Banesh is a Fintech services veteran and pioneer in Technology & Operations management. He has developed & implemented strategies globally including next generation digital capabilities for servicing clients. He has managed senior global responsibilities in Operations, Distribution, Divestures, Integration, Digital Services and a diverse range of technology for over three decades of which, for 23 years he was the Citibank International Consumer Bank Global Head, managing Operations & Technology for servicing 80m clients in 55+ international markets.
At Citigroup he was a senior member of the Global Consumer Planning Group, Global Cards Executive Committee, Global Operations Council and Information Technology Leadership Council. In his last role, he was a member of the Executive Committee and Head of O&T for Thailand’s leading universal banking group, Siam Commercial Bank. IDC Financial Insights in CIO Asia 2014 named him as one Asia’s top information services executives in the financial services industry.
As Chief Strategy Advisor for Intellect Design Arena, he is also a Partner and a Member of the Intellect Executive Committee. In addition to being a Senior Advisor with Boston Consulting Group and a Partner in a UK Fintech early stage investment company, he is also a key investor and member of the executive committee of Globallinker, a next generation SME Networking Platform Company.
When he met the Fintech team at the Sonali Intellect office in Banani he gave an insightful interview on the role Sonali Intellect plays in Bangladesh, the evolution and opportunities in Fintech and the future of Banking Technology. Here is the excerpt of the conversation.
Explain what Sonali Polaris does. What’s the role of Sonali Intellect and Intellect Design Arena Ltd?
Sonali Polaris was the old name, the new name is Sonali Intellect. What’s the difference? Polaris was one of the previous companies of Intellect. From a historic perspective, Polaris has evolved over the last 30 years and owes its creation to supporting the Global Banking giant Citibank. They started and have grown entrepreneurially into servicing several hundred banks around the world and continuously delivered world class technology for financial services over the last several decades. Many products, resources and assets of Citibank were merged along the way making Intellect one of the few companies that has significant number of banking experienced staff. A few years back Polaris was split between a Services business and a Product business, which is why I wanted to explain the difference to your question about Sonali Polaris and now Sonali Intellect. Polaris was the successful services side of business. Services business helps client banks manage technology across the banks various technology, while Intellect has and supports only its own products and it owns the IP of the product. This gives Intellect a expert and focused mindset of a product company and helps the clients with the latest capabilities and functionality. Technology is rapidly changing and we are at an exciting time using new Fintech capabilities and Intellect wanted to stay focused on helping its client banks grow and implement these new capabilities globally. So that is Intellect- a globally recognized Technology product company. We have brought that focus and capability to the Bangladesh market.
When this joint venture with Sonali Bank started, there were mainly two objectives. First, we believed that we wanted to commit to be a local company in Bangladesh unlike any other technology company; we wanted all international technology products to be available in Bangladesh. Secondly, a joint venture with Sonali Bank that also wanted to upgrade their platform and automate many manual processes to improve customer experience and strengthen their control environment was an ideal way to help the Bangladesh market. It is very different setup from all the others who are foreign products manufacturers who come in and implement products with third-party partners. We are a committed organization with a large number of trained people who are very good in technology because we built that experience for several products including core banking such as Banking, Lending, Treasury, Trade etc. Intellect, is consistently rated on the top of many independent global analysts and in Magic Quadrant (MQ) of Gartner for many products as it is consistently investing millions of dollars in keeping pace with rapidly evolving fintech, cloud, AI and customer experience capabilities. All of which it is looking to bring to Bangladesh.
We have always been rated very highly in various products, we call it Global Universal Banking but it is really a full-purpose, complete, end-to-end product suite that a bank would run, whether it is Corporate Banking, or Small and Medium Enterprise Banking or Retail Banking. And within each banking section there are a lot of sub-products. Intellect have many but there are 12 major products lines including liquidity, trade and supply chain, digital transaction banking, customer experience channels for corporate and retail banking, Core Banking including lending, cards, treasury, wealth and payment processing being the main products. We are also one of the very few Technology companies that has a dedicated Central Bank platform that includes many modules that support and upgrade the country central bank capabilities. So we believe we are only BFSI focused, we have around 5,000 quality engineers in our parent company, who are continuously being trained and our commitment to Bangladesh is to be able to deliver not just for Bangladesh but from SIFTL company provide certain services that are needed anywhere in the world. As we scale up and deal with more banks in Bangladesh- both public and private, we are confident we can achieve the future potential opportunity.
