Digital Transformation

The Digital Transformation Journey of Kotak Mahindra Bank

Deepak Sharma Says Kotak Is Redefining Its Tech Stack for Digital Services
The Digital Transformation Journey of Kotak Mahindra Bank
Deepak Sharma, president and chief digital officer, Kotak Mahindra Bank Ltd.

Retail and corporate banking customers are able to avail banking products from multiple touchpoints today. The preferred modes of access are digital channels, primarily smartphone apps and websites. Digital banking accelerated during the pandemic and banks had to transform their processes and launch new digital products to satisfy existing customers and gain new business.

See Also: The Evolution of Online Fraud in 2023 and Best Practices to Plug the Gaps

Kotak Mahindra Bank Ltd. (Kotak), founded in 1985, is an Indian banking and financial services company headquartered in Mumbai. It offers banking products and financial services for corporate and retail customers in the areas of personal finance, investment banking, life insurance and wealth management.

As part of its digital transformation, Kotak launched several innovative and global-first products such as 811, Jifi, Hashtag Banking, KayMall, WhatsApp Banking and Cherry, the investment super app. It also launched new initiatives like API platforms, open and connected banking, a conversational banking bot 'Keya,' biometric banking, cross-border remittances on blockchain, artificial intelligence and OCEN (Open Credit Enabled Network), among others.

ISMG spoke with Deepak Sharma, president and chief digital officer, Kotak Mahindra Bank Ltd., to discuss the bank's digital transformation strategy and business plans.

Edited excerpts follow:

What are the biggest shifts that you see in digital banking today?

There are three or four big shifts. The first is what's changing when we see it from the customer end - customers have to see value and relevance. So, we put customer experience at the center of whatever we are building, changing and transforming.

Today, customers avail financial services not only from financial institutions [or banking portals]. For instance, you can also find credit [services] when you go to a retail store or when you shop online. You can buy an insurance product on a travel site while booking a ticket. Financial products are getting consumed at different touch points. And customers want all the information and the best deals at that touchpoint.

The second big shift is consumers are now primarily digital forever as 98% to 99% of all transactions are digital. And this is largely mobile-led.

[To address this] banks want to become more like fintechs. They are launching new apps, new platforms, and becoming more agile. They are focusing on speed and rebuilding the tech stacks - from monolithic to microservices.

The banking stack is now becoming a more embedded financial service stack.

The third big shift is on the credit and risk side. The velocity of data has increased due to the goods and service tax, GST. And this creates a new opportunity for SME lending. Now you can score the transaction to give credit. I think traditional credit underwriting models are changing. And that's happening on the consumer side too. The new playbook is credit risk on the back of data.

The fourth shift is about addressing security and fraud. Increasingly, there is a lot more focus on the security risk and authentication stack. As customers are increasingly going digital, they are putting themselves at risk, either by sharing passwords, installing malware on their devices - perhaps unintentionally - or their credentials getting stolen. How do we protect these customers both at the front-end and back-end?

You mentioned security and fraud as one of the big shifts. Could you expand on that? What about data privacy?

Banks have been reluctant to go to cloud for that [security] reason. And they have never put their systems outside their data centers. They want full control of their security, firewall and perimeter. They want all the policies to work even if they are moving things around on the cloud.

Regarding privacy, banks have always been at the forefront. Banks are the only ones who are allowed to use Aadhaar for customer onboarding. And that was because banks invested in something called the Aadhaar data vault. That means all Aadhaar data that was coming in was encrypted and masked across systems. So you cannot see the Aadhaar details [of customers] in any of your systems. We have to deploy this across our 30 to 40 systems.

So I think the very reason banks got to do [such] things that other financial services players were not allowed to do was because banks took privacy and data as a foremost responsibility and as a regulated entity.

How are you pursuing these big shifts?

When we looked at our traditional business model, we realized that platforms are the way to financial services.

Kotak Fin is a platform for large and midsize corporates. On this platform, you can avail of trade services, cash management, account services and payments. You'll find everything in one place. Platforms for wealth, small business or retail cost consumers are all getting embedded at a single layer of engagement through different products - and experiences are getting orchestrated.

We also realized that our tech stacks were largely monolithic. So we set out to build API-first, microservices-enabled stacks. It helps us internally when we build new products. But also, it starts to become more [useful] when we integrate it through various ecosystem players. So it's more like embedded finance, where you can issue a credit card or a loan on a checkout app. So [we think about] how we expose these APIs to different partners or how to integrate it with the ERP systems of the large corporates. So this is banking as a service. The banking stack is now becoming more embedded financial services stack.

When did you implement CRM in your tech stack?

We started this journey in the last couple of years. Initially, our focus was on the customer onboarding journeys for our various products, such as 811, loan and credit cards. We began with the integration for all our customer onboarding.

Subsequently, we started building the CRM service with Salesforce. We had several disparate systems and wanted to integrate or unify everything.

And third, since this is all on cloud, we could cluster different sets of users and then run different developments of journeys for each customer cluster.

So I have a unified platform with the flexibility to run these [clusters] with some sort of autonomy within the setup.

But the CRM journey is ongoing and there is probably another 12 months of runway. But when you go to platforms like these there will always be something more you want to introduce.

For example, now there is this whole conversation around generative AI and bringing it into the customer conversational journey. One could give it to their relationship managers and contact center agents, or offer it directly to customers.

So if my CRM engine is coming through a Salesforce platform, I'll have to integrate those capabilities back into each of my touch points. We have already started to identify use cases [for generative AI] and get into what makes more sense for us.

How has the CRM platform helped with your digital initiatives?

It gives us the ability to find all customer-relevant information on a single screen. That itself is a big change. To do that, multiple systems need to talk to each other, and the data needs to be presented on a unified dashboard. Without that, I have to log into multiple screens to extract the information.

So if I'm able to provide all the required information about a customer's relationships, last request issues and all the customer activity with us - in a unified dashboard - that helps people serving customers, and they can be far more productive and efficient.

This type of value extraction is an ongoing process. But yes, we have definitely benefited from customer acquisition or with customer service.

But as I said earlier, this is a journey where we are continuously transforming and changing a lot as we learn more about shifts in customer behavior.

Sharma heads Kotak Mahindra Bank’s digital initiatives where he drives digital channels, payments, transformation, business model innovation and future-ready initiatives of the bank. He is responsible for efficiency, productivity, customer experience and growth of the business through digital intervention across consumer and SME segments. Sharma, who has close to three decades of experience, also leads the Mass & Millennial customer segment, Innovation Lab, Design Studio, India Stack, Fintech partnerships, and the start-up ecosystem participation for the bank.

About the Author

Brian Pereira

Brian Pereira

Sr. Director - Editorial, ISMG

Pereira has nearly three decades of journalism experience. He is the former editor of CHIP, InformationWeek and CISO MAG. He has also written for The Times of India and The Indian Express.

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