Guruprasad Gaonkar

Banking on resilience in recovery mode

By Guruprasad Gaonkar, JAPAC SaaS Leader – Enterprise Resource Planning & Digital Supply Chain at Oracle

We are witnessing unexpected and dramatic changes in the banking industry. On top of stiff competition from new digital challengers, traditional banks are now being forced into a digital-first business model as they have had to shut down branches for an extended period due to strict social distancing measures implemented by governments worldwide.

In order to remain relevant and continue to serve their customers, banks — including digital banks — have taken on the responsibility that helps address their customers’ needs from an economic point of view. In Singapore, where SGD4 billion in loans are being distributed to SMEs to help them overcome economic shocks to their business, banks are digitizing their loan application processes to ensure funds can be disbursed to customers in as little as a week. 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.

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Building 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 organizational and operational changes to help keep pace with customers’ needs and stay ahead of the recovery curve.

Traditionally, banking 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’re simply unable to deploy the right remote-working architecture overnight because it’s just not how their systems have been set up.

Once thought to be more secure and stable, the decentralized 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 digitize 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 business continuity plans.

Digitizing operational processes

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 decentralized approaches and disconnected systems. This represents a shift in CFO’s mindsets because banks are now starting to rearchitect their core finance processes and explore remote capabilities that benefit its business and ultimately customers.

For example, Asia Commercial Bank, one of the largest retail banks in Vietnam, deployed Oracle Cloud Enterprise Resource Planning (ERP) to streamline its finance, procurement and project expense management processes. As a result, the bank has been able to accelerate its month-end close and reporting cycles by 50 percent. Moving to the cloud also meant it no longer had to manage these applications in its own data center, which minimized the need for employees to be on-site and enabled the finance team to work from home without any operational disruption.

In another instance, Westpac, one of Australia’s largest banks, leveraged the 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.

Digitizing finance and risk functions

The current levels of uncertainty have caused banks to turn to scenario planning and strategic modeling to assess a wide array of possible outcomes, forecast revenues and liquidity, and make iterative short- and medium-term forecasts.

Technologies like Artificial Intelligence (AI) and Machine Learning (ML) that are embedded in cloud applications play an important role when it comes to delivering accurate measures and risk controls. This provides bankers with the opportunity to accelerate their strategic insight capabilities so that they can make better decisions, drive innovation, and gain a competitive advantage.

Building resilience in the new normal

The world is changing and no one can predict what’s going to happen. However, change is becoming a constant and banks need deeper changes to emerge stronger from the economic downturn in the coming months. Be it operational or functional changes, digitization is a necessity for businesses to mitigate their impact and build resilience as the economy starts to recover.