Talk about where you operate globally.
We operate in about 250 banks in over a 100 countries through offices in 40 countries. So we have clients in many parts of the world and well spread out between growth markets and developed markets. Of course in different markets we focus on different things depending on the state of the market evolution, often helping upgrade market capabilities along the way. Here in Bangladesh, we were focused a lot on retail segment which is what we do with Sonali, Rupali and also aiming to do with others. But there is nothing stopping us over from bringing different capabilities at the right time. We are extensively discussing with several banks other products and capabilities and also with the Bank Bangladesh of how we can bring some new Central Banking capabilities to them and the broader marketplace.
You provide an array of banking solutions. Which is your best selling product?
Our best selling product in retail banking is actually the Digital core. The Digital core has evolved a lot. We have developed a best in class, now rated #1 retail banking digital core. We refer to it as Digital Inside and Digital outside, which means we are fully digitally enabled right through from the channels like mobile, branch etc to the inside that provides all the services in a secure, stable with full functionality If you track what’s happening in the Western markets- three big things have happened. We’ve had firstly the long time promise of the cloud infrastructure is now being delivered for hosting core banking applications. Secondly the social media, e-commerce and payment providers have moved to the cloud very aggressively and integrating with them for a bank and open banking capabilities are integrating this customer experience. Our platform is both open banking ready and also fully cloud hosted. I think over the last couple of years banks have moved equally aggressively, definitely the neo banks and the Fintechs to this new model. Many of the neo banks that are licensed in the western markets like UK and more recently in other geographies, are slowly taking shape in country after country have always leveraged new digital capabilities and benefits of the cloud environment. Now when we say cloud, which has also been an evolving area and it takes most traditional banks some challenge to be comfortable with the cloud infrastructure as they are used to having their own datacenters and they follow the usual datacenter standards of scalability, up-time, disaster recovery and response time. The cloud is better in all these respects compared to those traditional data center activities and having the products and skill to move that infrastructure is going to be an important part of future opportunity for banks efficiency both cost and delivering customer experience services with agility.
I think the data center side of the infrastructure on cloud is becoming more and more relevant going forward. So when you think Fintech, cloud becomes an important determinant of how quickly can my applications be hosted in cloud; Intellect has made significant progress in getting the capability for a cloud-hosted digital core capability. This allows the potential to do Openbanking through API’s and also leverage cloud infrastructure. So cloud infrastructure is very often not a huge capital expenditure but more of an operating expenditure, so it is less capex and more opex driven model which is of great help for the banks scalability and cost efficiency. So cloud application is where our digital core is well equipped to handle, it has got all the readiness for open banking, the new directives of PSD2 and GDPR and services like that. Thirdly, Data is the new oil. Usage of data – demographic, transactional and behavior both with the bank and outside from social media, the external marketplace is evolving due to open banking and extensive use of customer mobile usage on various apps, social platforms, ecommerce and payment service providers make us have enormous access to data to provide customers products at the right time rather than only when they come to us as a transaction.
What are the important pillars of fintech in your opinion?
Customers need banking services; they may not need a bank. That is where the customer experience is heading. What that really means is that customers need certain services and as long as they can get those services from someone contextually at the right place and time, they don’t care who is providing it i.e. whether it is a payment provider, social media or e-commerce provider; it may not be a Bank. Today the telecom providers are giving you a chance to buy many things like a coffee or a lunch, why then should you bothered about using a bank. So you can use your phone pre-paid balance which is already working in many countries like M-Pesa in Kenya, Paytm in India and several platforms in China like Alibaba. So I think the ability for you to be able to make payments in your daily life is the first pillar of Fintech. I should be able to do all my transactions easily, seamlessly and therefore lots of Fintechs have built payment modules and interfaces to provide that experience. Banks need to compete and have also started offering technology capabilities to make payments easily using phone apps, chat apps and now early stage voice apps. This is important as people will keep money where they can easily use to pay for daily services. Banks need to make that experience simple and relevant otherwise money will go to where customers experience least friction.
The second pillar is where every human being whether they are earning a salary or is a businessman has a need to save money. Whether he keeps his money in a wallet or a bank account or a mutual fund. They must feel they trust the bank where they save and so this area is where Banks have the edge as they have history, safety and a brand that the customers trust. Savings is needed because there are certain payments in life you have to do at certain stages, whether it is your bills or something bigger like buying a house or a car. So this second vertical is about savings and wealth. How can I improve the ability to save in such a way that I can deliver my cash-flow for my business or my personal life, or the wealth that I can generate that will take care of my pension needs and certain payments at various stages in their life.
