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'Micro finance sector poised for huge growth'

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CIOL Bureau
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BANGALORE, INDIA: Cisco continues to dominate the Indian BFSI sector with its myriad solutions that offer good business growth opportunities to banks and other finance institutions in the country. The company is now planning to foray into the untapped Indian micro finance sector, where it sees a tremendous scope for growth.

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In an interaction with CIOL, Parag Arora, vice president, Banking and Financial Services, Cisco, talked about the various offerings to the BFSI sector and the overall market growth, etc. Read on:

CIOL: The BFSI sector in India is fast growing and Cisco has made a foothold in this segment. What are the company's plans to retain this dominance?

Parag Arora: BFSI is one of the fastest growing segments for Cisco in India. As per research reports, the IT services market for the BFSI industry is expected to grow at a CAGR of 14.2 per cent from $1.6 billion in 2009 to $2.7 billion in 2013.

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Cisco’s position as a trusted technology partner is quite strong in this segment with almost 95 per cent of all financial transactions in India running on Cisco powered technology. Consistently, Cisco has emerged as the most preferred solutions provider by financial institutions. With our mission-critical data center networks, we have already connected over 70,000 bank branches.

Also read: After years of buying Cisco may need to sell

The top reasons for BFSI to spend heavily in IT are:

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New set of clients - The emergence of a new set of tech and social media savvy (Generation X and Y) clients.

Financial inclusion - Banking the unbanked in the remotest parts of the country.

Compliance and security - Innovative solutions still need to meet stringent compliance and security guidelines.

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Increasing pressure to be profitable - Enhancing efficiency and driving productivity while increasing customer wallet share by up-selling and cross-selling.

While there is a need for banks and other financial services institutions to help achieve complete financial inclusion by ensuring access to financial services to the unbanked, they also need to provide next generation services and solutions to the tech-savvy and social media-savvy Gen-Y customers.

New technology architectures like Borderless Networks, Virtualization and Collaboration enable organizations address the opportunities and counter challenges, in a more holistic and efficient manner with improved security and compliance.

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With the move to architectures, Cisco has made the transition from being a networking infrastructure provider to becoming a key technology partner for organizations by devising industry-specific solutions.

CIOL: What are Cisco's offerings to the retail banking industry?

Arora: Most banks today realize that voice limits their work horizon and are hence migrating to a Unified Communications (UC) model where collaboration technologies unlock new avenues for conversations with their customers. Cisco has been at the forefront in enabling many retail banks with UC as a cost-effective service offering.

Also read: Cisco networking cos deal with more bad news

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Security is another important aspect for retail banks. We offer ‘Cisco Physical Security for Retail Banking’ which combines video surveillance, access control, incident detection and response into a comprehensive solution over the IP network.

The most recent example of a major deployment in the BFSI industry is the implementation of a Wide Area Network (WAN) Optimization Solution for the branches of United Bank of India (UBI). This was the largest implementation of its kind globally for a public sector bank which utilized more than 1,600 Cisco Wide Area Application Services (WAAS) devices.

These devices were deployed individually at UBI’s branches along with application accelerators for the data centre and disaster recovery sites solutions. By accelerating application traffic over the WAN to provide local hosting of branch-office IT services, the deployment allowed IT departments to centralize applications and storage in the data centre and enabled effective use of video-based conferencing and collaboration solutions.

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With the deployment of the WAN solutions powered by Cisco, the UBI noticed a three-fold increase in the overall speed of individual transactions across the 1600 plus branches. It helped the branch reduce costs related to server hardware, maintenance and administrative tasks.

The emergence of the Gen Y set of consumers who often prefer to consult social networking and other online sites have had a tremendous impact on retail banking institutions. As a result, many retail banks have already started to offer a diverse range of services based on the mobile and Internet platform since these consumers have a wide choice in terms of service providers, which could lead to low loyalty levels.

