Navroze Dastur, Regional VP APAC & Managing Director India, NCR Atleos, in an exclusive interview with Asia Business Outlook, shares his views on how financial institutions lead in fostering sustainable financial practices, the rise of Neobanks on customer loyalty, the role of Open Banking and APIs in fostering innovation and more. He has over 30 years of experience in multiple industries, and Navrose is a seasoned leader and strategist in the banking and IT sector.
Open Banking and AI play crucial roles in revolutionizing the financial sector. They also encourage a lot of collaboration, allowing for secure, controlled sharing of financial data between banks, third-party service providers, and fintech companies. This creates an ecosystem where a lot of innovation can happen and innovative services can be offered to customers. Open Banking and APIs primarily help tailor and personalize the customer experience to a considerable extent.
Hence, financial institutions can do a lot of third-party development by using fintech to help them innovate in their applications, and they can also give a rich user-consumer experience to their end customers and help create products that are more customized and personalized to meet many individual needs. But typically, if one were to look at products and services, it could be stuff like credit scoring. Companies can use a lot of transaction data to provide more accurate and personalized credit offers to their customers, which can be used by banks, et cetera.
Also, verification and fraud detection can be done through open banking and API. For instance, if you're a lending institution, you can use real-time data to access data about borrowers and their eligibility, instantly decide whether to give them a loan or approve their loan, et cetera. In this way, both AI and Open Banking offer their consumers a rich array of options and help build financial inclusivity.
Biometrics has been playing a pivotal role, and a lot of development activity has been happening on the biometric front, and the fintechs are leading in that space. So, many banking and financial services today have been transformed to a considerable extent using greater accessibility, efficiency, and convenience both for customers and financial institutions. Hence, with this comes a huge amount of responsibility in balancing the security and privacy concerns, especially regarding data privacy. Now, biometric authentication is a high level of security compared with the traditional PIN, PIN codes used on your ATM cards or passwords, etc.
We can look at this in biometric markers such as fingerprint, face, iris, retinal scanning, or even voice to gain access to data and provide access to customers in a more secure environment. Even in financial institutions today, as we move more and more onto the digital platform, this is becoming a more and more acceptable form of authentication, and biometrics has picked up hugely with smartphone technology, where we use facial recognition or fingerprint to authenticate the usage of our own devices and stuff.
So that has significantly increased its popularity. At the same time, a lot of trust and security should be built around it. It should be used wisely as we go ahead in time and has to be user-friendly. Also, adoption is picking up remarkably. We have voice recognition today, which can be used either on your mobile app or even to authenticate your banking transaction. Even if we look at ATMs today, instead of using our PIN and a card on an ATM, we could use our biometrics and fingerprints or do an iris scanning. Some banks have deployed solutions with iris scanning as an authentication option for withdrawing cash without using a card and a PIN. Hence, biometrics is here to stay and is a very secure form of authentication.
Neobanking is a new form of banking that brings disruptive forces into the banking industry. The neobanks primarily leverage technology to offer a whole range of banking services, whether an account management service, payments, savings, lending, or borrowing, providing customers with a very convenient and user-friendly banking experience. It attracts many young, tech-savvy, millennial, and digital native customers towards them. So, they offer a lot of innovation and have a very agile approach compared to the traditional banking landscape. So when we compare it with the traditional banks, we see neobanks attracting many digital native customers, the savvy, young, millennial people who are coming into their fold significantly.
At the same time, the neobanks, if we look at them and compare them with the traditional banks, have now started realizing this threat from the neobanks. And they have begun changing their approach to banking. So now you have this terminology called the fidgetle, the fidgetle era, where you are challenging the banks, and they're trying to find the right mix and balance between a digital and a branch offering.
The branch is getting redesigned, and many people are rethinking how to use their branch, reskill their staff in the branch, and offer a differentiated customer experience while remaining competitive in this changing landscape. Customer loyalty in this era has changed compared to the past. Hence, with a lot of neobanks, the stickiness of customers is low, and customers are willing to shift brand and loyalty if they are getting something better from another bank or if they are getting some innovative service from the other bank. Unlike when you stayed with the bank for years, that trend is changing remarkably.
Nowadays, financial institutions are becoming very engaged in sustainability. By adopting sustainable practices, they are positioning themselves as leaders in responsible business. They are looking at how they can contribute positively to the environment while enhancing operational efficiency. So, many banks are embracing green finance principles, and we will find them looking at stuff like green bonds, specializing in financial projects that positively impact biodiversity and climate change, the mitigations that need to be done and adapting to alternative energy sources.
They're looking at funding that kind of project and promoting those investments in renewable energy that will impact and play a significant role in climate change. So, there are bonds that attract ethical investors who look at funds that are looking at initiatives aligned with sustainability development goals and contributing to reduced environmental impact.
So, many banks themselves have their own ESG objectives and are also looking at aligning many of their supply chains and vendors and selecting vendors and partners who play an important role in the bank's ESG drive.
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