Sanat Rao on Digital Banking

Anand Verma: The banking and financial services industry is turning its focus towards innovation to prepare for a future that will be increasingly driven by technology and clearly, customer experience. Key trends driving these innovation include ongoing digital transformation, collaboration with fintechs, and increasing role of artificial intelligence, data analytics and of course, robotics. Sanat, what do you think about the role of technology, customer experience, digital and financial services, and banking sector? And also, if I can ask again, how is this sector evolving, in your perspective?

Sanat Rao: Thanks, Anand. That's obviously a very broad question, and there's a lot to be said there, but let me try and keep my response to a few relevant points. So I think without a doubt, when we look at the change that has happened in the industry, let's say over the last decade or so, the single biggest impactful factor is technology. Well, there is of course, regulation and compliance but that's a separate topic for discussion so I'm not including that here. And within technology, certainly digital in more recent times, is where everyone's attention is focused, and rightly so. Now, when we look at how the sector is evolving and the impact of technology there, I'd say there are a few things for us to keep in mind.

Sanat Rao: First, I think we have to acknowledge the fact that while the banking industry may not necessarily be the leaders as far as deployment of new technology is concerned compared to some of the other industries, it is indeed, ubiquitous this salvation which is presently reshaping the industry. And let me explain what I mean by that. If you look at the banking industry traditionally, you had some very, very large banks and those banks have grown even bigger. And historically, they've had the twin competitive advantages of a very wide distribution and of course, the access to a huge amount of capital. Now, what digital has done is that digital has completely eroded those twin advantages. So digital is turning out to be disruptive on the one hand, and pervasive on the other. And this is already manifesting itself in different ways.

Sanat Rao: So when you look at the way banking products and services are getting commoditized for example, or the fact that banks are finding it increasingly difficult to differentiate themselves through purely the products that they offer, and they're increasingly having to resort to other levers at their disposal if you like, such as the fees, the advice, and of course, services which ultimately lead to superior customer experience. But clearly leveraging levers like rates and fees and advice is not enough, and in the increasingly competitive world that we are operating in, banks need to look at what more they can do.

Sanat Rao: The fact that digital technologies are proving to be disruptive on the one hand, but indeed even if banks are not careful, then it can be the death knell of many banks. I think we shouldn't discount that. And while the banking industry per se, doesn't have at the moment an example of a Kodak moment, if you like, the truth is that when you look at the various industries... I read somewhere that in the last 15 years or so, over 50% of the Standard and Poor 500 companies have actually disappeared, and a lot of that has to do with the technology or the lack of technology, if you like, in the ability to combat the changes that are happening.

Sanat Rao: So very clearly, technology fits bang in the center of the change that's happening. And I think the second dimension to that is that it's not just technology but the rapid evolution of technologies. Technology that was modern five years ago is already looking a little archaic, and if anything, newer and newer technologies, whether it's artificial intelligence, a lot of people are talking about block chain. When you look at the future, people talk about virtual reality and augmented reality, the internet of things and quantum computing. These are areas which are likely to be very, very disruptive in future. So I think all of these are providing new opportunities to banks, but at the same time, I would say that if banks are not careful, then it would be disastrous for them. to where you've gotten to so far?

Sanat Rao: I'll just summarize this by saying one thing, Anand, which is that we did a recent survey at Finacle with ESMA. What was not a surprise is that of the banks that we went to and polled, about 70% of them named legacy technology and a lack of agility as the biggest hurdle in transformation. So it is not the fact that it's absence of technology. Technology is available. Everyone recognizes technology is available. It's the fact that in that plethora of choice that they've got, their inability to combat the legacy that still exists and the inability to show the kind of agility to scale it to the desired levels, this is what is really creating a big issue for the banks. So this is a very broad answer. I'm sure there are different dimensions of this that we could pick on as we go through this conversation.

Anand Verma: No. I think that sets the scene really well, Sanat. Thank you so much. And for our audience, exactly that's what we'll be exploring in today's conversation. Digital has disrupted everything. Over 500 S&P companies have disappeared and nobody has even noticed. The emerging nature of technology itself, there's so many great topics in relation to what we'll be talking about today, so welcome to the Infosys Knowledge Institute podcast, the Brilliant Basics Edition, where we talk about digital disruption, design and of course, future of work.

Anand Verma: The topic today is a really interesting one which is digital banking in the new normal. My name in Anand Verma. I'm the European head of digital services for Infosys, and founder and CEO of Brilliant Basics. I'm absolutely delighted to have a friend of mine, also a colleague and a Infosys leader, Sanat Rao, who is a chief business officer and global head of Finacle at Infosys. He also sits on the board of EdgeVerve and also is part of the Forbes Business Development Council as well. Sanat, thanks for joining us today.

Sanat Rao: Thank you, Anand. Entirely my pleasure.

Anand Verma: So Sanat, before we talk about the topic that I just mentioned, and you described it very well, it'll be great to hear about your background, where did you grow up, your back story, and also, how did you get to where you are today?