Since customer satisfaction remains a critical factor for the success of retail banks, they can reduce the average turnaround time for a transaction with the adoption of technology architectures in the form of collaborative, video conferencing and security solutions, and easily attract new customers.

Some of our customers in the retail banking space are: HDFC Bank, State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India, IDBI Bank, ICICI, Vysya Bank, United Bank of India and YES Bank.

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CIOL: What is meant by Cisco’s 'Branch of the Future' architectures?

Arora: Branch of the Future is a concept that enables head-office like efficiency and cost-effective operations at a branch office itself. 'Yes Bank' was among the first to deploy this concept in its branches to securely extend business applications.

Branch of the Future has been designed to optimize branch offices of all sizes, allowing companies to customize branch networks to meet their unique business needs and address the need of financial institutions to differentiate from competitors by providing superior services that customers expect and demand.

The solution improves security, regulatory compliance, application integration, and manageability by applying the power and intelligence of Cisco’s network infrastructure. It helps in the creation of a transcending level of consumer experience at the branch with the use of Cisco enabled IP phones, touch banking, multimedia collaboration banking, RFID and customer engagement solutions.

The Branch of the Future solution encompasses:

Self-service- Convenience Banking: Non-cash self-service terminal, using the Cisco IP phone. Customers can swipe their cards on the IP Phone and instantly use the non-cash transaction service.

They can also connect to the contact center directly via the application, should they encounter a problem.

In this solution, a touch-screen Cisco IP Phone tied together with an ATM debit card scanner and a thermal printer, serves as a Cashless Banking Transaction Kiosk that can be easily deployed in an ATM or a branch office.

This promotes efficient management and prompt delivery of customer requests by migrating cashless transactions to an alternative channel, thereby reducing customer’s waiting time for a transaction.

Premium Banking - VIP Identification and Greeting: Customers carrying Radio-frequency identification (RFID) cards are identified while entering a branch. Application-Oriented Networking (AON) technology then instructs surveillance cameras to take the customers’ picture based on which the customer profile from the Customer Relationship Management database is pushed to the Customer Service Officer (CSO) mobile tablet PC and the branch manager's IP phone.

Personalized Multi-media Marketing: When a customer carrying an RFID card moves near an HDTV that also has an RFID reader, the AON picks up the customers profile and requests DMP to play a personalized marketing video. This helps the bank cross-sell its new products which suit the customer’s financial portfolio.

Remote Consultation and collaboration with the virtual banker for effective Cross-Selling: The CSO serves the customer anywhere within the branch. When a specific product expertise is required, the CSO locates the best Subject Matter Expert (SME) with the help of presence service and then connects the customer to the SME located in the HQ/other branch using video intervention. The SME can then share information with the customer in real time.

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CIOL: What are Cisco's plans for the micro finance industry in India?

Arora: We are definitely interested in the segment and will work with them with a strong focus on cost-effective technologies since we foresee a major demand from financial institutions to bank on our networking capabilities for achieving financial inclusion. Micro finance lending institutions are doing a good job in lending and they would require more handholding by regulatory bodies so that all sections of the society profit without exploiting anyone’s interests.

We believe that the Indian micro finance sector holds a tremendous scope for growth as the number of people without access to basic financial services is pegged to be more than 600 million. They can work in tandem and in many cases supplement major financial institutions towards providing access to financial solutions.

It will make sense for them to adopt technology to streamline the entire process since technology will enable them to gear up to the challenge of reaching out to the unbanked in the most cost-effective way.

Another solution that will help financial institutions in their goal to achieving complete financial inclusion is Cisco Bank-on-wheels. It is an innovative solution enabled by Cisco’s compressed video technology that requires minimum bandwidth for communicating with the central server.

Bank-on-wheels simulates the functionality of an entire bank branch in a bus and gives banks the flexibility to test a market before opening up a branch in remote or rural areas. With its ability to offer all the services that a normal bank branch offers to consumers and even offer other core banking products like expert advice, it helps banks to enable access to financial services even in rural areas.