In this age of technological advancement, digital is the way ahead. In the banking and financial services sector, IDFC Bank has led the way with its strong digital roadmap. It got the banking license four years ago and in a very short while has been able to establish itself in the market, thanks to the digital transformation. It claims to have radically transformed customer experience due to its digital initiatives. Muqbil Ahmar, Executive Editor, Grey Head Media speaks with Sanjay Narkar, Chief Technology Officer, IDFC Bank on this digital journey.
DC: IDFC is a new bank. We can call it a digital-age bank. How are you using technology differently than the incumbents?
SN: The way we have architected our design and technology is entirely different from the way others use it. First, the architecture that we have built is barely 20% of the usual bank architecture. Our architecture is far more open. Our bank is completely on Master Data Management (MDM), which is a big part. Secondly, our architecture is completely based on SoA (Service Oriented Architecture.) Thirdly, the integration is based on APIs. These are the various aspects which keep us different, ahead and agile. Being agile and responsive are two very important aspects in comparison to any other bank in designing solutions, responding to business, and for that matter, third party entities.
Moreover, the complete customer experience which we have in comparison to other banks is totally different. All our digital solutions, be it mobile app, internet banking or Banker on Call or the contact center, all give a consistent experience because all three of them are built on one single platform, unlike other banks. All other banks have a separate mobile application solution, internet banking solution, etc. Therefore, if you ask our customers, their experience is the same throughout. What my customer sees as the interface screen is the same as that visible at the branch and my contact center. All this CRM integration comes from the same platform. Therefore, the customer experience is not in bits and pieces but holistic.
One more technology aspect which differentiates us is our use of the service responsive architecture, which is aligned with straight through processing (STP) and BPM (Business Process Management). This helps us in monitoring the entire transaction journey of each and every customer. So, if you log in today, I exactly know how you are navigating the screen and the options you are pressing. So, for example, if you tried to apply for a loan and left it midway today, we come to know that you had the intention. So, the contact center agent gets in touch with you as to why you left it. We basically view each and every transaction that a customer does with the bank as an event. We primarily have an event-oriented architecture.
DC: How has IDFC used technology to address the key issues of banking customers such as account opening, real-time resolution of customer grievances, new product offerings, cross-sell and up-sell?
SN: In 2015, when we were setting up the bank, there was a lot of competition in the market. We looked at each and every aspect that already existed in the market. We studied and looked at the pain points of the customer. The main pain point of the customer was on-boarding itself and for that he had to go to the branch, give the data and complete the formalities. I think, we are the first bank which defined a strategy for customer acquisition due to which we designed the micro ATM. Our product ratifies through the Aadhar. We were the first to offer account opening in as less as 4 minutes. This is an operative account in which you can deposit cash. You will get a checkbook also in 48 hours, if you opted for it. This is the biggest difference from the other banks. Other banks are also trying to do it but we were the first movers.
Our strategy was that instead of branches we will strengthen our field presence. Today, there are 17,000+ micro ATMs that we have deployed. We are planning to increase it to 25,000. They are useful for acquisition. So, if you want to open an account of any kind, all that can be done through the micro ATM. Around 60–70% of all the customer services, including statement request, etc. can be done through micro ATM. This machine is completely designed by us and it allows you to do all sorts of transactions.
We identify our customers through UCIC, which is a unique code that we give to the customers. So, if you open an account of any sort, we actually create a UCIC record with our master data management. The other banks have their customer data in various systems, for example, core banking system, loan system or credit card system. Our CRM is completely linked with MDM, which gets its data from all sources. Through the web services, it goes and fetches the customer relationship data from the MDM in real time.
Every service request is routed through the CRM and is constantly monitored from our end. Therefore, we are able to track the service request ID and its completion. For example, if you go to any other bank and request for a checkbook, for 48 hours you don’t know where it is. Even if you call the branch, nobody will be able to tell. So, we are kind of guaranteeing the service.
DC: Where do you think IDFC Bank stands today on its digital journey and what’s the near term aim of the bank?
SN: Since we call ourselves the new age bank, there was a requirement that we should present and market ourselves differently and not as a traditional bank. So, digital was the motto right from the beginning. Our motto was digital, not only on the outside (customer service perspective) but also on the inside. On the inside, a majority of our business processes such as back office, employee engagement, etc. all have a digital solution. Our employees are able to carry out various approvals and transactions through their mobiles or their own devices. So, we actually provided complete mobility to our employees. You can work from home also if you have the access.
We were one of the first banks that supported the digital movement in India. We also made the most out of demonetization. Our bank was able to take the maximum advantage of both the events because we were ready for all the integration, which is required for digital.
DC: Usage of cloud is limited in the banking industry due to data privacy and security issues. How and where is IDFC using the cloud and what advantages have you got from it?
SN: In our architecture, we are completely API based. So, because of the open APIs that we have, we have designed our systems on hybrid cloud. A part of our applications is on the private cloud and some part on the public cloud. It gives us great flexibility and a sandbox system through which any of our external partners can connect. That’s the kind of openness that we have created in the market. That’s why we are able to present Banking as a Platform (BaaP). Once you certify through the sandbox, it means you can do any transaction.
DC: Share some initiatives that IDFC Bank is doing with disruptive technologies such as AI/ML, IoT, Blockchain, etc.
SN: We are a young bank and for the last two years we have been readying ourself. Be it AI/ML or Business Intelligence (BI) or blockchain, all these require some or the other readiness on the part of the bank. So, today we are ready and we have initiated our Big Data and Data Lake projects, keeping our BI and AI in mind. There are several PoCs that are happening with bots to give us the RPA (Robotic Process Automation). Internally, we should be ready by October for a majority of the RPA projects. In case of blockchain, though we have started our journey and have participated in consortiums by NSE and NSDI, we have not yet done major transactions on the platform. Business is actually working on the opportunities around trade finance to get into blockchain transactions. Unless and until the business and operations fully understand that we don’t want to go ahead on that path. Therefore, it is taking some time.
DC: How do you see the proposed merger with Capital First through the prism of technology?
SN: We don’t have the data to comment on it right now. Capital First is also young as far as technology is concerned. Knowing their business growth in the last six to seven years, it is fully supported by technology. Having said that, we are quite confident that the technology merger will not be a major challenge because both of us are on SoA or enterprise or ESB architecture. So, integrating the systems of both the sides and offering the continuation of current customer experience, to start with, will not be a big challenge. Once we start the physical merger of applications and databases, automatically the customer experience will also get migrated to that. Technology will be supportive of each other, because both of us are of the 21st century. Their technology is also equally good.
DC: How do you see the future of digital banking?
SN: The future is very bright. Everything in the future will see a paradigm shift as far as the way in which technology is designed, defined and used is concerned. I can name them. We are in talks with Amazon Web Services (AWS) and Google Cloud. The world is moving towards an era where everything can be offered as a platform or as a service. So, the CIO’s role is going to be far more important from the perspective of taking advantage of all this. Today, there is a question mark in the minds of people in terms of what would happen due to all this. But, if business understands and we are able to make business understand the costing of cloud then we will be able to reduce the cost. But really you need to work hard on that. So, a CIOs role is crucial. They will have to do a balancing act.