Sanat Rao: I have to start by saying there's nothing really eye catching in my journey, Anand, and certainly when one looks at the exhilarating entrepreneurial journey that you've been on, mine has been a much more traditional journey.

Anand Verma: Not at all. Not at all. You're inspiring for me, so let's start with that.

Sanat Rao: So I think having said that, I have to acknowledge that the journey is one that has given me immense satisfaction. And it's not just because of the kind of companies and the people that I've been very fortunate to have been working with, but also I think when I look back at a career that's just under three decades, from my own personal development, and technology certainly is at the center of that because when I got into the banking industry, technology was a very, very different animal to what it is today. So I started my career after my MBA with an Australian bank, ANZ. I worked with them initially in India, and then moved to Australia. And at the turn of the last century, owing to a variety of circumstances, I got an opportunity to move into technology. And mind you, I don't have a technology background per se.

Anand Verma: Well, what did you study in India? Because you did an MBA didn't you?

Sanat Rao: That's right. It was a combination of marketing and finance, and I think from an education point of view, I think I went through a fairly standard routine in those days which was to do a bachelors degree. I tried my hand at chartered accountancy. I did that for a few years. And then it was just not my cup of tea. I think my passion was always to do an MBA and I finally was able to do that. And then, I went to the banking industry. And the turn of the century when I had an opportunity to move into technology, it was really because I was not certain of what to do, that I decided to take this change into technology and I still call myself a kind of an accidental tourist into technology. Little did I realize that here today in 2020, I'd still be associated with technology, but fortunately today, working with one of the most admired companies in the world.

Sanat Rao: My association with Finacle itself started at a time when Finacle was not yet born. I think at that time, the business unit that did similar work was, if I remember correctly, about 5 or $7 million in revenue. And in the unit at that time, if you said it was global, the globalization of the business then was really India and two or three countries who are immediate neighbors. Today, it's been a long journey for that unit, and Finacle was born along the way. And today, we are global leaders in that space, and I've been fortunate to have been associated with a good part of the journey, except for a short stint in between when I went away to IBM. But otherwise, it's been a great journey. Today, we are a global leader, and I have to say, the people, the company itself, and indeed, my personal enrichment is something that I'm immensely proud of and thankful for.

Anand Verma: What a story, and it is inspirational, even though you think that it's not. I was talking to Nandan the other day, and we were talking about entrepreneurship, and he said, "Anand, there are two kind of entrepreneurs, right? Entrepreneurs who kind of build company from scratch, and entrepreneurs who take a business and make it connect, so 100X bigger, right?" So I think there's entrepreneurship in everyone, and I really associate the story that you're talking about with your entrepreneurship within the company itself. And I've seen Finacle rising from strength to strength, and the heights that it has reached as well. It's become the leader, right, with regards to what it does and where it's also going, so. And I think that gives us a nice segue to talk about what Finacle actually is for our listeners, and also where Finacle is actually going in terms of its strategy.

Sanat Rao: So Finacle started, if you go back to our genesis, a couple of decades ago, we started in the area of core banking. And core banking itself in those days was very different from the way it is today. So our business was to help modernize and standardize backend engines, if you like. In those days, digital was not known, and somewhere along the way, electronic channels began coming up. In the last five years or so, Finacle has been focusing a lot of our attention on digital as well. So today, as we speak, not only are we a global leader in the core banking space... So while we got into this space about two decades ago, I think we've made all the associated changes that we need to make so that we continue to remain relevant. But at the same time, we branched out in to the digital side.

Sanat Rao: And I think today, we are one of possibly only two vendors globally who are acknowledged as a leader by independent analysts, both in the core banking area and in the digital space. And this fits in very well with our strategy because today, banks want to have a choice. There's no one-size-fits-all approach for banks. Sometimes the transformation starts in one part of the bank and then goes to the others. So we need to be a partner who can offer them the choice. And I think our strategy of focusing on digital without diluting the attention of core banking and backing legacy modernization. I think it's serving us very well because we are finding today, there are huge opportunities in both of these areas, and our story of front to back, or end-to-end, is really resonating very, very well with banks.

Anand Verma: And Sanat, given my role as kind of leading the experience side of things at Brilliant Basics and also for Infosys, customer experience is key in changing the bank's role or financial service's role, but also in this case, Finacle's role as well. So one of the questions that was coming to my mind in preparation to this session was how is the evolving nature of customer experience, the rise of fintech where they start with a customer problem to build their product for example, is also changing, first of all, Finacle's ways of working and ways of thinking of product, but also the banks and how they're reacting to that?

