Our first question to Bikram Saha was, “How does a successful, but still modest-sized company based in India, go about helping to create the forthcoming digital, mobile cloud era in the worldwide banking/financial services market?”
Saha is Vice President, Digital Banking, for Aurionpro Solutions (a profitable Indian public company, with about $130M annual revenues.) His responses provide thought-provoking insights into both: a) transfer of technology and experience – from emerging, less-developed markets to highly developed ones! – and, b) issues facing the powerful but fragile (think 2008!) financial sector.
The Product Strategy – Basic Economics
Aurionpro’s Digital Banking operation, based in the U.S. is offering a sophisticated set of solutions to traditional banking and financial services (FS) companies.
The strategy behind their product line combines some basic economics with cutting edge concepts about the future of banking.
First the economics: Saha reels off a number of facts about the cost of branch banking locations and operations. A transaction at a branch costs the bank 40X the cost of an online transaction; 15% of branches are unprofitable; There’s been an 83% increase in average transaction cost per branch, while branch volume has decreased by 40% – since 2002.
Aurionpro – Cutting Edge Tech Thinking
The tech thinking behind Aurionpro’s offerings is based on the idea that we are in the age of the “digital consumer.” While this may sound familiar to those who follow what’s happening in retailing, Aurionpro is out to enable banks to offer an “omni channel” experience to the consumer, addressing and taking advantage of all of the digital means that the individual has to engage with the institution.
In late 2015, the company launched its Aurionpro Customer Engagement (ACE) platform. Launched at the Money 20/20 conference in Las Vegas, ACE consists of both hardware and software capabilities. ACE promises to combine lower cost operations with enhanced customer engagement. The idea, Saha explains, is to offer a combination of “personalization, infrastructure and analytics capabilities, which can be easily integrated with banks’ core systems, through various connectors (for example a connector to the bank’s CRM – customer resource management system) and APIs.”
For the customer, the objective is to offer service across all devices and media, i.e., omni channel, plus a sense of more connection and immediacy to their own financial institution.
Smart Kiosk, Smart Branch – Services, Analytics
A key element of ACE is the Smart Kiosk. This standalone device permits a full range of customer interactions with the bank. For example, they can: open an account, receive a payment card (which can be real or virtual), get cash, make inquiries about their accounts and receive responses (which may require interfacing with an array of backend systems of the bank).
The capabilities are offered in different kiosk form factors, but they are also offered as software overlays to existing ATMs.
Saha points out that the smart terminals can be used inside of existing branches, but can also be sited as virtual standalone branches. He states that, “This brings banking closer to the customer. You can have a branch inside of a mall or inside a department store, or a sports stadium, at the cost of the kiosk.”
In addition to the cost of the kiosk, power and communications costs are borne by the bank.
Biometrics and Beacons
The smart branch relies on biometrics for user ID and security. Saha states that they are using a combination of: 1) voice biometrics and 2) retinal scanning. (Voice biometrics involves a digitized profile of features extracted from a spoken sample. The individual tones are used to create a voice print. Retinal scanning detects the unique patterns of the blood vessels in a person’s retina. It is said to be the most reliable biometric.)
Saha also states that they are working on incorporating beacons into future versions of their digital banking products. This would add a further level of personalization.
Applying Lessons from Emerging Markets
While the obstacles a company such as Aurionpro faces in trying to penetrate a monstrous traditional industry like banking in a country such as the U.S. are obvious, the company’s background in multiple markets around the world is one of its major advantages.
Saha states that 25,000 smart kiosks are operating around the world today – none in the U.S. Current customers include several Indian banks, Emirates Islamic Bank, HSBC and others.
One of the company’s points of attack for marketing to U.S. banks is to provide assistance to them in expanding to emerging markets. As he puts it, “In emerging markets our technology offers a low capital cost means of entering, and if things don’t work out, it also offers an easy exit.”
Telecom and Other Areas
Saha views the company’s technologies as applicable to other areas of FS beyond banking, but also to other verticals, most prominently telecom. While he does not have direct responsibility for that sector, he states, “Telecom companies are becoming quite a bit like financial companies.” While they can’t make loans or take deposits, they do facilitate payments, issue gift cards and get involved in other financial-type transactions. He views them as an area where smart kiosks could be very efficient and helpful.
Aurionpro is a company that is involved in several business areas and has multiple product and service offerings. The company has succeeded in making a large number of acquisitions over the past decade.
One of the most significant of these was the 2008 acquisition of security services provider SENA Systems. Based in the U.S., SENA provides Identity and Access Management (IAM) services primarily to the banking and FS sector. Currently, enterprise security services are still Aurionpro’s largest revenue segment, accounting for nearly 40% of revenues in the most recent quarter. Interestingly, however, the Digital Innovation segment of the company, which includes Digital Banking, has grown from 6% of revenue in Q3 of FY 2015 to 25% four quarters later.
Our guiding framework at Mobile Cloud Era is to examine the impact of the new technologies driven by cloud computing and mobile on the underlying economics and methodologies of businesses throughout the economy.
We’ve looked at how these new technologies and applications will affect areas including healthcare, automotive, retail and others.
In almost all cases there is an ingrained resistance by established institutions to accept disruptive change enabled by the tidal flow of new technology unleashed since the advent of the Internet and now magnified by the convergence of cloud computing and mobile. This resistance exists even after there is a demonstration of how the changes could enhance efficiency and promote customer satisfaction.
The banking industry is an obvious example of this. Let’s recall that this is an industry which, assisted by regulators, managed to crash and burn almost universally in 2008-09. No matter what one thinks about “too big to fail,” just ask yourself how long it would take the world of the Internet to completely replace the traditional global banking system with something more streamlined and easier to use. 12 months? Less maybe?
Clearly, there is a tussle going on in which new technologically-driven approaches must fight their way into the banking/FS sector. Saha is well-aware of the challenges and, interestingly, he frames them in terms of the differences between Value Creation and Value Capture.
Many companies can conceive of business improvements that could create value. But who will capture that value? This is a classic dilemma for entrenched institutions such as banks. (See, e.g., “Don’t Just Create Value; Capture It,” Harvard Business Review, 6/6/13, M. Ryall.)
We find Aurionpro to be a very interesting example of a company that is proving out the value creation potential of its products via its international reach and bringing a sophisticated marketing approach to attacking the U.S. market.
Visit their website: www.aurionpro.com