Prasanna Lohar currently works as Head – Innovation & Technical Architecture at DCB Bank. As a part of DCB’s digital transformation, he is firmly focused on innovative customer servicing, technical architecture implementation, and adoption of emerging technologies for banking.
Prior to this role, he was the Digital Bank Head for DCB where he leads various technology projects including Implementation of Aadhaar & biometric-enabled innovations, omni-channel architecture, API management, fintech – startups – institutes alignment, payments innovation, DevOps, cloud computing, big data, robotic process automation, artificial intelligence, IoT And blockchain.
To boost innovation for the bank, Prasanna launched DCB Bank Innovation Carnival, where he leveraged hackathons & accelerator programs and mentored more than 250 Startups in India during this program. He has led projects involving emerging technologies for various banking processes, including AI for fraud risk management, biometrics for multi-factor authentication, and blockchain POCs for payments, verification and reconciliation functions.
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In this interview, Prasanna talks about the fast-changing disruptions in the banking sector brought about by changing customer needs and fintech. Further, he sheds light on how his bank uses data analytics for strategic innovation and the use case of blockchain for solving the NPA crisis and improving India’s credit system. Here are the excerpts from the interaction:
What according to your perspective, are the major technological shifts happening in the banking and finance industry?
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There is a lot of shift that has happened in the last 4-5 years. Banks are adopting new technology; the customer is changing; government-regulated entities like RBI, SEBI and NPCI are launching new initiatives and more. There’s a lot of deregulation, and new entities like Paytm, PhonePe and other fintech players have disrupted the banking space.
Fintech companies are very agile. And because of this, the customer is also changing, and with the customer change, the bank also has to change. So you either have to align with new age partners or create a super app or some significant innovation to make a big impact and achieve operational excellence. Banking firms cannot always conceptualise on a business level or a strategy level, so when they have to execute, it is mostly using technology, which is why a lot of technology adoption is happening everywhere.
When everybody is adopting new technologies, a bank has to ask itself how it can make itself different from competitors, and that’s why they have to keep innovating. Innovation is a survival game for every entity. If a bank is unable to deliver technology without at the right time or speed, it will be treated as a traditional entity. And these conventional entities will not succeed in serving those upcoming future customers, or even existing customers.
When you say that the customer has changed, what kind of customer do you see right now, and how has the demand changed?
The customer earlier used to go to a branch for any transactions. But the same customer can now do all of the banking through a mobile phone. So the customer wants everything done instantly on the mobile. The new generation of banking customers are hyper agile and have huge expectations from banking services. This can be challenging for traditional banks as they have to satisfy the expectations and needs of various generations and demands of customers — all the way from SMEs to new-age customers who are very agile.
With the adoption of digital and mobile, there is a lot of data that is generated. How can banks put this to use for more innovation?
Data is a critical aspect to serve existing customers. Based on their understanding of the current data, banks need to understand how they can serve existing processes and customers. There are many static data points which are available with the bank which needs to be thoroughly understood. For that, you need to go and look up in the database and perform analytics. But when you have hundreds of thousands of customers, how do you analyse all of that data? For that, you need to build an excellent system that uses artificial intelligence and Big Data.
In what aspects of your bank do you use data analytics?
We create data analytics models based on the business needs for which we use 360-degree data around a customer from different systems. We use data analytics for improving staff performance, cross-selling, upset strategy for customers in the SME area. For example, if an SME is doing a transaction on a POS device, internet, or even third-party apps, we try to understand the various data models to build a score for the SME by deeply understanding their expenditure and financials.
You have been a big proponent of blockchain. How can blockchain networks help the Indian banking industry?
Blockchains can be a great value addition for Indian banking systems. Blockchain allows customer data to be shared in an anonymised fashion with other banks who are on the same network. Using this mechanism, banks can share real-time self-automated repositories of loan data related data of customers and help in controlling NPA problem and making credit systems more efficient.
Today, if you go to microfinance, the same customer gets multiple loans from different banks using the same asset, which can be challenging for the involved banks. Instead, if all the banks are on the same distributed ledger network and understand which are NPA customers and the assets are attached to it, the whole situation can be solved.
Blockchain networks which are foolproof can also minimise banking fraud cases as all transactional data is accessible and shared with all banks in the network. But for such a system to come to life, Indian banks will have to come together and design a blockchain which is quite challenging due to their immutable nature.