Sanat Rao: Great question, and I think a very, very relevant question because something that we like to tell banks that are evaluating potential solution vendors is that you're not spending money to replace one piece of software with the other, and you're certainly not spending money to get functionality. Functionality is important, but that's not the end point. Today, it's all about winning mind share and getting more share of the customer's wallet and therefore, it is indeed, from a bank's point of view, the customer experience that they are able to offer to their end clients which is the biggest single differentiator. And I think this is an evolution and a maturity curve for everyone, whether it's people like us on the vendor side, or indeed, the banks themselves. And I think the good thing is that from an industry point of view, everyone today recognizes that customer experience is the holy grail, if you like, and it's the one that really differentiates that.

Sanat Rao: Now, as far as customer experience is concerned, I think from Finacle's point of view, I think we've also learnt many things along the way. So if you go back to five years or so, we tried to design customer experience at the front end of our applications, and we continue to do that. But I think given the importance of customer experience today, given the power of the newer technologies that are available to facilitate superior customer experience, I think there's a realization that people who build good software are not necessarily the same people who can define good customer experience. And therefore, whether it's the experience of working with, Anand, you and your team at Brilliant Basics, or whether it's even when we go to banks, we offer them a customer experience layer out-of-the-box with our own product, but we are happy to work with banks to define what they think should be a customer experience for them in terms of what they take forth to the bank. So I think we're giving the choice to customers, and we have something out-of-the-box as far as we're concerned, but we recognize that that may not suit everyone.

Sanat Rao: I think the other big change is that customer experience is forcing everyone, whether it's the bank in terms of their end customer, or whether it's even ourselves on the solution vendor side when we deal with banking customers, customer experience is forcing everyone to take a outside in view because I think many of us in the past where guilty of taking a inside in view, inside out view, sorry, because you tend to start with what you're comfortable at and then you think that that's what will suit the customer. Today, when you put customer experience at the forefront and the starting point, your starting point really is what is it the customer wants? And then you work backwards to see how you can make good that.

Sanat Rao: So I think that's a big, big change, and I would say that's the single biggest change that we've seen. And I think that works very well because the end of the day, you might think you're doing great stuff where ultimately, if the end customer is not endorsing that, then what's the use. So I think this outside in perspective is a big change, and I think we're still very early in the days of customer experience. I think this is going to be one of the most exciting areas on the one hand, but at the same time, with the power of new technology available, it's going to be an area where there's going to be an increasing amount of differentiation going forward.

Anand Verma: Yeah. That is really interesting, and I would love to know how the banks leadership team C-Suite are looking at that as well in a few seconds. One of the things that listeners might find useful, Sanat, is maybe bring this to life with a use case or an example. I'm not sure client could be referenced in this podcast from your perspective, but it'll be great to kind of hear a real example of where Finacle has managed to kind of achieve this.

Sanat Rao: Sure. I think in terms of what we've been able to do when we work with banks in the area of helping them use technology and looking at some use cases, I think one of the most interesting challenges for us is there is a growing trend in the banking industry today of large banks creating digital only banks, right, because they recognize that in the parent large institution, they're probably not geared for a completely digital proposition for a variety of reasons and good reasons for that. And we're finding more and more banks today creating digital entities where they're not burdened by legacy at the start. The kind of staff that they have there in terms of profile are very different from the staff in a traditional bank. The technology they deploy from day one is on the cloud, modern technology and so on. So I think the whole experience of creating digital banks has been a amazing example for us and we've been fortunate to work with the likes of Marcus by Goldman Sachs, Live by a very visible bank in Dubai, Emirates NBD, or Digibank by what is known as the world's most digital bank which is DBS Bank of Singapore. In fact, what is not known Anand, is that amongst the digital only banks in the world, Finacle has the highest market share. So that's something that's very, very impressive I think.

Sanat Rao: The second example is how are we working with banks to monetize the open banking opportunity. And while open banking as a phenomenon is more mature here in the UK and Europe than most other parts of the world, what is not recognized is that open banking, the basic principles of open banking, they began flourishing and emanating in different avatars in different parts of the world. And if I just give a couple of examples. In India for example, ICICI Bank, they took to introduce short-term digital credit product which mimics the properties of a traditional credit card, but they don't use any of the traditional card networks like a Visa or a MasterCard. Instead, what it does it that it works on the open banking payment ecosystem that's been developed locally there, and the product that they've launched which is called ICICI Bank PayLater is an instant digital credit facility that enables customers to pay their bills, to shop online or to pay any offline merchant.

Sanat Rao: Now these kind of capabilities today, are putting a lot more power in the hands of the end customer, but at the same time, the bank is bringing together capabilities beyond just what they themselves offer to be able to make a more holistic proposition available. The other great thing is that we've been able to work with banks like ICICI and the others to completely change the customer experience. So while they don't compromise any of the mandatory checks that are required around know your customer and so on, the ability for us to be able to support them in a completely digital and a paperless manner and complete the whole transaction in under two minutes, whereby what is really required to be done by the customer is done upfront, and all the other mandatory paperwork can be done at the backend, so you don't burden the customer with that. That's creating a new clearance on the one hand for the end customer, but ultimately, it's also creating the ability for banks to leverage technology and use the principles of open banking to broaden the proposition but at the same time, change the customer experience.

