Infosys Finacle exec Rajashekara V. Maiya on AI's growing role in banking  

In today's competitive banking landscape, the demand for comprehensive digital strategies, from customer interaction to backend operations, is more pressing than ever. Infosys Finacle stands out as a firm providing digital banking solutions, partnering with both emerging and established financial institutions to drive their journey of digital transformation. 

In an interview with TechCircle, Rajashekara V. Maiya, VP and Global Head of Business Consulting at Infosys Finacle, discussed how artificial intelligence (AI) is reshaping digital banking, the challenges financial institutions encounter when adopting new technologies, and more. Edited Excerpts: 

How has your tech journey been, and what technologies do you use in your services for financial institutions?

Infosys Finacle is a leading banking solution used by banks in over 110 countries. It caters to various banking segments, offering solutions for deposits, lending, trade, wealth management, treasury, and Islamic banking. 

Finacle supports mobile, web-based, and social media banking, including WhatsApp, and handles real-time, corporate, and peer-to-peer payments. It is cloud-agnostic, compatible with AWS, Azure, Google Cloud, Oracle, and IBM, and supports open banking and financial transactions. 

Recognised as a market leader, Finacle powers the world's largest core banking system with India Post, managing over 155,000 branches, 200,000 users, 500 million customers, 700 million accounts, and 50 million daily transactions. 

Finacle runs on the latest technologies, including Java and JSPs, with Oracle databases and operating systems like Linux and Unix. It is industry-neutral, allowing banks to choose their preferred technology stack. Banks can deploy Finacle on any cloud platform based on their regulatory compliance and regional vendor availability. 

How is AI transforming banking?

AI encompasses a variety of capabilities, including robotic process automation (RPA) for efficiency, machine learning for understanding customer and branch transactions, and natural language processing (NLP) for services like voice banking and multilingual customer support. The banking industry is leveraging AI and Generative AI to innovate and improve services. 

Banks are increasingly using RPA to automate routine activities and financial transactions, reducing the need for manual intervention. This automation extends to customer-facing services, allowing for seamless, efficient transactions without needing to visit branches or spend much time online. 

Machine learning is crucial for detecting and preventing fraud by analysing transaction patterns and behaviours. For instance, if a customer's transaction history is limited to a specific area and a transaction suddenly occurs in a distant location, AI can flag it as suspicious and alert both the bank and the customer, enhancing security and protecting privacy. 

NLP advancements enable more sophisticated voice banking, allowing customers to authenticate, authorise, and perform transactions using their local languages. This technology translates and processes customer requests in real-time, improving accessibility and user experience. 

While still developing, AI’s role in banking is growing, promising more automation and enhanced customer interactions. As technology advances, its applications will expand, transforming front, middle, and back-office operations in banking. 

What are the biggest challenges banks face when integrating AI, and how do they address them? 

One of the biggest challenges banks face is raising awareness and educating people about AI. Many fear that it will take away jobs and reduce human involvement, but that's a misconception. Banks need to understand AI's capabilities and what it can deliver. Educating everyone from entry-level employees to top management is a monumental task, especially as the technology and its use cases are constantly evolving. 

Banks are increasingly interested in AI's potential, but they struggle to see how to effectively integrate it due to a shortage of trained AI experts. AI relies on vast amounts of data and requires thorough testing before implementation. Use cases vary by region: in the West, AI often aims to improve efficiency and productivity, while in developing economies, it focuses on preventing fraud and cybersecurity threats and educating customers on AI's benefits. 

A positive development is the widespread adoption of chatbots by many banks. These chatbots, using natural language processing, handle customer queries effectively by drawing on past interactions. While this technology is maturing, banks still need time to develop and apply more advanced AI use cases. 

How does your company address security challenges in digital banking transformation? 

Security is a journey, not a destination. No bank or vendor can claim to be completely secure as technology continually evolves. This means both opportunities for improvement and threats from hackers are always growing. 

We emphasize the importance of educations and awareness for our clients and their customers. Security relies on three key factors: what you know (passwords or PINs), what you have (cards or mobile devices), and what you are (biometrics like fingerprints or facial recognition). Implementing multi-factor authentication (MFA) using these factors significantly enhances protection against breaches. 

Global and Indian regulations, such as GDPR and the Digital Data Protection Act, are evolving to safeguard customer privacy. We advise banks to tightly control access to customer data, ensuring only authorised personnel can view or modify it. This conservative approach helps prevent data breaches. 

Every action on customer data should be verified by a higher authority to maintain accurate records and audit trails. Sensitive information, like mobile numbers and email IDs, should be masked and only accessible on a need-to-know basis. Finacle provides the tools for banks to configure these security measures, ensuring customer data is stored securely and protected from leaks. 

Besides security and AI, what other technologies do you think will impact banking in the next five to seven years? 

Many technologies are still evolving and in early adoption stages. I'll focus on two relevant to banking. First, distributed ledger technology, commonly known as blockchain, is becoming crucial for banks. It's highly secure, requiring extensive authentication, and is built for distributed use. Blockchain’s consensus-driven mechanism and immutability ensure data cannot be altered without agreement, making it ideal for customer data protection. In India, banks are experimenting with blockchain for trade finance, aiming for secure, transparent, and cost-effective transactions. 

Second, cloud technology is set to revolutionise global banking operations. With lower net interest margins and negative interest rates in some countries, moving to the cloud can significantly reduce operational costs. Cloud technology offers scalability, crucial for handling the growing volume of real-time payments, such as India's 14 billion monthly transactions. This scalability ensures efficiency and cost-effectiveness per transaction. 

What is your vision for the future of digital banking, and how is your company preparing to lead in this space? 

We believe technology enables and catalyses progress in banking. Our vision is to inspire better banking by helping banks innovate, engage, operate, and transform more effectively through advanced technology. 

To innovate better, banks should leverage both organic growth and ecosystem integration. Our capability to expose application programming interfaces (APIs) and unify ecosystems supports this innovation, both internally and externally. 

Engaging better means understanding customers deeply, interacting with them effectively, and providing superior experiences. This includes empowering customers with self-service options and ensuring secure transactions. 

Operating better involves enhancing efficiency and improving return on assets and capital, despite lower interest margins. We support this through automation, efficiency improvements, and implementing advanced technologies like robotic process automation across all banking operations. 

Transforming better requires adapting to continuously changing technology, customer expectations, and regulatory demands. We help banks transform holistically and progressively with up-to-date technologies in cloud computing, AI, and improved user experiences.