Embracing the Future: Insights from Razorpay's CTO & Head of Engineering on the Role of Big Data in Digital Banking

Murali Brahmadesam shares his vision for digital banking technology, customer experiences, and the cashless revolution.

In an era driven by rapid technological advancements, digital banking has emerged as a transformative force in the financial sector. To delve into the future of this dynamic industry, In an interview with Murali Brahmadesam, CTO & Head of Engineering at Razorpay, a deep understanding of the intersection between technology and finance, Brahmadesam shared his insights on various aspects, including the potential of big data, customer experiences, the path to a cashless future, and the role of open banking and banking-as-a-service technologies. Join us as we explore the fascinating realm of digital banking and discover how big data is shaping the landscape for both banks and customers alike.

Excerpts:

In your thoughts, what does the future hold for digital banking technology?

From what we can see, both India and the world are increasingly embracing digital inclusivity. The rapid emergence of neo-banks is a testament to this fact, and according to reports, the digital banking space is poised to increase at a compound annual rate of 23.1% from 2022 to 2030. This indicates a paradigm shift that is characterised by innovation, especially in the mobile payments and digital wallet space.

Keeping this growth trajectory in mind, it is important to note that big data plays a crucial role in gaining insights into customer behavior and managing risks in digital banking. Some of the key trends that we feel will shape the future of digital banking technology include increased personalisation, a seamless omnichannel experience, and extended reach to underbanked populations. Additionally, the integration of AI will be automating several tasks, thereby, leading to improved customer service and the enablement of accurate financial predictions. Security measures, meanwhile, will focus on biometric authentication and encryption to address cybersecurity threats. Mobile functionality will continue to advance with features like mobile check deposits and voice-activated banking. Collaboration between banks and fintech companies will be a step forward in revolutionising India’s financial landscape, expanding services to cater to diverse customer needs. The growing support from Indian regulatory bodies in creating a favourable environment and frameworks for banks and fintech companies has also ensured the security, integrity, and stability of digital banking services in the country.

How are banking leaders reshaping customer and employee experiences with their approaches, lately, especially in sync with technology?

Leaders in the BFSI sector are realising that technology can serve as a catalyst for change. This is apparent in the way that technology has been revolutionising customer and employee experiences for the industry. To facilitate this, banks are utilizing technology to digitize customer experiences, offering personalized and seamless services like mobile banking, online account opening, and 24/7 customer support. They are investing in emerging technologies such as blockchain, AI, and machine learning to transform their operations and remain competitive within the industry. Additionally, given that security and regulatory compliance are paramount, they have taken to employing advanced authentication methods, real-time monitoring, and data encryption.

A direct outcome of this interplay between technology and the banking space is that employee productivity is improved through automation, chatbots, and data-driven insights, allowing for more valuable tasks and enhancing customer experiences. Moreover, banks focus on the employee experience, utilizing technology for better training, collaboration tools, and work-life balance initiatives, resulting in higher engagement and retention rates.

Are We Heading Towards A Cashless Future? How Will Banks Use Big Data In A Cashless Society?

The shift towards a cashless future is becoming more evident as digital payments gain momentum. Mobile payments and digital wallets are options that are increasingly favoured, especially in developed economies. The COVID-19 pandemic has accelerated this trend, driving online shopping and contactless payments even further.

Banks are increasingly recognising the importance of big data analytics in understanding and serving their customers effectively. By leveraging big data, banks will be equipped with valuable insights, make real-time decisions, personalize marketing campaigns, assess risks, detect fraud, and optimize operations for improved efficiency and customer service.

Analyzing transaction data, for instance, enables banks to identify and address bottlenecks, enhancing efficiency and customer experience. With the increase in digital transactions, banks can gather data on consumer behavior and preferences to develop insights into customer needs and tailor their products and services accordingly, which can fuel product innovation and open up newer market segments. Big data analytics empowers banks to make data-driven decisions swiftly, detect and prevent suspicious transactions, target personalized marketing efforts, assess risk accurately, and gain insights into market trends and customer sentiment. By optimizing operations through big data analytics, banks can streamline processes, reduce costs, and maintain a competitive edge in a rapid and consistently evolving ecosystem.

