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53 Unleashing the Digital Revolution with Sharad: Transforming Banking in the Age of COVID-19 ​

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Podcast with Sharad Part 2



Summary Part 2 with Sharad:

Discover how the COVID-19 pandemic has accelerated digitaltransformation in banking. Join the insightful podcast as Sharad Gupta explores
the remarkable impact on technology adoption, process digitization, and
customer experience. Gain valuable insights on leveraging AI, driving
efficiency, and creating successful transformation strategies. Don't miss this
engaging discussion on revolutionizing the banking landscape through digital

The podcast discusses the impact of the COVID-19 pandemicon digital transformation. Sharad Gupta highlights three key changes: increased
velocity of technology adoption, the strategic importance of digitizing
processes, and the need to focus on cost reduction and customer experience. He
mentions that banks have seen a significant growth in their sales pipelines due
to accelerated digital adoption. The implementation of AI has allowed banks to
redeploy staff for more productive work, resulting in improved efficiency. The
discussion emphasizes the importance of considering digital transformation as a
strategic priority, involving both top-down and bottom-up approaches. Sharad
advises starting small and moving fast, establishing successes on a small scale
before scaling up. The challenge of engaging multiple stakeholders is
addressed, emphasizing the need for clear roadmaps and stakeholder management
to ensure buy-in and excitement for the transformation journey.

[00:00:05] Andrew Liew: Now, the next interestingquestion I want to ask you, you were doing digital strategy work before COVID
19 and after COVID 19, now we have this new Omicron thing. So how has This
pandemic change digital transformation. What do you think?

[00:00:18] Sharad Gupta: Yeah it has changed in all threedimensions.

[00:00:22] Sharad Gupta: The velocity of adoption. It'sno brainer that nowadays nobody is using face to face meeting or face to face
processes. So processes are digitized, has to be digitized that realization
suddenly has come to business people. And that realization is not just in front
end processes.

[00:00:41] Sharad Gupta: This has come across in theprocesses. Risk compliance used to be a boring job and has to be usually manual
sitting in front of computer for 10, 12 hours and working in offices. And now
that so the velocity of adoption has [00:01:00]increased due to multiple factors due to employee factor, due to competitive
pressure, due to cost pressure, you need to be able to work most of the work
digitally without human intervention, right?

[00:01:12] Sharad Gupta: So multiple driver for adoptionof technology. And the proof is before COVID we were, like, before versus now
our sales pipeline has grown many fold. And that's just a proof of how the
banks are adopting in terms of speed. And second part is, it's a strategic
imperatives have come very clear now.

[00:01:35] Sharad Gupta: You have digital banks which aregetting launched. You have FinTechs, payment companies which are coming in.
Their cost base per unit transaction cost is way less. Now, unless you dramatically
lower down the cost, you are not going to win the race, and dramatically
increase the customer experience. So if your payment doesn't get passed through
because you have a money laundering or fraud software, [00:02:00]It doesn't go straight processing, and it takes a few days to pass that

[00:02:04] Sharad Gupta: It's a bad customer experience.What I'm saying is that every processes and digitizing of that processes, many
of them, has become strategic priorities for the bank. So that's the second
point. It's not just a cost game. Or it's a strategic choice bank has to do and
we have seen that bank have started taking that that journey very quickly.

[00:02:26] Andrew Liew: I see. So you mentioned about thespeed of digital transformation, the skill of it and the importance of it. And
give me some kind of a range of numbers so that we can gravitate to for
example, the speed of digital transformation. So before COVID 19 people would
take for example, I don't know.

[00:02:44] Andrew Liew: Like how many weeks or how manypeople to work on manually doing this kind of fraud detection. And then with
COVID 19 suddenly through the implementation of these kind of new solutions,
like what's the impact going [00:03:00] to looklike?

[00:03:00] Sharad Gupta: Great question. Like for exampletypical banks in today's time would have somewhere around, depending on size of
the bank, but midsize bank would have anywhere 100.

[00:03:11] Sharad Gupta: to 300 people looking intotransactions, doing transaction monitoring, name screening, compliance and you
can imagine if those, and that used to be the staff and whenever you have a new
product launch, that volume of people required to do the job tremendously
increases up to thousands. So the volume of alert increases.

[00:03:31] Sharad Gupta: Sometime you have a newregulation, sometime you have a new product launch. Sometimes you have a change
in processes and policy. Now, with AI and adoption, what we are seeing that the
banks are able to deploy, redeploy 50 to 70 percent of those staff in doing
more productive work rather than just looking at the needle in the haystack.

