Mint BFSI Summit | Indian banks need to look at transforming back-end tech to stay ahead: Zafin CTO Shahir Daya

While India has been at the forefront of digital transformation when it comes to payments, user experience and front-end services, banks need to look at transforming back-end technologies, Shahir Daya, chief product and technology officer of banking software platform Zafin said.

“A lot of time and effort has been spent in the last few years on the user experience on the front end, on the glass, and there have been some amazing advances…but we’ve reached the limits of what we can do on the glass…it’s now a level playing field,” Daya said. “For any brand to now advance further, they need to look under the glass,” he said.

Daya was speaking at Mint BFSI Summit 2025 in Mumbai on Friday. 

While India has been a global leader in digital transformation with services like Unified Payment Interface (UPI), its front-end capabilities are now at par with global players, Daya said. 

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“India has undoubtedly emerged as a leader in digital transformation especially with UPI setting the benchmark in terms of customer adoption and scalability. The India Stack enables inclusion and scale that’s unmatched globally,” said Daya.

However, both global and Indian banks are struggling with core modernization and this is where the innovation needs to happen now, he said.

“There’s a lot of legacy technology in the back end that is really inhibiting agility, inhibiting innovation…core modernization is something that needs to be tackled in India,” Daya added.

Need to work with cloud providers 

Adoption of cloud is much slower in India compared with developing markets, Daya pointed out. “They’re being very cautious because of regulatory uncertainties,” he said.

However, they need to tackle this and move towards the cloud because there’s significant benefits to be gained from this. 

“It’s probably going to be a multi-hybrid cloud hybrid environment…because you are not going to put sensitive workloads in the cloud,” he said. 

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However, moving non-sensitive workloads or data to the cloud can be a good start, he said, adding that banks need to work with cloud providers to make sure their needs are addressed, keeping safety and privacy in mind. 

Functions like customer segmentation, managing storage or fraud detection benefit significantly from the cloud. 

Fintechs such as Zafin are a great way to get into the cloud as well. “Take advantage of the fact that SaaS providers are in the cloud, they’re optimized, they’re agile, they’re innovating,” Daya added.

Investment in AI

Zafin is looking at leveraging artificial intelligence for creating personalized products and dynamic pricing.

The fintech’s platform enables banks and financial institutions to design products and pricing while modernizing their core technology. 

“AI has taken us by storm. When ChatGPT came out, it was a huge step-up. Zafin has been investing in AI for more than two years now,” Daya said.

“We’re starting to leverage AI to figure out what a customer needs, looking at their behaviours, habits, creating an offer that is hyper personalized,” he said. Dynamic pricing is another area where AI can be leveraged–to look at risks, demand, customer profile and then optimize the price, Daya added. 

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However, there is also a need to focus on fairness and transparency when it comes to AI. “Fairness, trust, and transparency are the cornerstones of banking; so, we need to make sure that AI is not biased in any way, especially if we have to cater to the diverse socio-economic demographics,” he added. 

More and more Indian banks are adopting AI in their functions. The Reserve Bank of India’s October 2024 bulletin noted a steady rise in adoption of AI by Indian banks, although the pace of adoption was faster in private banks.

The RBI in December 2024 announced setting up a committee to develop a framework for responsible and ethical enablement of AI in the financial sector. The committee is expected to identify potential AI risks and recommend a framework for banks, NBFCs, fintechs and other financial institutions.

Cybersecurity concerns

There’s a lot more renewed focus on cybersecurity as banks push for digital transformation. There is also a lot more awareness, Daya said. 

What is needed to ensure cybersecurity and avoid fraud or phishing attacks is collaboration. “Banks need to collaborate with cloud providers, with fintechs, with cyber security professionals, so that we can all together work on being aware of the threats and keeping those threats away,” he said. 

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For all of these transformations, there is a need for talent. “AI needs data scientists, engineers…product managers that have deep domain knowledge and technical fluency, designers who can bridge the gaps,” Daya pointed out. 

India is well-positioned with a large pool of talent, but what is needed is upskilling the existing talent to make sure they are trained in the new technologies, he added.