Outlier Briefing: Infosys’ Jay Nair on preparing for the day after the pandemic

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Today’s guest is Jay Nair, who leads the financial services business for Infosys in the Americas. He’s responsible for one of the largest units in the company with annual revenues of around $800 million.

Jay works increasingly with client CXOs to help them with their transformation journeys. He shares his experiences working with banks, insurance companies, and capital market firms to prepare for the reopening of the physical component of financial services as we think about the day after the pandemic. Jay gives his thoughts on open banking and what he calls the APIfication of financial services. With Infosys’ work across different verticals within financial services, he provides his views on the future of financial services.

Takeways

• Evolution of product development: Earlier, it was more about developing the product, testing it and making it resilient. Now, emphasis has moved to security and anti-money laundering and fraud. Those aspects have taken center stage.
• Acceptance of cloud: Since COVID-19 hit, there’s been an accelerated move to the cloud.
• Distributed work force: Large banks thought they needed to have all their teams co-located. Their applications resembled this thinking. That’s all changing as COVID-19 attacked on-prem setups.
• Payments adoption: COVID has changed the pace at which electronic payments are being adopted. Demand for talent and new technologies is at a high.
• Branchless to safe banking: As the economy opens up, banks are looking to reopen their branches with a sensitivity to health concerns and growing familiarity with digital tools.

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Evolving skillsets

Skill sets have changed and things are accelerating. In the early days of my career — 25 years ago — requirements were more on the mainframe side. And a lot of work which we did around the Y2K front was more on mainframe programming. I’ve done a lot of work personally with ladder logic programming, if you know that what that is. It was really ancient technology.

But in the early 2000s, when the early adoption to the web happened, we saw changes in skill set requirements. But what’s interesting now is that in the last couple of months, especially with COVID, we’ve seen an acceleration of payments adoption. And I’ve seen the most acceleration in demand for talent. The types of technologies coming and emphasis has changed from earlier — it was more about developing the product, testing it and making it resilient. But now what I see is that the emphasis is on another dimension, security and anti-money laundering, and fraud. Those aspects have taken center stage.

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Moving to the cloud

Enterprise clients were circumspect about leveraging the cloud, putting the data out in the cloud. They were just very, very nervous about doing that. But in the last couple of months and years, I think clients are more amenable to moving to the cloud. And that’s not just their peripheral systems, like CRM or HR systems, but their core platforms like core banking platform, core asset management platform or a core lending platform. They traditionally kept it on prem.

Especially in the last three to four months since the COVID-19 pandemic hit, they’ve seen an accelerated move to the cloud. That’s a significant change.

I remember just before COVID started, I was talking to a very large bank, and they were very insistent that large workgroups, like trading and compliance groups, needed to be co-located. They needed to be on the same platform. And so most of their applications, whether they were in house or with fintechs, they will almost always require that the fintech have on prem.

That’s gone. When COVID happened overnight, banks had to move their workforces out of their offices. And these applications now needed to be accessed. So we saw a rush from clients asking us to help in that journey, either moving to the hyper scalers like AWS or Azure but also with these on prem fintech installs. They wanted to move into the cloud.

Navigating through a crisis

When we started this journey, when it struck us in early March, the focus was to enable our global teams to access systems. A large part of Infosys’ workforce worked out of remote locations outside the country in campuses. So, we were first focused on trying to make sure that our associates were able to access clients systems.

And I think we rallied around very quickly — we were able to get almost 95% of our teams enabled to service our clients very quickly.

Then the second question was our own teams: are they being productive enough? And are we able to deliver services in a very secure mode? Our focus was always to ensure data security, that we were the custodian of client data. So we built a lot of systems for that.

And the third thing which we were focused on was on resilience, on making the IT systems we access resilient enough. Then we started seeing new business model emerge. There’s a new normal, where we are seeing a very productive workforce and an environment where we’re able to deliver solutions in a very secure manner. We’re able to be in step with our clients who are looking at changed business models and addressing those demands. We’ve been very busy because these models have been changing in the last six months, more than what I’ve seen in the last 20 years itself.

New business models

From our clients’ perspective, I would say they are six broad themes. They want to build systems which are resilient. They want to digitally engage with their customers. They want to provide security, which is a third one. They want to present a secure environment in which they can ensure that their clients and their associates can transact. They also want to ensure that the operational processes are streamlined. They want to make sure that they’re able to leverage the cloud.

There are two aspects to operational processes. Let me take an example of what happened in the capital markets space. For instance, there was a spike in trading volumes when people worked from home. And our clients had to react to meeting those operational requirements of increased trading volumes. So our clients had to grapple with two things at the same time. One is the workforce is remote. The second is that trading volumes have gone up and volatility has increased. So, how do you address those two things? We had to quickly put in operational processes as well. We were doing things on the fly and refining it.

