Our apps will be mainly cloud-based: Deutsche Bank's Dilipkumar Khandelwal

Dilipkumar Khandelwal offers insights on how the financial powerhouse is driving innovation through emerging technologies such as artificial intelligence and machine learning

The financial services sector has seen significant technology-led transformation globally during the ongoing Covid-19 pandemic. Dilipkumar Khandelwal, Managing Director and Global Head of Technology Centres at Deutsche Bank, in an interview to Sai Ishwar, offers insights on how the financial powerhouse is driving innovation through emerging technologies such as artificial intelligence and machine learning. Edited excerpts:
 

What permanent changes have occurred due to the pandemic in terms of technology deployment?
 

We realised quite early that it is extremely important for the financial industry to start leveraging technology. It has become more prevalent in the last six to nine months because of Covid-19, where the expectation was for everyone to be able to work from home and service your client in a far more digitised way. You also have to make sure that all your solutions meet certain regulatory requirements, because our industry is highly regulated. We started with the evaluation of cloud vendors two to three years back, and signed the letter of intent with Google Cloud Platform in July. A lot of the applications that we are running, which are predominantly on-premise applications, will be run in the cloud area. The partnership with Google is a two-way partnership where we’re not just looking at applications that we want to shift to the public cloud, but we also want to make sure that we really leverage the capabilities and advantages that come with public cloud vendors, like elasticity and scalability.
 

How is Deutsche Bank using artificial intelligence (AI) and machine learning (ML) to enhance the customer experience?
 

AI and ML are the most widely used words, and the most misused as well. This is because everybody wants to leverage AI and ML capabilities that are quite fancy. We are looking at it differently. The most important thing here is that for leveraging these capabilities, you acquire the right-use case or business case, because you can then see the benefits. For example, in a ticketing system or a customer-experience system, if your machine can learn about complaints or issues being raised by customers, and is able to address them directly without human intervention, you start seeing a lot of benefits.
 

How has automation come into play in your operations?
 

I think it is everywhere. We constantly look to optimise or automate a lot of the operations that require less human intervention. It spans all areas of the bank. It can be an area like anti-money laundering, where we actively consider automation and leveraging AI and ML capabilities. The other area could be know your customer (KYC).
 

Did customer onboarding present any problems during the lockdown?
 

We were already digital. There was no impact on customer onboarding or customer lending. Of course, when you start getting people to work out of their homes, it requires an adjustment. But there was no impact. From a technology point of view, we were far better off compared to other banks. We had the technology required for remote onboarding of clients already in place.
 

The world is moving towards digital banks and neo-banks. How do legacy banks like yours view such developments? Will it result in more cyber threats and data protection issues?
 

If there is one industry which can come somewhat close to the tech industry, it is banking. People might use different words like “digital”, but everything is digital in the banking world. On data security, a lot of such questions were raised when we signed the cloud partnership with Google. One must remember that all these cloud providers invest more money than individual banks or companies can do, for data protection. So, data is secure and protected. Also, the data that we stored are anyway encrypted, and we always would have the keys to this data that we own.
 

From around 85 per cent of tech outsourcing some years ago, you have brought it down to 50 per cent through inhouse work. Why has insourcing increased?
 

It was getting to a stage when insourcing was a lower percentage compared to leveraging of partners and vendors, and you just did not have control. You come to a stage where a lot of people are not able to deliver. We want to build the right level of competencies internally. We expect to increase insourcing to around 80 per cent in the medium term.
 

Is India becoming a major global tech hub for multinational banks?
 

We don’t really look at the India technology centre as a pure cost exercise. Earlier, we were operating out of several locations across the world, which resulted in productivity losses. We wanted to focus on a few technology centres which would then form the core for certain competencies. So we identified four countries — Russia, India (Pune and Bengaluru), Romania (Bucharest) and the US — for this. India is very special when it comes to new-age technologies like AI and ML, and we will leverage a lot of these capabilities when we start building applications in the cloud.