The third Pillar is about borrowing/lending. You have to borrow certain things in life at certain times, whether you borrow for a bike, car or whether you borrow for a fridge in the house or for a house, along the way there is a need for a customer to borrow. Our ability to allow customers to borrow at the right time is crucial. You have to understand the customer needs unlike banks that have treated it as a transaction. The only way a good customer becomes bad if you lend him more than he can pay. Whether you are eligible to take a loan or not, the Fintechs are making that credit assessment in minutes. Fintechs are enabling you to get the best possible loan deal contextually at the right point in time. Whoever is giving you the money is not relevant, what is relevant is that you want the money at the right time for the product that you are buying easily and without any friction. And that attitude, behavior and logic will define lending in the future. Here the AI and use of data of the customer, social & marketplace data is vital. Banks have a lot of data and do not use it efficiently. They will have to as data is the new oil in this “information age”
The fourth pillar is that every human being needs security. He takes insurance for his health, car, life etc. If something goes wrong, the needs will be taken care of. So that’s the fourth vertical, how do we develop the capability to provide security services to a client from a financial services perspective will be important; thus these four pillars make up Fintech effectively.
There is a fifth pillar, which is relevant to all, is the regulatory pillar, they call it Regtech. Regtech is also aiming that in the new world we need to deliver privacy, security, cyber security, regulatory reporting. This is to be controlled so we are not misusing peoples’ information for wrong purposes like we have sometimes seen happening. This is necessary in the “open” environment of Fintech.
So going back, this evolution, this journey, whether it is from the channels what we call digital-outside or it is the Core Banking digital inside we must ensure there is a superior customer experience so that the client has the right product at the right time.
You say you are “leading the modernization of the largest bank of Bangladesh- Sonali Bank Limited along with Rupali Bank Limited “ How much of this modernization is automation? Explain in which areas your technologies help achieve modernization?
That’s a good question. Firstly, just to clarify, we do a lot more work for Sonali here than in other geographies. But to your question of how we are modernizing them, I think every bank just like I explained has moved from manual to automated processes. Automation is that everything is more paper-less, more straight through. And all the pillars of Fintech I told you earlier will be the future. So how do we take them from the first step of automation to the next step that is to be able to provide all what I have been saying above on fintech solutions; digitization of operation processes, reducing the cost of operating the banks. Worldwide banking costs have gone up a lot and there is pressure on revenues because customers are moving services like to other providers that may not be a bank. Improving credit decisions using data and AI capabilities to manage risks and controls is the other area of modernization that will be critical.
In many countries there is hardly any interest earned because the rates are so low. So customers put money in a crowd investmen where the fintech uses this crowd funding to decide using new tools and data to give loans and give a better return for their money which earlier was made by the bank. It is like I become a small bank with my money, which may be just one lac Taka, but I can get a better return on one lac Taka than keeping money in any bank and I am willing to give upto 5,000 Taka to 20 people for a loan. And as long as those 20 people are evaluated by a good operating and credit-risk model, there is very little chance that will I lose money. Then to top it off the people doing this kind of lending will give you security to ensure that you don’t lose the money by way of an insurance. So there are many new and different models, therefore you have to believe that the customers will use banking services but may not need to do it at a bank, or they don’t care who the bank is or it doesn’t matter to them. And to some extent, the money they have saved is secure, whether it is insured by the government, in most countries the money invested in Fintech savings is covered by the government’s local insurance scheme. So as long as that’s covered, they don’t have any problem and they feel comfortable that they have safety and what is kept for safety and what is earmarked for earning and what risk they are willing to take. The point is that various fintech models are evolving.
And the architecture and technology like I explained to you on the cloud and the data, the ecosystem all get together like a puzzle to work for the customers benefit. That’s how you have many successful banks going very far because they delivering those experiences better. Big banks struggle to make their modernizations work and we therefore partner with them and in this case we have partnered with Sonali. It is not limited to Sonali, any other bank in Bangladesh who wants to modernize can be partnered with. There is belief that when you come in later you can skip some generations and get the latest & the best. As an example in India, there was a time we could not get a phone connection for years because you had to apply and there would no lines etc. Then suddenly the mobile networks came and we jumped a few generations, and everybody at every level got a mobile service. And because they have a mobile, they have a whole new bunch of services that they could not avail earlier. This an digital automation journey..
