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The case for creating banking data architecture that allows seamless information exchange by re-imagining existing data assets.

Along with other corporate and household sectors faced by lockdowns, the banking sector is witnessing humongous losses – especially in the financial markets. Decreased productivity, income slowdowns, reduced investor sentiments, supply chain disruptions, manufacturing hindrances, are unprecedented strains with significant economic repercussions in this year. This may overflow into the next.

Governments globally along with their central banks and supervisory institutions, are rolling out combative diverse measures – be they stimulus funds, liquidity injections, targeted loans to severely affected industry sectors, policy rate cuts or repayment moratoriums for borrowers of all commercial banks including housing finance companies and micro finance institutions.

Much of the globe’s economic rebuilding success – with the premise that the virus will plateau in the near future – will hinge on how swiftly the governments’ and regulators’ policy responses are converted into financial transactions. Speed of money will determine the speed of recovery.

The need of the hour are minds that look at the situation calmly and clearly – minds that ask precise questions and then, seek out pragmatic answers. Especially by leveraging the various existing data ecosystems and assets to forge relatively inexpensive and ready to deploy solutions without compromising on data security standards.

The challenge areas that governments and banks can rapidly de-risk, and de-clog are quite a few. But the most important one which will determine the success is the ability to seamlessly onboard new customers, exchange information – digital approvals, payments and settlements.

Apart from payment processing, the current work from home scenarios is adversely impacting multiple banking functions that are non- contactless and non-payment related – like Customer on boarding, underwriting and approvals of Mortgages, Loans, Lines of credit, Credit Cards etc.

In these Covid-19 times that mandate specific containment strategies, banks are forced to work on skeletal staffing and their associates cannot have physical contacts with the customer. This fact combined with strict adherence to regulatory procedures means banks have to think of migrating and operationalising their customer on boarding processes to a digital only infrastructure.

Let’s play out this scenario further for customer verification processes. Presently for higher value loans the applicants’ need to physically present themselves at a bank’s premise or for issuing a credit card, banks’ representative meets applicants for multiple verification proofs – residence, income and other KYC information etc.

Extending our case in point, why do we not think of piggybacking this transaction dynamic to our existing data assets? As in institutionalizing a complete e-onboarding process by creating ‘KYC sharing platforms’. What this essentially implies is, rather than going back to customers for laborious verification exercises, the proposed data architecture will re-utilize already verified and enriched data assets like AADHAR, PAN, Voter ID, Ration card, Driving License, Passport, KYC data held by Telecom authority, and GST company information etc. to generate socially distant but well connected and secure transactions. The advanced data can ensure that this is achieved without compromising on the accuracy or security of socially connected process.

Along with pooling customer identification data (from the mentioned sources), the architecture will need newly created information workflows. These workflows will vitally integrate small businesses that may not have bank accounts or be even registered as business entities. In fact, without this last-mile connectivity, governmental benefits – soft loans, benefits, and other relief measures – would not reach the intended recipients.

The clear idea here is to architect a data solution for seamless information exchange that accelerates delivery of financial services to both banked and non-banked population. By integrating data assets and pooling them in a way that does not compromise privacy and security, banking can become truly contactless to ensure government schemes and benefits are reaching the needy faster.

And all this without reinventing the wheel by leveraging the significant investments already made in creating GST infrastructure, the UIDAI architecture and the existing seamless payment provisioning processes.

Understandably the proposed concept will raise regulatory and jurisdictional questions pushing us to diligently work through; but given the unprecedented nature of the global challenge that knocks on our doors; it is time that private-public partners unite across social – economic – political spectrum to find pragmatic solutions that revitalize the economy – one definite step at a time.

In summary, digital-only information flows and workflows are a pre-requisite for benefits to flow into deserving wallets to ensure faster economic recovery.

This was originally published on ET CIO website and is being reproduced here.

Article by

Muraleedhar Pai

Executive Director, Maveric Systems Ltd