Sanat Rao: The other example I just want to mention is something that's increasingly becoming relevant today in different parts of the world which is that I think banks are recognizing that there is a market place model if you like, which is becoming very, very relevant in certain segments of the market. And whether it is the likes of Citibank which have tied up and gone to large banks in India, or whether it is just the fact that banks leveraged the APIs that are available in Finacle to be able to associate with other third party players and bring to the table, capabilities, products and services, which are not necessarily from the bank's own portfolio. And that allows them to create this marketplace model. So I think these are... These two or three examples that I gave are different kinds of examples which allow banks to differentiate and create this great experience. So just to summarize, it's monetization of open banking. It's the development and launching of a marketplace that I talked about, and the one that I referred to right at the start, which is to launch a completely different digital bank.

Anand Verma: That's really amazing, and I think you gave a diaspora of different examples which is... And sometimes it doesn't come out clearly in terms of Finacle proposition. People still associate Finacle with core banking, but it's so much much more than that. And what you said really kind of bowled me over which is Finacle enables more digital banks than any other venture globally, right? And I think that is phenomenal. And especially, everybody's going on that digital banking journey and I think this statement is so powerful that I learned something really unique today. Just kind of shifting gears slightly, Sanat, and you deal with a number of board level people, the C-suite in your role. There must be a contrarian stance on this, right? What are some of the most popular misconceptions that people have, the leaders have about digital banking and also, the new age banking as well, in your experience?

Sanat Rao: So Anand, that's a great question, and you're right. There has been misconceptions along the way which have led to certain contrarian positions. I think over time, the misconceptions have not gone away. If anything, they've sort of taken a different shape. And let me explain what I mean. So if you go back to the early stages of digital five-plus years ago, I think in the minds of many banks, digital meant an electronic channel, and if you ask someone, "What are you doing as far as digital is concerned?", they'll say, "We're introducing electronic banking, or we're introducing mobile banking," or something like that. I think that has by-and-large been addressed, and that misconception I think has today largely gone away.

Sanat Rao: Having said that, I think given that digital transformation in some form or the other continues to exist in most institutions today, I think the other big misconception at the moment is the fact that digital banking is purely a technology play, and I'd submit to you that banks that take that approach are playing into a very dangerous game. Digital banking is much more than technology. Technology of course is bang in the middle of that. No doubt about it. But it's much more than just technology play. And when I look at our own experience of having worked with so many banks in all the six continents of the world, I think when you look at the right formula, or what is the right formula for digital banking, I think we would submit that there are different elements to it.

Sanat Rao: One is of course, the ability of a bank to leverage technology and transform its business model from a traditional pipeline model to a more platform-based model. The second is that in the past, banks were quite happy to work in organization silos where you had a product team working in one part, another product team working in a different part. I think today, there is organizational agility that's been brought in. Therefore, these silos are being broken. The third important element is that technology today is allowing banks to automate operations in a hugely different way, and that's the other big change. The fourth I would point towards is what is increasingly becoming mainstream which is that the modernization of your legacy applications is going hand-in-hand with a question of how will we move to the cloud? And there's no one journey to the cloud, and there's no one-size-fits-all approach, but the great development in this space is that today, banks are no longer saying, "Should we move to the cloud?" The question more is, "How do we move to the cloud?"

Sanat Rao: And last, but not the least, I would point to arguably the biggest element of this change, but probably the most understated if you like, which is that at the end of the day, it's all about people and culture. If you listen to the transformation with [inaudible] and DBS Bank in Singapore, and they are actually recognized as the most digital bank in the world, their story is obviously a lot about technology. But it's also about how the organization has changed, and it's all about people, culture. It's all about being driven from top-down. So these are all the different positions, and these were far removed for the definition of digital 5, 10 years ago. So I think misconceptions have changed along the way, but to summarize, I would say that it's a very dangerous proposition to believe that digital is only about technology.

Anand Verma: Yeah. That's a good one. And thanks for unpacking that as well. So digital banking is much more than just a technology play. Stay with us. Once again, you're listening to the Infosys Knowledge Institute, the Brilliant Basics Edition. Today, we're talking about digital banking and the new normal. I'm delighted to be here with Sanat, chief business officer and global head of Finacle at Infosys. So Sanat, just kind of changing tack now, and talking about... you know..And I've been part of the platform discussions at Infosys recently as well, and I'm sure you're a core part of that, is platform-driven business models. With regards to the research that we have seen, platform business economics can be quite a large business model. It's projected to expand continuously. I've been looking at some of the research around how companies are operating at both platform mindset and services mindset combined together. I would love to get your perspective with regards to what is a platform-led business model, first of all? And also, what advice can you share with the listeners with regards to how to tap into platform opportunities?

