Wipro and JTI’s broad digital transformation partnership
IT services giant Wipro has been a close partner of tobacco company JTI for more than a decade. Vinu Varghese has been at the organisation for eight years, and possesses over 23 years in the industry. “I manage the consumer business unit for continental Europe, one of the six business units of Wipro,” he says. “And this includes four verticals - retail, CPG, travel and media.”
The company, which boasts a $25bn market cap and around 180,000 consultants, works across a hundred countries. Varghese points to its ownership structure as one of its defining traits. “What really makes us unique is that we are almost 70% owned by a charity - the Azim Premji Foundation. And this foundation works with 300,000 schools to ultimately provide education to children who would otherwise not have gotten education in remote parts of the world. It means that every quarter, 70 cents in every dollar we make goes to the charity, which is something that we're particularly proud of.”
Wipro’s long standing association with JTI began with data centre operations, with Wipro now ensuring high availability and performance levels across the globe. “Then we moved on to independent validation,” says Varghese. “This was a very important initiative for JTI, which has freed up their business users so that they could focus on more value-added work while we take on the drudgery of testing.” That’s been achieved with automation, with Wipro employing extensive regression testing to make sure of functionality before going live.
Wipro also works with JTI on the security side, including identity access management and security incident and event monitoring. “A fourth very important aspect is closely related to the BPM initiative of JTI,” says Varghese. “JTI is setting up shared services centers around the world and transforming its operations. We were tasked with creating the knowledge management around it - the documentation - which ultimately would help them streamline processes.”
The aim of the collaboration is simple, says Varghese. “Fundamentally we are aligned to help JTA achieve its vision of being the number one tobacco company in the world by 2030. The bedrock is delivering success. It's about making promises and keeping to those promises.”
Varghese is confident that the relationship is built to last, with future focuses including blockchain, cloud, artificial intelligence and analytics. “We see digital and technology driving a lot of decisions and changing the world today, especially in organizations like JTI.”
'Doing digitalisation wrong and risk being left behind'
Research has shown that 55% of bank executives view non-traditional players as a threat to traditional banks. The fear is justified, as digital banks could have a cost base approximately 60-70% lower than theirs. If this looming threat from innovative and digital-minded industry disruptors has not been enough to trigger a digital rebirth of legacy financial institutions, surely the biggest disruptor of them all – the pandemic – would force change?
It seems that despite studies showing COVID-19's long-lasting effects on the global economy to be of the likes of a substantial one-year reduction in worldwide GDP of more than 6%, the necessity of cost-cutting in 2021 is still not a stake high enough to steer legacy financial service CFOs in the same digital direction that the world is heading to.
Modern living now operates online, both professionally and personally. Distributed working, retail, and socialising are all the ‘new normal’, and the financial services sector is no different; the pandemic has resulted in 71% of global consumers now using digital-banking channels weekly – with contactless and digital payments at the forefront of this shift.
Due to this demand, many banks are experiencing a 50% increase in the use of their digital services. Research has shown that accelerated consumer adoption of digital banking tools has led to the growth of new digital banking users by approximately 20% over the last year alone. The decision-makers at legacy banks now have a choice to make: understand and adapt to the modern consumer’s needs and lifestyle or watch them leave.
This is different from the threat legacy banks saw in the 1990s with the rise in internet banking or even the financial crisis of 2008. Consumers now have a plethora of options available to them with a click of a touchscreen button in the palm of their hands. In order to remain a noticeable competitor in the industry, legacy financial institutions will have to cut costs by 25-50% in the next 3-5 years, which simply won’t happen. A lot needs to change.
Transformation in various forms
This transformation can materialise in various forms, from introducing operational efficiencies and superior customer experience by leveraging AI, modernising legacy systems and processes to allow for cloud-native end-to-end experiences, to building digital onboarding, quick loan disbursements, and real-time payments. With studies finding that firms could digitise many activities 20-25 times faster than previously thought possible, it’s a convenience simply waiting to happen.
It would be wrong to imply that all legacy financial institutions have not thought about accelerating their digitisation. Research has shown that 45% of banking executives are keen on transforming their existing business models into digital ecosystems right now. So, if sentiment and plans to pivot are beginning to take shape, where are legacy banks going wrong and why are changes not being made?
It’s simple. They have their priorities all wrong. Data looking at the top banking priorities for post-pandemic FS shows the three lowest priorities mentioned are instrumental to achieving digital transformation success: innovation, operational excellence, and culture development. This lack of focus on technology, operations and culture will ultimately derail most digital banking transformation efforts, rendering these legacy banks obsolete.
Changes need to be made for these institutions to stand a chance of surviving against their disruptor counterparts. As Jack McCullogh, founder of the CFO Leadership Council, astutely said: “Few, if any, investments can give an organization a sustainable competitive advantage like an investment in technology”.
In every crisis there is an opportunity, and the pandemic is a perfect time for legacy banking to reassert themselves as a viable option for consumers and as noticeable competition in the industry. The world has been forced into digital, and these legacy firms are no exception. It is now or never.