Digital India –Technology for economic transformation

Prime Minister Narendra Modi came to power with a massive mandate in May 2014. His m

antra has been good governance and economic development. Given the massive scale of poverty in India - in spite of the impressive growth witnessed in the last decade – the path to economic salvation is

complex and merits serious thought and policy initiatives. As Modi seeks to put the Indian economy on a high growth trajectory north of 7%, his government is betting on deploying a broad spectrum of cutting edge technologies as the catalyst to enable this massive economic transformation. Digital India initiative will play a pivotal role in facilitating this transformation.

The reliance on technology rather than ideology is a refreshing paradigm shift. Unlike the socialist ideology forced upon the nation for over six decades that resulted in stagnating poverty and measly growth rates, technology has proved to be a reliable catalyst in economic transformations of nations. More importantly India, where a majority of whom are under 35 years of age, is impatient and in no mood to suffer economic hardships any longer.

Industrial Revolution of yesteryears is a striking example of how new inventions and technology spurred western economies.  In more recent years, the advent of mobile phones has enabled widespread reach of telecom and mobile enabled services to remote areas in poorer economies of Africa and Asia.  Kenya’s mobile banking is a shining example. Hence the reliance on technology is prudent and has the highest odds to success in enabling this massive transformation.

Digital India will provide both government and non-governmental service providers a platform to co-create and co-share a transparent, leak-proof – read corruption free - and efficient delivery of services to every nook and corner of the country.  This connectivity will hasten a feedback loop to the federal and regional governments by providing instantaneous data on various program implementations and other vital data.

In fact Prime Minister Modi, in his recent address at the NASSCOM summit on 1^st March , 2015 stressed the importance of digital technology in service delivery, governance, transparency and  effectively deterring corruption. Even at a minimum, this will be a phenomenal achievement that will set the stage for rapid economic resurgence. The benefits are immense.  

However this reliance on technology is fraught with the obvious risk of obsolescence.  Rapid changes in technology can render huge investments redundant and can hurt developing economies badly. Hence the window of opportunity for deploying extant technologies as an agent of transformation is minimal to small. This is precisely why we find the almost obsessive pace with which the government is working to execute the digital India initiative.

Leveraging digital technology as a transformational catalyst envisages three key prerequisites – technical knowhow, ability to consume digital technology and capital. They will dictate the success of Digital India campaign.

Unlike cryogenic engine technology of the yesteryears when the country was held to ransom by western technology, India has access to the best in class digital know-how via its very own home grown IT majors.  Hence access to know-how and skilled human assets would not be a problem.

Secondly, mobile usage in India is at a record high and growing and consequently the ability to consume services via digital technology is high. India currently has approximately 90 crore mobile users!  This is a vast user penetration and an incredible service delivery platform for the government.

However, availability of capital could be a major challenge. The Modi government has been investor friendly and has produced the right sound-bytes to attract fresh investments. Many analysts who have followed the Modi government for the last nine months believe that the government may not face serious challenge in raising funds externally.  Internally, the recent auction of coal blocks that netted over rupees 1 lakh crores points to new financial muscle and determination of the government.

That leaves the execution and delivery of the project which may be the weakest link in the chain. While PM Modi has the right credentials in delivering, as seen from the Gujarat experience, he is on test as to how these lofty ideas are translated on a broader canvas to benefit the country.

 It is, however, imperative to point out that for the first time in over six decades, the Indian government has mustered the courage to dream big - a clear vision rooted in pragmatism and not on empty ideology or rhetoric. This has gladdened the heart of middle India. For starters, the Digital India initiative has prevailed over its biggest obstacle – selling the vision and winning hearts; it is a major victory at that. But risks persist in  making this dream a reality.

India today stands at the cross-roads – a poor nation with lofty dreams that has squandered away its resources and treasure to corruption and a perverted politico-bureaucratic ecosystem bent on exploiting the country rather than serving it. It is this very same system that will help execute and deliver on Modi’s lofty vision for a digital India.  Modi will need all hands on deck since Digital India is fraught with high risks, but the rewards are huge too.

Digital Banking – Lessons from channel integration

Digital banking offers unprecedented opportunities both for banks as well as customers. It has provided banks breadth and ease in delivering their products and services to customers. As for customers, it has pushed service options and expectations to a new high. Given the opportunity spectrum, it is no surprise that banks have invested heavily in upgrading their digital preparedness. 2015 promises more investments in digital banking.

A definition of digital banking will be of help here. Obviously many definitions exist. Banking transactions and experience through the internet and electronic devices - desktops, laptops, tablets and mobile phones – structure our digital banking experience. This is a simple and easy definition.

Digital banking is also the prime force that has helped in proliferation of banking services to remote areas and brought huge unbanked segments into the ambit of mainstream banking. Arguably, it has the deepest transformational impact on any industry. Most important, it has provided customers with the information they need at a time, place, format and device of their choice. This has been a true empowerment.