Sanat Rao: All of us I think today are familiar with what a platform means, and indeed, when you look at the really disruptive platforms that are existing in the world today, none of them are from the banking industry. And that might surprise many of us because banks have been early adopters of technology, but really, the platforms that you and I know of and the more familiar examples of whether it's Facebook or Uber or Airbnb are all outside the banking industry. Having said that, I think the acknowledgement has to be made that the platform model is here to stay. It is increasingly maturing, and indeed, even in the banking industry, today there's a realization that banks need to have their perspective of how they'll adopt the platform model.

Sanat Rao: Now, let me try and paint a picture for you, and hopefully your listeners can relate to this. So traditionally, what used to happen was that banks, the business model of a bank was vertically integrated. So you had a product that was being manufactured by the bank in one part of the bank, and it was being distributed by a certain set of people. It was being distributed through a certain number of channels and therefore, front to back, it was vertically integrated, but it was a product silo. Those kind of value chains were fragmented and those are being broken now. And if you look at a bank today, the way we look at our own banks, the banks that we deal with, what are essentially the three or four layers of work that the banks are doing?

Sanat Rao: First, they manufacture products. Second is that they identify who those products need to be sold to. And third, they decide how they will distribute those products. There's also the added dimension of the product's portfolio, and what's certainly happening today is that in a traditional model, the banks used to sell their own products within the platform model. Technologies allowing banks to not just sell their self-created products, but they're able to add on complimentary partner products, products built by someone else but which can be sold to your clients through your distribution channels. The other change that's happening here, Anand, and this is something really significant, which is that in the past, institutions were very wary, indeed suspicious if you like, of working with someone else. The belief was that I can do everything and I will do everything.

Sanat Rao: I think today, we are in an era where creating joint products with other banks or partners or fintechs, or indeed, even some of the digital giants, is here to stay. And while there's a recognition that two institutions may compete in one area, there's nothing to prevent them from collaborating in some other area. And some amazing partnerships have come to light. So if you see the recently announced partnership between Marcus by Goldman Sachs, our customer, and the Apple Card for example, that's been a very visible example of two players from two different industries coming together. That's in the US. If you travel towards Asia, Citibank wanted to capture the large demographic advantage that India had, and they combined with ATM to launch a new credit card and sell that in India. But it doesn't stop there.

Sanat Rao: Today, I think again, technology's allowing banks to leverage through the platform model, the ability to create lifestyle products, and therefore, today, it's not at all unusual to be able to do things like hotel bookings, flight bookings or cab bookings through the infrastructure and capability that's available through the platform model in banks. Last, but not the least, I think there's a very big fundamental shift in that banks today are recognizing that they can indeed be selling competing products from third parties, and that's here to stay. And it goes back to the point I made a few minutes ago which is that you can compete in one area, but collaborate in the other area. This is all in terms of the product manufacturing part which like I mentioned was right at the back in the engine room. This is where the work is being done.

Sanat Rao: If you go to the middle layer, this is where the banks I think today are focusing from being a distributor if you like, of self-created products to being a marketplace where the customer can access the capability that you make available for a full range of products which are sourced from a variety of different sources. One is of course, your own in-house created products, but increasingly, those that are built by partners or products that are jointly created, or indeed, sometimes even procured from competitors. So banks will try and create I think a best match based on the contextual needs of customers, and the products and services will be available as their aggregate portfolio. So this is the middle layer which for want of a better word, I call a layer of matchmaking because we manufacture, you determine the portfolio of products which includes things that you will not manufacture on your own. And then you come to the very, very interesting part of the distribution side.

Sanat Rao: And banks will today, increasingly offer aggregated products and services, not just through their own channels, but increasingly we'll find that the shift is going to be towards third party channels, including non-assisted channels. If you go back to the traditional definition, the traditional definition was that you needed a channel which was bank owned, but today, with newer technologies, with non-banking infrastructure like a smart home or the newer automation devices that are available, banks are today able to allow the distribution of banking products and services through third party unassisted channel. And indeed, this is going to be one very, very big area where there's going to be a huge amount of change. But there's obviously a lot more that can be said about platforms, but I think fundamentally, this is where it comes to the fore, which is that the bank has the ability to create an ecosystem and make a proposition that's much, much larger than their own.

Sanat Rao: You'd also asked what the advice to your listeners will be. It's all very well to I think get excited by something like this, and certainly, when you look at the huge disruptive platforms that today are in existence in the market, like I said earlier, they're not in banking, but I have no doubt that in the banking industry sooner rather than later, we will see some kind of a large platform play. Having said that, and recognizing that platforms are here to stay, the future platforms will continue to inspire both on the innovation side, and the disruption side. But I don't think... We would actually be making a big mistake if you just felt that if you launched a platform, that by itself is going to be the answer to all your problems. So I think platform as a model is a great model. I have no doubt that many banks will launch platforms in some manner or the other. Will they be truly disruptive at scale like Uber for example, or like Facebook, or Amazon for example? I don't know. So I think platforms are here to stay. Platforms have a big role to play, but I think it will be increasingly harder to sort of capture and monetize and make it truly disruptive.