[00:03:53] Sharad Gupta: And that's the impact, peoplehave seen it, and which is making bank and many other [00:04:00]industries to adopt technology and AI especially. At greater speed because it's
no more a fancy thing and something which can just give people bonuses. It is a
real tangible benefit to people and the companies and they are and especially
in Singapore this is I've seen it across many large banks now they have seen
the benefit of in COVID time that earlier otherwise.

[00:04:27] Sharad Gupta: Otherwise the amount of digitaltransaction has gone up it was unimaginable that they would be able to manage
that kind of operational load with that kind of small team. Now they are able
to do because a lot of the heavy lifting is done by AI. And the human
intelligence is used for the right purpose, not for the doing things which
machine can do easily.

[00:04:48] Andrew Liew: Cool. And what about the skill ofdigital transformation? So is it before COVID was like 10, 20% on digital stuff
and now almost like a hundred percent? Is there something like that? I don't

[00:04:59] Sharad Gupta: No, [00:05:00]I didn't get your question.

[00:05:00] Andrew Liew: Sorry. So I'm trying to get thegravity give us some numbers in terms of the percentages of resources that go
into digital transformation before.

[00:05:10] Andrew Liew: COVID 19 and after COVID 19.

[00:05:12] Sharad Gupta: Resources mean like the spendyou are talking

[00:05:15] Andrew Liew: about? Yeah, both the spend andthe time. Just an example, let's say for a bank that I used to look at is that
before COVID 19, they, every year they will do a 20% capex capital expenditure
and maybe also 20% of their payroll time and man hours To increase new
application or innovate after COVID 19 is the flip.

[00:05:40] Andrew Liew: It's almost like 80% of all myresources. If I can digitize and automate using AI, I will do that. So what is
that like gravity number of change that you have noticed? Yeah.

[00:05:53] Sharad Gupta: The same putting finger to thosekinds of number is difficult, but the some kind of numbers, if you want to [00:06:00] see the.

[00:06:01] Sharad Gupta: Total bank spent on complianceused to is gonna touch around 10% of the total bank spending. Now 10% is a huge
number and it is growing around 15 20% year on year and we are not counting on
the the penalties which MAS or any regulator may implant on due to insufficient
processes. So it's a huge cost.

[00:06:25] Sharad Gupta: Risk banks are carrying and ifthey do not divert their significant part of their IT spend on the new
technologies the cost of people and processes will eat up all their margin in
future. So now, right now it is sitting at 10% by 2020. It could be tomorrow
15% and think about on one side you have the high margin business are taken
away by Fintechs and it is constantly getting attacked piece by piece.

[00:06:53] Sharad Gupta: And on the other side, your costis increasing by 10, 15% year on [00:07:00]compliance and regulation. So unless you do very concentrated effort and high
ROI projects There's no chance that you would be competitive with with fintechs
of tomorrow. Wow.

[00:07:11] Andrew Liew: Like you mentioned, it's almostlike an upward trend that has got to be more and more compliance and therefore
just spending 10% every year is not enough.

[00:07:21] Andrew Liew: You just got to keep up and theway to keep up is increase a priority for using digital transformation and
implementing AI, right?

[00:07:29] Sharad Gupta: Yeah. And part of the digitaltransformation. I think, see, there are a couple of piece. One is banks
spending on ongoing cloud adoption. And cloud is, has its own virtues and its
own at certain scale it may have its own challenges.

[00:07:44] Sharad Gupta: But then there is an hardcorepart around how to, even if you digitize the processes, the decision automation
is what takes in knowledge economy is needed, right? Automation is very much
required. And people have seen [00:08:00] thatif they use, let's suppose process automation, process boards or even the first
gen automation tools building apps, is going to give them 5 10% of productivity

[00:08:14] Sharad Gupta: It's not going to betransformative where you need to dramatically reduce the cost 60 70%. And that
can come, what we have seen and demonstrated across multiple banks, can come
only through a purpose built AI. which solve a particular process problem. Now,
it has its own challenges, like how many AI applications a bank can afford, and
how do you manage that scale is another second order and third order problem
which is coming as a result.

[00:08:41] Sharad Gupta: But and there are solutionsbeing built around. But at least solve the big problem, at least solve the your
80% of the problem through those 20% initiatives.

[00:08:52] Andrew Liew: I see like you just described. Interms of yes, there is definitely the first order benefits of using [00:09:00] digital transformation And if not, thecost will eventually eat up all the profit and it's not going to be Competitive
and sustainable now the interesting question is let's say a c suite Leader in a
tech company or a bank.

[00:09:13] Andrew Liew: They Say I get it. I want to dodigital transformation what is the advice? Those hearing that what do you have
to give to them Sharath? I think the main important part is it is around you've
got to do it, do not consider digital transformation as one off thing and IT
spend, right?