Bangladesh doesn’t have an ecosystem to support automation to the level of developed countries (lots of records aren’t digitized, etc). Talk about how much is possible using tech that companies like you provide.
Good question actually, because like I was saying earlier, a lot of what you can do is possible if the infrastructure lets you do it. I think there is two ways to look at this. One way is, can it be done? The answer is absolutely yes. Is it done? The answer is also yes. Now the question is, how do all the stuff we want to do along with the banks here and along with the banking regulator, how can we get together and push the change to happen? Who is going to make the change happen? It is not only in banking, I am sure change is happening in every industry. How do you make it happen? I think the leadership of the organization, the association, the people, the millennial, the demand they have, creating the environment of competition where people can compete, providing the right licensing for competitive neo banks to come in with different models of operating will wake up the existing banks. So all of this has to get itself together, can it be done? As I said, absolutely yes. Can it be done faster? Absolutely yes. It will be faster than yesterday because new and newer technology is making everything much quicker.
If you see statistics round the corner, you are a large country but there is one larger country beside you. As far as digital India goes, they have put up 300 million new accounts in two years and guaranteed every single account holder insurance and medical if they have a bank account. They have created a payment corporation today where more transactions are done by email transfers to each other, what we call Unified Payment Interface (UPI) than any other way, to the extent that the old, traditional Mastercard and Visa are actually losing business and making a lot of noise because as a percentage of payments is becoming less and less relevant. And that’s the fact. Today you will see Mastercard saying that it is a technology company what used to be a card-processing payment engine making money on each other’s bank interchanges or transactions. So as far as Bangladesh is concerned, where is this whole thing going to come together to make that big change possible. I think that’s where we can help in facilitating that leadership, it is not like you only have to come to us, you can go to lots of people, but we are committed to focus on Bangladesh to make that happen.
Each infrastructure is different, the transaction example I gave you which is the first vertical of Fintech needs very good payment-switching, payment engines and payment supports, bill settlements and so on. That is one type of infrastructure. But today, many markets can be developed in Bangladesh if there is focus. The will and focus needs to come from leadership. Similarly, on the lending side, the infrastructure, the credit bureau, the credit quality, the data quality, both structured and unstructured data that the banks have and the data the banks don’t have. So how do we take the entire infrastructure to take decisions better for lending? Wealth on the other hand has got to do with the infrastructure of the capital markets, how the capital markets operate, how they are controlled, how the mass people can save money at different levels of risk in the capital markets that can further spur the economy.
So when you say, can this infrastructure happen, I think each area is a different kind of structure in each vertical to help the customer live a better life, just like the infrastructure for buying e-commerce versus buying face-to-face, it has changed in many markets, then, for that you need the ability to have the right infrastructure to be able to deal with logistics, to deliver the product quickly, so on and so forth. And frankly, many other things matter. You can buy a car but if don’t have the roads, what can you do? How can I change the way I drive if I can’t move around? So you need the roadworks, but who is going to make that road happen? Who is going to build that pipeline? Who is going to build that track? All of us need to put our energies together to make that happen, otherwise it will not happen. Only other thing is the road takes time to build but this technology can be built very fast, the capability is there, you just have to plug-in and play.
Do you have MFS products?
Let’s explain it like this, if I come on the mobile, or I come on the internet or I come in a branch, I should be able to provide you similar services, which are what people refer to as omni-channels. There is also a term that people use called omni-digital. Omni-digital deals with digital channels, it does not include branch and all that. Think of it like a Netflix model, right, so I start on my i-Pad and I continue the same program on my other devices. Secondly, when I go to Netflix, it tells me this is what you have viewed and here are some suggestions for you. Similarly, when I get into a bank website, it will tell me about suggestions, what is the better product for me, what is more tailored to my needs? So all that intelligence put together is what needs to happen. When you say mobile financial services, I should be able to provide you everything you want to do in a mobile. I also took next generation of intelligence and data and all that put together to answer that question for you.