How are open banking and banking as a service (BaaS) technologies helping consumers in Tier-3 and Tier-4 cities?

Consumers in Tier-3 and Tier-4 cities stand to gain significantly from open banking and banking-as-a-service (BaaS) technology. It gives them access to a range of financial services, improves their banking experience, and brings them under the ambit of India’s digital journey. UPI, for instance, completely changed how India used digital payments, bringing users from the remotest regions of the country into the fold of financial inclusivity.

Furthermore, BaaS has empowered users in these regions by simplifying account opening, providing enhanced payment solutions, offering personalized financial services, and supporting financial education and empowerment. These technologies enable collaboration between banks and fintech companies, leading to innovative offerings like digital wallets and investment apps. They also facilitate streamlined onboarding processes, making it easier for individuals in Tier-3 and Tier-4 cities to open bank accounts. Seamless and secure payment solutions, tailored financial services, and educational resources further equip consumers with financial inclusion and knowledge.

With accessibility and agility as its goal, BaaS has created relevant touchpoints for consumers across the country, ensuring that banking convenience is available to them at their fingertips.

The opportunity that Razorpay sees with growth in Generative AI and blockchain in the banking space

As India’s Leading Full-Stack Payments and Banking Platform, Razorpay is likely to explore the potential of generative AI and blockchain. Generative AI can be utilized for fraud detection, personalized customer experiences, automated customer support, and innovative product development. On the other hand, blockchain technology can enhance security in payment processing, offer transparency and accountability to customers, enable faster cross-border payments, and reduce transaction fees and settlement times. The use cases of Generative AI are a testament to the paramount impact it has in the broader financial and banking landscape.

How banks are leveraging data analytics to build personalised solutions for customers?

The way banks are interacting with their customers is evolving rapidly, fuelled by the integration of technology. Banking leaders have adapted to the changes brought about by data analytics, utilizing it to ensure that their approach is customer-centric and holistic.

To put this into perspective, banks can essentially utilize data analytics to create personalized solutions for customers, employing techniques like customer segmentation and tailored product recommendations. They leverage this data to develop targeted marketing campaigns and improve risk assessment for credit scoring and fraud detection. Data analytics also enhances customer service through personalized support and AI-powered chatbots. Overall, data analytics empowers banks to better understand their customers and provide customized experiences.

Is the role of big data in managing compliance risks better?

The overarching BFSI space, like many other related industries, is incredibly complex and subject to regulatory developments and compliance. However, organizations can leverage big data to obtain insights and spot potential compliance risks and violations by analyzing vast amounts of data. It enables businesses to track and examine both structured and unstructured data, including financial transactions, regulatory filings, and market trends. Companies can, as a consequence, identify patterns and potential compliance violations through a comprehensive analysis. This helps them to reduce compliance issues before they escalate.

• Data Analysis and Monitoring: Big data analytics enhances compliance risk management by analyzing vast amounts of data, enabling efficient identification of patterns and potential risks.
• Early Warning Systems: Utilizing historical data and market trends, banks can develop early warning systems to proactively detect emerging compliance risks.
• Real-time Monitoring: Big data analytics enables real-time monitoring of transactions, allowing prompt identification of suspicious activities and potential violations.
• Automation and Efficiency: Big data analytics automates compliance processes, improving efficiency and accuracy in data collection, analysis, and reporting.
• Predictive Analytics: By leveraging historical data and external factors, predictive analytics helps banks anticipate compliance risks and adapt to regulatory changes.
• Enhanced Audit and Investigation: Big data analytics facilitates thorough audit and investigation processes by analyzing transaction data and identifying irregularities or non-compliance issues.