Anand Verma: Right. Right. And what is exciting is digital has enabled the power of partnership. So what you're saying is that it's companies that would not otherwise work together are working together. Products that otherwise would not be manufactured by one company are getting manufactured together or shared on the platform. So the definition of also the platform has evolved dramatically. Would you agree with that?

Sanat Rao: That's right. So as the definition has evolved, I think some of this thinking that I talked about which is that your platform should incorporate third party products, should incorporate third party channels, should incorporate the possibility of jointly creating products with someone else, this is all a maturity in the thinking, and you're absolutely right.

Anand Verma: Got it. That's a really good point because with platform comes the evolution, right? And how can we not talk about evolution, given we are in an unprecedented times with COVID-19. And we have been recording this remotely as well, and I've been recording podcasts for the last 100 or so days remotely as well. What's your view on how the definition of money and the money market and financial services changing or evolving or reimagined because of the COVID-19 situation we're in?

Sanat Rao: So I'm going to take a slightly contrarian view here. There was this WhatsApp message that was going around not too long ago saying, "What was the biggest facilitator to moving towards digital?" And of the three or four options that were given, COVID-19 was one. And there's no doubt that the current pandemic is a big, big to the move towards digital banking, and indeed, digitalization in every aspect of our life. If you stick with the banking industry for a moment, I don't think COVID-19 alone is going to change anything dramatically. I think there's no doubt that COVID-19 will hasten the adoption of digital. It will hasten the maturity of digital, but I don't know whether just one experience with COVID-19 is enough. You probably need two or three such for there to be a radical change.

Sanat Rao: And that said, there's no doubt that even in the last four months or five months that we've all been in lockdown, there's no doubt that because of COVID-19, a lot of misconceptions have been sort of dispelled, and there's been a rapid move towards digitalization. Now, in terms of financial, the thing as the pandemic creates the recessionary conditions, and we read about that in the newspapers every day, banks I think are really working hard and overtime to respond to the crisis. I certainly believe that the banking industry has a very, very big role to play in the way we combat the current situation. In terms purely of digital adoption, I think without exception, the banks that we have spoken to in the last few months say that they're experiencing a very sharp acceleration in individual adoption across segments, and I think we're seeing that.

Sanat Rao: My own parents who are in their late 70s and early 80s, they've been able to use the Zooms and all the other collaboration channels very, very easily, and I think there are many, many such examples in all of our families across the world. So I think the fact that there is a hastening towards that, there's no doubt about it. But the other important thing is that customers of banks are not only banking more on digital channels, but they're also I think consuming more products digitally. I dare say that once the dust settles on COVID-19, whenever that is, customers may partially revert to physical banking, but a total return to how it was done earlier I think is ruled out. So I don't subscribe to the view that branches will disappear, but at the same time, we probably won't need as many branches as we have today.

Anand Verma: But branches were disappearing already, isn't it, Sanat? And this will only kind of hasten the more disappearance. Do you think that?

Sanat Rao: Sure, it will. The ones that remain, there'll be some change. So mundane transactions which don't necessarily need face-to-face, I think will increasingly get done through the remote channels, but there'll certainly be some activities, advisory for example, where clients might still want to be with their banker and do it face-to-face. So I think there will be a reassessment of what actually needs to get done, and there'll certainly be, the more progressive banks will take a step further to recast their business into completely new digital models. So in our own case, for example, in terms of our own operations, we swiftly moved to a remote working environment I think, if I remember correctly, about 95% of our workforce were working from the safety of their homes very, very quickly. And that transition happened extremely smoothly.

Sanat Rao: I think the question really, Anand, is that everyone conformed to this because of fear, right? So if you go back to March where the world suddenly went into lockdown and everyone went home, the planet went home, there was genuine fear because no one knew what this virus was about. And therefore, I think even in societies and economies where adoption or where the conformance to practices such as stay completely at home or wear a mask were not sort of prevalent in the past, I think there's a fear that made everyone sort of go down that route. I think the question will be, as things start easing, exactly like the way we're seeing it right now, will customers and the general public still conform to this or will we go back to our old ways?

Sanat Rao: I think there, there is something that we still need to wait and watch, but I'm firmly of the opinion that COVID-19 has hastened it, and certainly make us rethink about many elements of the way we used to live and work in the past, but just one COVID-19 is not necessarily going to change everything. So to round off this answer, I mean, the question that a customer asked me last week was... I used to travel 15 to 20 days a month every month on business. And a customer asked me, "Will travel stop?" And I said, "No. Travel will not stop. Almost certainly, I'll not travel as much as I did in the past. I won't need to travel. Customers won't expect me at every meeting. But at the same time, I don't think one can just afford to be in a home office throughout and say that we'll get all the business done here."