Over the years, many teams in the financial services space had moved to an agile way of software development. Small teams had to come together mostly on site, so you had to stand up meetings. Our clients and companies like Infosys had to deploy at scale — we had to get mass collaboration up to speed on Zoom. We had to industrialize these things, hardening them, because these needed to be designed to be resilient.

Reopening bank branches

Before COVID hit, a lot of branches were being repositioned by financial institutions as advisor locations. So a lot of investment has gone into that space. Individual clients are getting used to doing a lot of their transactions branchless, but as the economy opens up, we’ll need to ensure safe banking in branch locations, in premise locations. We are seeing a lot of companies add technology solutions to help accelerate that.

We have a four pronged approach which we calling Return to Work Solutions. When we when we talk to financial services clients, we try to break it up into four different subsets.

1. How do you prepare them?
2. How do you prevent them?
3. How do you protect them?
4. And how do you thrive?

They’re asking us, as we’re preparing for the branches to re-open, is there a return to work playbook? Are there sanitizing solutions? We have a COVID chatbot so when employees come back to work, we prepare them to come back to work safely. And there is the element of prevent — when customers walk into the branch, we have seen banks adding technology which will allow AR thermal screening, contact tracing solutions, and social distancing solutions for clients coming in.

And then once they are in the locations, be it employees or clients, they’re looking for protect solutions, which are based on things like AI-based mass compliance, social distancing, using CCTVs, resource planning, occupancy planning.

Lastly, there are wellness solutions, quality checks. To be honest, this is not an element which we focused on before the pandemic. But now as we are helping financial services institutions come back and they’re starting to think about reopening their branches, they are asking us to help them in automating some of these things and make it easier for employees. So we have done a lot of work in this area. We have mobile applications which many of our financial services institutions are using. Many of the states are also using them. We have a COVID Rhode Island application, which we launched for the state of Rhode Island. Now we see applicability of those, even into our clients. And you know, we’re trying to scale it to make sure that our clients are able to use that. So a lot of solutions are available as branches open up. Some of it we delivered ourselves. Some we partner with.

Looking out into the future

Even before COVID, there was a path in which most of our Financial Services customers looked at physical branches and digital. They were looking at a bifurcation. And now that has simply accelerated. I talked about the move to cloud to deliver the services. So that is an area in which our clients are in. I would say that, other than security and resilience, this is the third area in which our clients are spending a lot of money and are accelerating the journey

API-ification of financial services

On the API-fication of financial service, there is a mass acceleration. I think that is only going to accelerate the next couple of months and years.

Let me take an example of a mortgage lender. A lot of their applications which the banks were on, they were on prem. They were on infrastructure, on in-house bank applications. When clients came in to the lender, they had a huge lot of paperwork which needed to be filled in and which needed to be delivered for the mortgage process.

What happens now is that there are a lot of fintechs which provide subsets of those lending processes. So the mortgage company is no longer looking at its own core lending platform but to partner with a lot of apps, a lot of third party providers. And now it becomes an ecosystem in which it provides a platform for these apps to integrate and which needs to be hosted. Clients get services that include online appraisals and inspections. A lot of third party providers are providing such services, which is contactless, and they’re using machine learning and AI based tools to check whether some of these processes are required, based on common third party data available. We see a lot of these applications which were physical applications moving into the electronic space and then being accessed elsewhere. So there’s a lot of transformational work being done in this space.

Open banking

One of our core service offerings is our own banking platform, Finacle, which is one of the largest core banking platforms in the world. It’s a key participant in the open banking initiative itself. It’s probably the largest bank platform outside the US and Europe in the last couple of years. It has started making an entry into the North American space, too.

So we have clients like Goldman Sachs, which uses Infosys’ back end, which is Finacle. We have a few other clients.

Goals for 2020

We are seeing an increased demand for digital security. Clients are asking us to help them in their digital transformation journey. There are a lot of opportunities. I’ll take three recent examples where Infosys helped our clients. We recently announced a partnership with Churchill Mortgage. We announced a partnership with Old National Bank. We announced a partnership with Vanguard. These three are in different sectors of the financial services spectrum: one is a mortgage company, one is a traditional bank, and one is a wealth manager. The unifying requirement for all three of them was digital transformation. It was to improve the client journey experience, as well as forming the existing legacy architecture and environment.

I expect in the next few months, a lot more clients will come asking us to transform their businesses, which is legacy modernization, moving their applications to the cloud, providing a resilient atmosphere, which is secure. I see a lot more demand happening in that space.