Accelerate ESG With Cloud and Data in Banking

Feb 08, 2023
Banking | 5 min READ
The banking industry has a reputation for being one of the slowest industries to adapt to change. Some industries have undertaken massive transformations to keep up with customer demand and the new financial technologies available. Several factors, including new trends in data management, drive the need for banks to transform to remain competitive. The cloud presents an opportunity to make these changes more quickly and easily. By leveraging the cloud to support data, banks can innovate more quickly than ever before.
Vikram Chandna
Vikram Chandna

Sr. VP & Global Head



Ayush Sharma
Ayush Sharma

Segment Head, Americas

Banking & Capital Markets


ESG Compliance
Financial institutions worldwide are keen on delivering beyond their lending and investment strategies to add an environmental and social impact. The markets drive a strategic commitment to deliver solutions and address catastrophic climate change and social inequity.
Owners are confused with expectations and outcomes with ESG; there will be a different definition of "green investment" if you ask different portfolio managers.
Around 54 % of the SMEs have pledged to implement ESG concerns, but only 26% of them have a full-fledged dedicated ESG strategy.
ESG is the epicenter of global conversations as a resource to justify corporate impact. With the pandemic in timeline, it has pushed banks worldwide to re-align the risk and social impact of their portfolios and implement ESG strategies. To maintain compliance, a certain level of digital maturity and tools are needed to best ensure success.
Creating benchmarks in environmental and social audiences is essential for economic evolution, but banks re-thinking their loans in perspective of climate/ environmental impact is revolutionary.
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The Sustainable Finance Disclosure Regulation (SFDR), spearheaded by the European Union, aims to ensure that financial institutions must release information on how they account for sustainability risks. That’s why banks are increasingly placing reliable and resilient digital performance systems with the intent to match digital performance on global levels.
Technology is and will be playing a critical role in the success and viability of any ESG strategy. The integration of tools and solutions is a tricky space and takes time to configure.
What Are Banks Doing Towards It?
The appetite to cope with pandemic and ESG risks solely depends on the maturity of operational resilience. With ESG measuring, monitoring, and process re-engineering tools, banks are further streamlining product lifecycle and capital project management operations.
The ESG Risk assessment evaluates cost impact and environmental and regulatory exposure. This highlights how increased physical climate risks will impact asset valuations and customers' credit ratings to get insights into existing risk management frameworks.
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Harnessing the power of data governance, digital finance, AI, and IoT to deliver products that integrate ESG into investment and business decisions. One solution is to divest portfolios by exercising policy influence and changing overall risk and return. Asset managers are already making a significant shift in their investment priorities by getting out of businesses that lack long-term value by concealing their decarbonization activities.
With recyclable cards, loyalty points for a low-carbon lifestyle, and green bonds for investment banking, the adoption of green practices will lead to the transition to net zero.
  • Tracking metrics with sophisticated systems like Birlasoft’s supply chain management cloud to keep ESG data relevant and reduce the footprint in the process.
  • Banks are evaluating climate impact based on short- and long-term risk strategies. Based on the data captured, simulations are run based on different configurations to compensate for losses and achieve decarbonization.
  • Recognizing climate change as a global security priority
Cloud Migration
Financial institutions worldwide are implementing cloud service offerings with value-added service options. The implementation solely depends on the level of automation and technology to deliver high-end coverage with cloud services.
Data centers require maximum energy, and organizations are looking to reduce power costs tied to CPU consumption, cooling to ambient temperatures, and consolidating storage.
FIs may be able to further sustainability aims by adopting a digital strategy. Banks can benefit from several different FinTech services in addition to advancing AI-based techniques. With digital banking solutions, reduced paper/plastic usage and reduced travel will help reduce footprint and increase accessibility.
  • Provide users with the convenience of digital services infused with human interaction at different touchpoints.
  • Engaging customers with customized financial coaching by providing rich, immersive digital experiences.
  • Leveraging AI to understand customer needs and delivering new approaches with digital-only models.
Creating a Strong Ecosystem of Partners
Consideration of ESG factors in business and capital planning, with active referencing from data to create transparency based on different strategies implemented. Integrating purpose-driven KPIs with internal and external reporting and restructuring individual and group incentive structures across customer-facing and leadership positions.
  • Poor data measuring and storing capabilities affect the digital maturity index and undermine the company’s ability to achieve diversity goals. Collaborate with CIO about digital transformation goals and their impact on ESG’s plan.
  • Forge new alliances and share resources to start and define a combined ESG framework to work on focussed initiatives with targeted investment plans.
Know Your Supplier
Banks are keen to highlight the positive environmental practices of their suppliers. Banks are now able to rank the environmental practices of their suppliers to increase their green credibility. They are also able to use the system to increase their competitive advantage by highlighting the green practices of their products.
  • With Net Zero targets defined for years to come, FI’s are taking steps to mitigate risks with green funds and socially responsible funds by offsetting carbon emissions
  • Identify sources and credibility of supplier-specific location data (production site) to measure climate risks.
  • Assess the impact of climate change on existing financial assets and credit rating of suppliers/customers
Birlasoft understands the impact of green solutions and often expresses its efforts to connect suppliers that administer greenwashing, net zero, etc., regularly. Our solution can provide precise, measurable results that advance you toward a successful, efficient, and long-lasting CRO Function concerning ESG risk management. With climate change at the center of our group's priorities, Birlasoft is helping banks achieve change with a clear line of reporting and escalation mechanisms driven by technology and digitization.
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