As the COVID19 pandemic unfolds, organizations worldwide are grappling with ensuring business continuity in these uncertain times. Banks especially are under tremendous pressure as banking is not only a part of the list of essential services but also the key to keeping the economy alive.
Shalini Warrier, Executive Director, Federal Bank, spoke to dynamicCIO about the impact of Covid19 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 Covid19 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 on 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 helping us overcome the current challenges around Covid19,” she said.
Digital Migrations Increase by 10%
On the positive side, Covid19 has proven to be a trigger for accelerating digital migration among the bank’s customers. Warrier informed that already before Covid19 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 been not very high.
“While our branches are open and we have got controls in place in terms of people number of people coming into the branch at a time and how long they can stay, still a lot of customers have started switching to digital to make transactions. That has helped increase our digital migrations,” said Warrier.
RPA Ensures Processes Keep Running
Whether the customers choose digital or in the branch transactions, the bank has to keep its systems and processes, including the payments processes like RTGS, NEFT, etc. running and all of these require some reconciliation at the back-end. 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 who are normally there in the office. It is using the RPA solution from UiPath, which has become a key enabler for the bank in keeping the lights on amid the crisis.
“While we have benefited immensely from the use of RPA technology even in the past, it has been particularly helpful in the last few weeks since the Covid19 outbreak when not all employees have been able to come to work. The Bot knows what to do, how to do, 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,” explained Warrier.
Deep Diving With Analytics
Another digital technology that Federal Bank is using extensively is analytics to help its customers. As per RBI’s guidelines, banks’ customers are allowed to take a moratorium for three months to defer their loan payments. 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 cost for the customers. Thus, it is actually in the interest to forego the moratorium offered if they are in a position to make the payments on time, which many customers are not aware of.
While Federal Bank offers the moratorium to its customers in line with the RBI regulation, it is targeting 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 of it 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,” explained Warrier.
While people working in industries like hospitality and airlines will be highly impacted in the near-term, for those working in pharma or FMCG companies the salary and job prospects are not likely to get impacted. Therefore, the key is really in identifying the right set of customers for driving this messaging and awareness.
According to Warrier, “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.”
On one hand, this will enable the bank to enhance the experience for its customers through helping them take informed decisions, on the other this will also help minimize the impact on bank’s liquidity if more customers were to make their loan payments on time.
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