[00:09:35] Sharad Gupta: It's a strategic priority forthe bank, and for any company or any institution. Take that as a strategic
priority. No what I'm saying is this...

[00:09:47] Sharad Gupta: So those who take this as aninitiative as a strategic priority, start from the board level and down to at
at the lowest level. So if you have a bottom up and top down [00:10:00] both initiative, and to me, that's astrategic priority. priority, where the sense of urgency is there, both at the
top and bottom, and both the parties are hand in hand working that's what make
a successful digital transformation, especially AI driven transformation,
successful and those who are able to do it, they are able to dramatically
reduce 60, 70% in wherever I've seen in processes, they are able to do it.

[00:10:26] Sharad Gupta: A, do it as a strategicpriority, do B, more inclusive the initiative need to be more inclusive, not
just top down or just bottom up but both, and C start small and move fast,
right? You need not to run multi million, multi country project AI project
without having a success, right?

[00:10:53] Sharad Gupta: So establish a success on smallscale. And then once you see it move fast. So [00:11:00]that's what I, my, my advice would be. On this one

[00:11:04] Andrew Liew: So you mentioned about those whoreally take ownership and really believe in it. They start with the board from
the top down and the bottoms up making inclusive and then also bringing back by
starting small and once it works move fast.

[00:11:21] Andrew Liew: Now. I believe that a lot ofbanks now, they all want that and they all engage I call it subject matter
expertise, which is it could be the company Tokitaki, could be consulting
brands to work together. Now. And a lot of times the challenge is about when
you bring too many stakeholders coming in, things starts to become like very
slow or things starts to become messy.

[00:11:47] Andrew Liew: What is that advice that you willgive for like the banks that they want us to engage different? Subject matters
expert startups or branded consultants to work together including the in [00:12:00] house guys to make things move

[00:12:02] Sharad Gupta: Very good question. Thanks forasking this question Let me try to give a good answer to it Because there is no
silver bullet But what i've seen and i've seen Like organization which are
known big organization very successful organization, I won't name them but very
poor at execution and AI execution.

[00:12:24] Sharad Gupta: On the other hand, I have seenbanks, those who are really not known as a digital natives and really name in
in, in digital transformation or AI transformation. But what I've seen that the
banks who have succeeded, Very clear on the road map. So the role of top guys
is to provide the the clarity and the clarity should not come from consultant.

[00:12:52] Sharad Gupta: Clarity should be on the head ofthe business and they should be clear in the head that this is the path to [00:13:00] go. Now it's their job to convince and toget a buy in from both top and bottom. Unless you so I'm talking stakeholder
management at the head of business is very important. And it's not just opening
PPT and giving presentation on Friday evening with it's more around building that
sense of urgency and excitement, not just the fear, but I've seen like in
banks, which were not really top grade in terms of either number of people,
quality of people, management practices.

[00:13:35] Sharad Gupta: But they were very passionateand very clear that this is a path they want to take, why they want to take. So
why was very clear and how was very clear. Generally, in this area, there are
many questions how. Do you want to make or build? Do you want to, what kind of
technology you use, right? All of those questions are sorted out as a part of
the blueprint, as a part of small [00:14:00]experimentation.

[00:14:00] Sharad Gupta: So team learned. It's not liketop management was not aware. They were very much into the game. And even the
day to day people who are working on floor was also involved. I would say the
common way, common path. emerge that this is a way to to solve their problem
through AI, right?

[00:14:21] Sharad Gupta: And that is the kind of AI youneeded. And now then you look for what is a solution could be from Dukitaki,
could be from any company, but the way which doesn't work is that, Hey, Mr.
Consultant, come give me an advice. And then I will take three year roadmap.
And then I will hire another consulting company or a implementation, a partner
who will implement these.

[00:14:43] Sharad Gupta: I've not seen succeeding there.In fact, with the large, very successful organization, which have been doing
this sort of transformation, I've seen them failing enough. So my learning has
been that people passion on the causes and they should [00:15:00]see that it is almost solving their own problem and they may not be equipped
with all the expertise required for AI, but they know the problem.

[00:15:09] Sharad Gupta: And unless they are involved inthe process yes, it may slow, it may look like it will, it is slowing them
down, but they're buying very important. I

[00:15:19] Andrew Liew: see. So you mentioned about thosesucceeded tend to have leaders who are passionate. So they really care. They
really own this thing. And there's that drive, that sense of urgency to follow
up, to get buys in, and then to rope all these startups or vendors and
consultants in and that really helps.

[00:15:40] Andrew Liew: Now you also mentioned about likebusiness leaders that are clear in their head. They also get it done. .