There is a lot of progress in some markets where they don’t look at bank accounts the way we look at bank accounts. Bank account has been a place where you get an inflow and an outflow. If you have more digital banks around, the more relationships you have, not just banks, you may be borrowing from a merchant bank, you might take a credit card from another bank. Your bank accounts will be different, your wealth provider will be different, and your insurance provider will be different. I need to consolidate all these and show you your cash-flows, can you get your position in all inflows and outflows in one place. Those who have multiple relationships with financial services don’t have a picture of that, it is called personal financial management, and it comes through the mobile, and through the internet. But it actually takes the aggregate of all your expenditures and all your incomes, whether the income comes from dividend, salary etc. So it knows all the inflows and outflows and it helps you manage your cash.
We have the platforms and partnerships, when I say partnerships we also have to realize in this new world that you can’t do everything; you need to tie up with other Fintechs to be able to provide solutions where the business model is concerned. So there are a lot of interesting partners; one of our partners will help you aggregate this. Now the regulator will not allow you to aggregate but in the new world of open banking you can actually aggregate information from all banks with customer consent because it is helping the customer manage his cash-flow. And that’s the objective of banking. From a regulator perspective, the objective is not for banks to make money but to help the customers fulfill their banking needs. So I think we are re-stacking the way financial services are being operated.
This does not concern you strictly, but are you worried by the situation in the banking sector in Bangladesh (because of enormous NP loans)?
See it is like this, every country is going through an evolution, right? There is this similar NPL issue with certain types of banks. But you got to ask yourself: what is the core fundamental issue? How I am going to fix it right? Are you giving credit to the wrong people? Are you lending to people more than you should lend? Not lending is not the answer because you want to keep the economy going. You got to lend appropriately, correctly and is some cases you may be lending to people who will never be able to pay back to you so might as well give them a subsidy. There is no harm and the world is moving to some kind of a standard basic income. That whole model has to be looked at in detail and inefficiencies eliminated. New Fintech models removes those in-efficiencies.
So I think the important thing is, obviously one should be concerned about high NPL but one really needs to figure out how I am going to fix this, am I going to have better bankruptcy rules? Am I going to have a way to ensure that misuse of money is understood; the reason for misuse is understood. Most people generally take money because they need it and they try to honestly pay it back. But there is a large group of people who take money with no desire to pay it back and are trying to misuse the system. Identify them and fix that issue rather than structurally impact everything. So everything has to be thought through with an analysis of what is the underlying issue and how can I eliminate that issue, how can I stop misuse and at the same time ensure the economy continues to move forward. The good thing about Bangladesh is that the economy is moving forward very well and at the same time there will be other challenges. And guess what, in today’s day and world, there is technology solutions to each of those challenges provided we sort of dissect them and use some design-thinking type mindset to be able to understand the problems and then fix them.
What’s ahead for Sonali Intellect? Talk about future plans etc.
So you know it is an exciting time for financial services. It is a very exciting time all over the world because on one hand you have a lot of new banks, new infrastructure. A lot of relatively young people in certain markets including the positive demographic equation in Bangladesh, there are a lot of young people; they are looking for ways to grow their businesses or whatever they do. So at this exciting time with new technologies and new ways, in which financial services deliver services to customers, whether it is social media, e-commerce or traditional banking, the banks have the customer base, they have the data, they have the information, they have the trust. How to connect all of that strength along with the needs, that’s the new world order, to be able to provide solutions. So as far as we are concerned, we will continue to modernize the architecture that is needed to excel in Fintech. And that’s what we refer to as progressive modernization. We also believe that the concept of doing a big one-shot conversion is a multi-year event sometimes causes a lot of issues, so we need to do that in a progressive way.
We have today the capability and technology to do that in a progressive way. I think the journey, for that road map, we have to work with the banks for what we intend to do. And at the same time you have do that when the rails are there so that you don’t do something that can never be used. Technology for the sake of technology doesn’t matter, if it doesn’t impact the customer. And I think there is another big challenge, it is probably one of the bigger challenges we have to learn to deal with. The old way of working, which we call the cultural mindset of the past, along with the new way of working, which is with a different millennial mindset, we can see that often the old mindset overpowers the new one. So the ability to have a separate track of young millennial driving forward the new way of financial services, banking is going to be crucial for the success of the banks. How the old mindset will co-exist with the new one in a traditional banking environment, this is where the challenge lies. That is why I would like to mention the advent of challenger banks and digital banks. Challenger banks and digital banks work for an existing large bank but with a different culture of operating, both technically as well as business-wise. That will be a massive opportunity for an organization going forward.