Anand Verma: Correct, correct. I'm ready to get out of my home office, and I'm sure you are as well. And talking about capitalism, the other capitalism that kind of really interests me called stakeholder capitalism and kind of we were talking about it offline a few days back, Sanat. The role of institutions generally, especially banks as well, it's changing dramatically, right? So where it's not just about pleasing the shareholders, it's about the environment. It's about society. It's about climate. Number of things are basically coming together. Governance for example. I would love to get your view on... Especially with financial institution, but also in general as well, is stakeholder capitalism. And I think COVID-19 has also hastened that process, right, where we're thinking about communities. We're clapping for the social care. All these things. What's your view on this?

Sanat Rao: Let me answer this a little more broadly rather than just the banking industry on this. So I think, I've been reading quite a bit about capitalism in the last six months and it's a topic that I think is very relevant today, and not just because there a large number of people today who think that capitalism is broken and is not working for them. I think capitalism important in mention in the world that we live in and we need to address the issues there. And thirdly, in recent times, there have been the right kind of debates within society, and increasingly, in the world of business as to what is the role that purpose-driven businesses play in driving change. And you're absolutely right. Banks and many corporations have become very aware of their role and their responsibility, if you like, towards other relevant issues beyond just making profit.

Sanat Rao: And there's probably a good debate to be done about whether companies should do good just for the sake of it, or whether the act of doing good should be driven into their business model. I'm no expert on this topic of capitalism, but on the basis of what I've read and understood in the last few months, I do believe that there's an increasingly strong argument to be made that the act of doing good should be driven into the business model of organizations. So to that extent, there's probably a structural change that's required in the way world is operating today.

Sanat Rao: And if you take Elon Musk for example, right? Possibly not everyone's favorite individual, but for a moment, if you just keep our respective emotions and biases aside and think about it, isn't it possible that Elon Musk genuinely thought that electric vehicles were going to be truly good for the world? And I dare say, with his focus on making electric vehicles, he has probably hastened the development of electric vehicles by a good number of years, that if he didn't come on the scene and Tesla didn't focus on EVs, the automobile industry probably would be taking a much, much longer time to really pay serious attention to electric vehicles. Now, why did I get in this? I think this example is a good example of a company which had not lost it's capitalist soul. So he was there. He wanted to make a profit. He ran the company with a motive like any other corporation. And yet, there was an underlying attempt to try and do good for the world, which was to bring an electric vehicle and move it away from oil and so on.

Sanat Rao: So I believe there is this debate about capitalism, the role of the companies and businesses play, and indeed, what is their role and responsibility to the world? So this debate I think preceded COVID-19, and I think when you look at the measures that corporations such as... To take this two example, Microsoft and Starbucks have taken towards climate change for example, I think it's very clear that there are many companies today who are very serious about this, and who are looking at making changes not just for the sake of it, but because they genuinely believe that those changes can be made, and they recognize that there are other stakeholders who are part of the same environment to whom you have responsibility. And I just want to end, as far as Infosys is concerned, I think right from the beginning when the company was formed and it was a startup and not the global, hugely respected corporation that we are today, Mr. Murthy had always propagated the philosophy of compassionate capitalism which was you always have a capitalism in mind. Look at socialism at heart.

Anand Verma: No. That is really interesting. And I think my kind of second point here, and I'm so glad you mentioned Mr. Murthy, he is just like Elon Musk. Mr. Murthy is a change maker in our industry, right? And the change comes not just by creating new marketplaces, but also taking the market, the community with that as well, right? And I think one of the things that was making me quite excited reading your article recently was the role of leadership in the current situation. I would kind of extend the question a little bit more for you. With the role of leadership and current situation, a lot of leaders are behaving differently, given the pressures on cost or given the pressures on products and services, consumer pressures, job pressures, so many things. In your view, what should be, could be the role of a leader in the current situation that we're in?

Sanat Rao: That's a great question, Anand. And I'm reading a lot about today, and in fact, in the last 48 hours, an article that I'd recently written was published in the Forbes magazine where I said, leadership needs to continue but you need to deal with leadership with soft hands. So deal with the hard problems but deal with them in soft hands. So I think in the last four months, the question of leadership has come up every so often. It started with should we go into lockdown, and all the associated questions that were asked of governments and companies as the planet went back home, if you like. And today, we are in an environment four months, five months later where fortunately things are looking better, and the question now in front of governments and chancellors in different countries is how do you start easing the economy and create economic activity going, but without necessarily exposing everyone to the health risks because the virus has not gone away? And these are leadership questions.

Sanat Rao: I think if there's one thing which certainly I have seen the last few months, it was this, that... And I like to give this example in this context. So the example I give is that when we go into an office, there is a manager there or a general manager or a CEO, whatever, right? So that individual has certain privileges there because of the position that he or she occupies in the organization. Now, when everyone went home, that CEO or that general manager was dealing with exactly the same kind of problems that someone down the line in his team was, right? So dealing with children at home, dealing with all the other issues, the entire family working from home, finding the right balance between work life and everything else. So this pandemic didn't hit the leaders any less than people down the line.

