we’re talking about as an individual going guided through their tax form filling, and the AI kicks on and a chat box opens with it with a bot that says, Hey, can I help you? Can I give you information on where you are? The user then has an action to take whether it’s, no, I know what I’m doing, I’m just looking at a few things or two, Yes. I’d like some information, let me read it on screen. That’s customer support, number one, right? And this could really take down the expenses with your operation, but it also enables you to provide superior customer experience and support.
So as the AI is working with and watching the user, as they’re going through the application, say they’re continue to fumble and they continue to have some, some difficulties then the chat box can come out again and recognize that and ask them, Hey, you know, I have an expert, a real person expert that I can connect you with. Would you like to have a short discussion on what you seem to be having difficulty with?
The uniqueness about this is that sounds great, right? If I’m a customer, I, now I don’t have to wait on a telephone line on hold and the system knows that I’m having difficulty with it. It gave me advice right in the topic that I’m having difficulty with, as well as being able to get somebody on a phone or on a chat with me immediately. That is a game changer for customer experience, because now it’s got contextual information about exactly where someone is in the transaction and what type of help that they need, as opposed to, you know, if I was calling the general helpline, I didn’t have to start from scratch and explain everything, and I think that that’s something that’s going to become very apparent in banking, because as even your operations team is going through something and they may need help with the software itself, the software provide, consumer may need help directly from the bank as well. So I think that’s a really big part of AI is understanding the customer experience using that intelligence to really give insights and support at a superior level than it’s ever been before.
Gurpreet Purewal: I think we totally agree in that sense and I think that it’s almost this personalization, but where we talk about this customer experience, we’re also talking about that employee experience. The fact that you can use utilize AI, not only from a kind of internal operations standpoint to identify some challenges, but like you mentioned, with the actual employee, with the customer, sorry, where we can look at exactly where they need to transition from a chat bot or an AI to an actual specialist within that space. So how successful have banks been so far with that kind of deployment?
Samir Agarwal: I think it’s just starting. I can tell you that non-banks have been very, very successful with it, but we’re just starting to see that show up with banks.
Gurpreet Purewal: Okay, like you mentioned, obviously this is right at its infancy where banking institutions are integrating this top of technology and providing this customer experience. What kind of challenges do you think could be paced in the next couple of years in relation to, to utilize? They should have some experience.
Samir Agarwal: I think It’s going to be around standard practices on how to, how to answer the specific scenarios. You know, we really do want a custom experience for each individual user type and I think we don’t have that knowledge right now of exactly which type of user does what and it’s evolving, so, you know, the danger and the big challenge, I don’t think will be the technology. I think it will be about how the technology is implemented and used, and if you end up with something that’s similar to a FAQ, you know, frequently asked question, and then, you know, and we see that today where people just dump the FAQ’s into their chat box answers, and you can have a completely disconnected conversation with what’s supposed to be a help you told me, and it can get very frustrating and that can turn customers off. So I think it’s going to be a really big challenge, and we have to handle delicately, especially when you’re talking about a bank providing a financial transaction, we feel differently with consumer products and objects than we do with our money. So you know, I think that’s something we just got to look out for and be very, very diligent about.
Gurpreet Purewal: Yeah. I suppose that’s going to come into how you build your resiliency as a business where you try and keep your customer attention, as all this transformation happens, getting your customer experience right on the frontend, would be pivotal in about how your market share as a banking institution holds fair in the near future, would you say?
Samir Agarwal: Absolutely, This is not a B2B or something like that. There’s something to be learned from the, the consumer world.
Gurpreet Purewal: Great. Okay, so to me, we kind of running out of time now. So we’ve talked about some really interesting areas where it comes on looking at how technology is going to play a monumental role for banks and some of the shifts that have already occurred how there’s a need for huge collaboration internally with banks to make sure that they make the right decisions for their businesses moving forward, along with the partnerships with tech, potential FinTech partners. As this kind of topic is around intelligent banking operations. Are there three or four key takeaway? What’s most important within the operations strategy to try and get it alright?
Samir Agarwal: Yeah, absolutely. we’ll leave folks thinking about is if you’ve got a legacy system, is the legacy system serving you, or is it impeding you, that’s a really big, big discussion or a big topic to kind of first head on and, and understand, and that’ll be the impetus for change. Usually legacy systems are holding us back from evolving what we can do in our business, because we end up catering to what the technology says we could do. Today, the technologies that are more flexible for our customer experience. So pay attention to that customer, really listen to the marketplace about what they need, and then allow us to be successful and sustain future business. The new technologies on the block, you got to pay attention to them. AI, predictive analytics, you know, auto decisioning and ultimately the same technology will assist us in creating a superior customer experience. So those are the things that I would, I would highly advocate for any banking executive to pay attention to, and that’s how we’ll embrace the digital transformation for the future.
Gurpreet Purewal: Brilliant, and I think that’s a good way for us to wrap up the episode, say, um, thank you, Samir for joining us today. and look out for our next podcast episode.
Samir Agarwal: Thank you.
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