Lines are blurring in tech spends: Anirban Bose, CEO, Financial Services, Capgemini

India has recently been at the forefront in this. When you talk about digital payments like UPI, it’s technologically way ahead. What RBI is trying to do on the same day settlement or the open network digital commerce (ONDC); these are going to create more innovation between the bank and the others. The good part is that India is a very young country and the generation is hungry for digital consumptions. If I compare with the overall APAC scale in various countries and various degrees of maturity, some countries have leapfrogged. The Monetary Authority of Singapore started offline retail settlement using tokens, whereas trying to do it on a mass scale and that takes time. What India has done with UPI is very phenomenal. Australia did a little bit of retail currency and China is a different story altogether.

Banking is the first one to move. You have the technology innovations like GPT, the rise of cloud data and API. You cannot take advantage of the new things and identify the weak signals or the strong signals to do the predictive things unless you move your business forward. Then you have a totally new asset class that is getting built called the crypto. Similarly, if I look at the overall insurance spectrum now, I’m seeing a lot more movement in the P&C and General Insurance. You can buy insurance much faster. You can file a claim and get an adjudication faster. We are working very closely in certain areas where a commercial insurer can use our digital twin methodology to actually get the entire valuation of the asset for example of this room and simulate any risk and get the cost valuation immediately before even sending an adjuster, so this is picking up faster and organizations want that. Even commercial clients want that. The third one is the climate risk which will have to be now embedded in the price. Technology is no longer nice to have thing; it is a part of the business. ESG will soon go into that level.

I’m a very hopeful Indian Investment in tech will be soon bigger than many countries. In the US, 25 per cent of OpEx cost goes into tech, whereas in India it is 10 percent or so. As a percentage of revenue, the banks were always the highest spender – around 9 per cent of revenue. I was with JP Morgan Chase and the Co-head of investment banking in Davos where she made a statement that they have more engineers than Google because they get hit a million times a second. So here also it is the same thing. The behemoths are still public undertaking.The private ones are also coming up fast. The banking industry started adopting tech as there is not enough solution to build everything on their own. Over a time period, they started buying packages and now today they are renting. India started straight from the renting. Web banking never took off in India, but people went to mobile banking straight away.

That is true. And it is not only banks, but in every industry. The rebalancing of CapEx and OpEx has changed. OpEx cost is going to increase, the capex should reduce. The question is where are they spending? The focus will be on 2-3 things. Automation has to happen to get a lot more efficiency. With AI and GenAI the focus from start was on efficiency. From there focus will be on assisting where we can use AI and other kind of technologies to make the next best predictive action. Finally, it would be about creating a more focused approach. People will soon understand that GenAI and other such technologies can work very well with unstructured data. Once you move into structure it doesn’t become accurate. It becomes a predictive or probabilistic model. That’s where there are specialized services for the customer. The same thing is going to happen with SMEs and corporate businesses. Another aspect to note is what is ethical and what is ethical AI. If you are creating anything that cannot be explained and multiply the impact by 100 times, it will make a biased judgement. Lastly, financial services clients have to be extra careful because they are a national strategic industry.

In the banking industry around the world, regulation comes before anything else. Getting a banking charter is very tough and that’s why you see many of the Fintech organisation walking on the periphery of banking like payments, wealth etc. Resiliency is a big part.