Consulting companies and IT majors, as would be expected, are deeply invested in the digital transformation initiatives at banks. They have proffered channel integration/optimization as the central pillar in enabling this transformation. Banks’ response, however, have been mixed.

Channel integration/optimization, in short, seeks to fine tune different digital channel touch points so that the customer has a unified experience at the bank. Consequently, this synchronization or optimization can help banks elevate customer experience by calibrating the delivery of best in class products and services.

But the problem with this approach is that every organization has to level up and offer top customer experience. That is the minimum and ‘must have’ expectation today. Anything less will jeopardize business and could potentially result in loss of customers. The result is that all major banks have geared up and offer par or exceed expectations in customer experience.

Further, channel integration/optimization is, by no stretch of imagination, a disruptive innovation by itself. It is an evolving standard or touchstone that every organization must meet to remain competitive, albeit an attractive revenue generating opportunity via the integration business. By definition it is glued to the physical architecture and seeks to achieve operating efficiency or synchronization as its end result. To that extent it may be handicapped and only obliquely impact profits.

There is, for instance, no room to incorporate analytical insights and the consequent learning as the motive force in reinvigorating banks business drivers. Hence it is no surprise that this channel optimization has not greatly enthused banks.

A recent study by McKinsey, in this context, is an eye opener. The study identified areas of bank digitization that made financial sense and those that did not. It concluded that while back office digitization / automation – like document digitization (e.g. mortgage financing) , automation of credit decision and sales side analytics - impacted bottom line, investments in multi­channel integration do not appear to have been as effective. Interestingly, huge investments in select areas of digitization and analytics distinguished highly profitable banks.

Analytics Business in 2014 - A review

It is the time of the year when businesses take stock of their performance in the year that went by and also see what the New Year may bring in.  How did the Analytics & Insights business fare in 2014 and what are the learning that can help us forecast performance in 2015?  In review I think 2014, in spite of some hiccups, has been a great year for the business. Definitely the industry experienced greater acceptance of analytics across verticals for helping organizations make sharper and well informed business decisions. In fact its sway over the market is so intense that even the term ‘dashboards’ is now being replaced by ‘Analytical Flows’.

Three key drivers - revenue, innovations / new trends as well as the enterprise preparedness to convert the opportunities - provide insightful assessment of the industry’s performance.

In 2014, specifically in the banking and financial services sector, IT honchos dug into their deep pocket books to invest in new gizmos – from analytical decision platforms to cool analytical BI tools integrated with underlying data to provide fast predictive insights. Many companies focused on this sector - mid-tier and boutique players in particular - have benefited from this largess.

The year 2014 has also seen several innovations in this space.  Several cloud based solutions have hit the market. Cloud based analytics service in itself was kosher with industry majors announcing their own products. Watson Analytics, Salesforce Wave, Oracle Cloud offering are key highlights in the market that I have discussed in more detail in another piece.   ApplePay, CurrentC are other key innovations that come to mind that impact analytics in a big way by broadening the marketplace. As companies seek to offer personalized customer experience, these innovations will increase the thirst for deeper insights. 2014 also saw high profile acquisitions where the IT industry majors acquired analytics companies to broaden their reach and capabilities.

In 2014 many banks had initiated a comprehensive internal review of their analytics capabilities – human assets, extant platforms and have authored all the findings into a roadmap for the future. It is interesting to note that the emphasis of many Fortune 100 banks appears to be on revamping analytical technology platforms. Road maps include using big data technologies, incorporating social data in customer acquisition/ collections and integrating real-time predictive analytics capabilities that can instantly provide personalized offers that will be the new norm in customer management. Further, freshly inked digital strategy roadmaps seek to go far beyond channel optimization and emphasize revenue generation. All this, together with a rebounding economy, portends to a busy 2015 for Analytics in the banking and financial services vertical.

But how are the IT majors prepared to meet the opportunity? As already mentioned mid-tier and boutique consultancies continue to have the advantage and are better poised to exploit the opportunities. But they have their share of problems in scaling and retaining top talent.  It would be logical to expect swift growth and acquisitions in this space. 

It is an entirely different story for the IT majors who continue to be plagued by several problems. High profile executive turn over, revenue slide, multiple flopped product/solution launches and a leadership that is completely at woods with analytics are key issues that continue to bedevil the majors. To add to their troubles, a series of strategic initiatives launched to push analytics revenue have been non-starters. While these are known devils, their resolution does not appear to be near. Further, there are also reports of huge layoffs, albeit in offshore centers, that point to acute revenue pressures that do not augur well for 2015 performance. 

While there seem to be no dearth of market opportunities, the major players as well as mid-tiers have their own laundry list of fires to put out. Unless they get their acts right, 2015 revenue will be in jeopardy.  Stay tuned as the industry rides through the turbulence in 2015.