Sanat Rao: So I think one thing that has certainly happened is that when you look at some of the more prominent examples of leadership in the last few months, whether it is what Governor Cuomo did in, or continues to do in New York, whether it is what Jacinda Arden did in New Zealand, or from a banking industry, when you look at what Jill Castilla did in the US, these are not examples of just leadership brilliance. They're examples of leadership backed by a certain humane perspective, and I think that's got to be the biggest change. It's not as if suddenly out of the pandemic some very new, radical scientific thinking of leadership's going to be there. I think that the pandemic is going to create a new thread of leadership, the more human part of leadership, the fact that behind a leader is a human being and that human being is no different from someone on his own team. I think this is going to come to the fore.

Anand Verma: No, I agree. And I think that empathy is the word that comes to my mind. And I think you're raising a really important point. And leadership can be a thankless task as well, right? It's like in some cases parents. Sometimes thing just happen and people don't realize as well. And I quite like this bringing that humane aspect of leadership where everybody is on the same boat together, and that's what COVID-19 has created, right? It's created hundreds of offices in people's homes, not just one office where people come together. And I think it's a brilliant, brilliant way of wrapping up our business part of this podcast, and Sanat, thanks for very insightful conversation, very passionate conversation as well. I learnt loads today. One of the traditions we have on the podcast is to ask our guests about their favorite book, what you're reading right now, why you're reading? Some insights and share from you. So love to hear from you what you're up to nowadays from a reading perspective?

Sanat Rao: You've touched on a slightly raw nerve here. And I say that only because I have to confess that I'm not a veracious reader. In fact, I think in the last 6 to 12 months, if I've become better informed on many things, even outside of banking and digital and technology, it's actually through a slightly different medium which is podcasts. And I listen to a lot of podcasts when I'm out on my daily exercise. I have my AirPods on. It's not as though I'm listening to music. More often than not, I'm listening to podcasts. Having said that, I have been doing a lot more reading in the last one year than I think I have done for many, many years.

Sanat Rao: The book that I'm presently reading... So I'm not going to say a favorite book because I think every book and every podcast I think offers something new, and therefore, it's probably wrong to say that one is more relevant than the other. So the book that I'm presently reading is something called Doing Digital: Lessons from Leaders. It's by Chris Skinner, and there he's interviewed and studied five large banks that have made huge strides towards digital. And while there are multiple messages in the book, I think the key ones that I took away are number one, that digital transformation goes well beyond technology, and we talked about this a little earlier. Second, that the change in the organization is driven from the very top. And last, but not the least, I think the fact that large organizations can change too.

Sanat Rao: And I stress upon this because there is this feeling, and rightly so, there is the feeling that in adapting to the digital world, it's the smaller, newer, younger organizations who'll adapt more quickly, and indeed they will. But I think what this book has dispelled is that the big boys can't change. And he's taken five big banks, JPMorgan Chase, BBBA, ING, BBS Bank, and China Merchants Bank. He studied those banks very carefully. He's spent a lot of time with the leaders there. There are lots of examples. I've not yet completed the book. It's a fairly big book, but I think all of these banks... And indeed, there may be a handful of other banks as well which are great examples of banks which are changing, and despite their size, they're driving digital to the core. So that's a book that I'm currently reading. Besides books, I tend to read a lot of other publications on my iPad, but like I said, podcast remains my primary source of information.

Anand Verma: Amazing. Very efficient as well. That's brilliant, and thanks for sharing that, Sanat. With regards to how can people find you online, are you on social channels? Are you staying away from those?

Sanat Rao: I am there on some channels. So you'll find me on Facebook, but you'll never find me posting on Facebook. I'm quite happy on Facebook liking what someone else has posted. But the two channels that I really like are LinkedIn, where I've taken to posting quite regularly. I'm also very active on Twitter and I can be followed at @sanat_rao. Link to the fact that I've been listening to a lot of podcasts and been doing more reading as well, I've begun writing quite a bit, and the article that I referred to two days ago in Forbes, that was my fourth article I think in the last six months. So I'm a regular contributor to publications like Forbes, not a social channel, but it's a channel I would list where my views are being expressed. And there again, it's not always about banking and technology.

Anand Verma: No, that's brilliant. And I've just followed you on Twitter. I'm a big reader of your LinkedIn articles as well. So keep pushing those things. I learn a lot from that, so much appreciated. Sanat, thank you so much for your time and a incredibly interesting discussion today. I appreciate it.

Sanat Rao: Entirely my pleasure, Anand. Thank you so much for this.

Anand Verma: Anytime. You can find the details on our show notes and transcripts at Infosys.com/IKI in our podcast section. Everyone, you've been listening to the Infosys Knowledge Institute, the Brilliant Basics edition, where we talk about digital disruption, design and future work. Thanks to our producer and researcher, Yulia De Bari, and the entire Knowledge Institute and Brilliant Basics team. Until next time, keep learning and keep sharing, and of course, keep safe. Thank you.