How Federal Bank Is Ensuring Business Continuity During Pandemic

The COVID-19 pandemic has impacted organizations worldwide as they grapple with ensuring business continuity in these uncertain times. Banks, especially, are under tremendous pressure as banking is a part of the list of essential services and the key to keeping the economy alive.

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Shalini Warrier, executive director, Federal Bank, spoke about the impact of COVID-19 and how the bank is using digital technologies to keep its operations running amid this crisis.

"The biggest challenge for the banking industry currently is around the COVID-19 crisis, and its impact will be not only on the banking industry but on the economy as a whole. It will only become clearer in the next few weeks and months what the impact will be. But, we have started working on various aspects using our digital and analytical capabilities. Our bank's maxim of 'digital at the fore and human at the core' is embedded in our DNA and helps us overcome the current challenges around COVID-19," she said.

Surge in Digital Migrations

On the positive side, COVID-19 has proven to be a trigger for accelerating digital migration among the bank's customers. Warrier informed that before COVID-19, almost 80% of the bank's transactions were digital in nature and since the pandemic outbreak, the digital migration percentage has gone up by around 10% at the overall bank level. While the increase varies by segments, it has been particularly high on the corporate side. On the retail side, which is already running at a high percentage, the increase has not been very high.

"While our branches are open and we have got controls in place in terms of the number of people coming into the branch at a time and how long they can stay, a lot of customers have started switching to digital to make transactions. That has helped increase our digital migrations," Warrier said.

RPA Ensures Processes Keep Running

Whether the customers choose digital or in-branch transactions, the bank has to keep its systems and processes, including the payments processes like RTGS and NEFT, running. All of these require some reconciliation at the backend. The company's extensive automation drive is helping Federal Bank address this challenge.

With over 120 processes automated through robotic process automation (RPA), the bank is able to keep its key processes running and operational even in the absence of people present in the office. It is using the RPA solution from UiPath, which has become a key enabler for the bank's functioning amid the crisis.

"While we have benefited immensely from the use of RPA technology in the past, it has been particularly helpful in the last few weeks since the COVID-19 outbreak when only a handful of employees have been able to come to work. The bot knows what to do, how to do it and at what time, and just runs the process without any human intervention. This is key to ensuring that our processes are running so that we can continue delivering banking services to our customers," Warrier said.

Deep Diving With Analytics

Federal Bank is also extensively using analytics to help its customers. Banks' customers are allowed to take a moratorium for three months to defer their loan payments, according to RBI's guidelines. While this means that their loan payment will get extended for three months, the moratorium is not a waiver. It will accrue additional interest for the deferred period and will also prolong their loan period, which means additional costs for the customers. Thus, it is in the interest of customers to forego the moratorium offered if they are in a position to make the payments on time, which many are not aware of.

While Federal Bank offers the moratorium to its customers in line with the RBI regulation, it is targeting a certain set of customers that are less likely to have been impacted by the crisis to create awareness around the implications of taking the moratorium and guiding them to make their loan payments on time if they don't need the moratorium.

"We are guiding them that while they are at full liberty to take the moratorium, there are implications in terms of prolonged loan period and additional interest. Hence, if they don't really need the moratorium, they should not be taking it because it's not a waiver," Warrier explained.

While people working in industries such as hospitality and airlines will be highly impacted in the near term, the income and job prospects of those working in pharma or FMCG companies are not likely to get impacted. Therefore, the key is to identify the right set of customers for driving this messaging and awareness.

"We have been using analytics to get to that level of data and approaching these targeted set of customers directly through SMS, email, website and branches to help them take better and more informed decisions," Warrier said.

This will enable the bank to enhance the experience for its customers by helping them make informed decisions and also minimize the impact on the bank's liquidity if more customers were to make their loan payments on time.

This article was previously published on the DynamicCIO website on April 21, 2020.