How Indian banks are using emerging tech to do more than just acquire customers

How Indian banks are using emerging tech to do more than just acquire customers
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In a bid to reduce costs, create product and service differentiation, and in turn, gain more market share in a crowded segment, Indian banks are using a combination of emerging technologies such as machine learning, artificial intelligence and blockchain. Banks are also driven to innovate due to the challenge posed by mobile wallets.

One way that banks are adopting emerging technology is by using chatbots developed by enterprise startups. Bots have helped banks reduce their customer acquisition costs besides improving customer experience.

Some banks have even absorbed the technologies developed by startups into their processes. Lenders like HDFC Bank and ICICI Bank arguably lead this trend. Both have either held competitions seeking technology solutions or have held a startup entry contest. HDFC Bank is expected to unveil winners of its next startup entry challenge next week.


For lenders like DBS Bank, HDFC Bank and Kotak Mahindra Bank, adopting a digital strategy has resulted in larger revenue share and return on investment, more time to market products and services, and has increased the number of their customers.

“Tech tools can do some tasks much faster, more accurately than human hands. This does two things. One, human hands can focus on other important tasks. Two, it gives us a faster time to market in terms of product and services creating better customer experiences which in turn makes us stand out,”  Nitin Chugh, country head of digital at HDFC Bank, told TechCircle.

Technologies such as Aadhaar and Unified Payments Interface have also boosted banks’ customer willingness and awareness. UPI has been consistently ranked as the most disruptive technological innovation by the US financial services company FIS.


Besides these, the penetration of the internet and smartphones, as well as banking regulator the Reserve Bank of India, have also helped lenders develop their digital strategy.

“A large chunk—around 60 to 70%—of customer acquisition has moved to digital because we can onboard and validate customers much faster,” said Deepak Sharma, chief digital officer at Kotak Mahindra Bank, in a prior interaction with TechCircle.

For banks like ICICI Bank, technology has reduced its cost-to-income ratio, said B Madhivanan, the chief technology officer at the financial institution. “The cost-to-income ratio of our retail business stood at 38.8% in the first half of 2018,” he added.


According to the EY FinTech Adoption Index 2017, India ranked second globally, at 52%, and second to China, at 69%, in the adoption of fintech services.

How chatbots are enhancing customer satisfaction

Nearly all CTOs of major banks and experts have said that chatbots have helped reduce customer complaints with satisfaction rates on the rise. Most lenders already have at least one chatbot solution at different stages of maturity in terms of services offered.


PwC’s consumer intelligence series report, Bot.Me, published in May 2018, highlights the growing comfort of consumers with digital assistants.

It said that 42% of consumers, 72% of business executives and 53% of millennials already use digital assistants. “Business executives are looking at virtual personal assistants as key channels for consumer conversations and engagement,” the report stated.

HDFC Bank’s Chugh said that the lender’s move to use chatbots was a necessity based on consumer demand. “Our customers no longer want to wait in call queues and several problems can be solved quicker using chatbots,” he explained.


HDFC Bank has developed two chatbots, IRA and Eva, with help from startups Niki.ai and Senseforth Technologies, respectively.

Similarly, ICICI Bank, State Bank of India, Yes Bank and Kotak Mahindra Bank have iPal, SIA, YesRobot and Keya as chatbots, respectively. Shrinath Bolloju, chief operations officer at RBL Bank, said that his bank was exploring WhatsApp-related payments strategies.

“ChatPay flows have been incorporated as part of our mobile banking platform under the RBL Bank ChatPay branding. We have proposed a mobile-based cheque-scanning model to the RBI and we are running the pilot for the same, which is restricted to some branch location,” he added.


In April 2018, public sector lender SBI partnered with South Africa-based digital infrastructure company Dimension Data to set up digital branches for enhanced customer experience for its advisory and banking services.

How robotic process automation will add more jobs

Banks have also devised solutions to automate mundane day-to-day operations.

ICICI Bank’s Madhivanan said that his bank had introduced RPAs, calling them ‘software robotics,’ as early as September 2016 in over 200 business processes.

“They (RPAs) reduced the response time to customers by up to 60% and increased accuracy to 100%, thereby sharply improving the bank’s productivity and efficiency. This enabled the bank’s employees to focus more on value-added and customer-related functions,” he said.

He further added that these software robots then performed over 10 lakh banking transactions every working day. The bank soon intends to automate a total of 1,500 processes which currently stands at 950.

Kotak Mahindra Bank’s Sharma said that his bank along with RPAs was using optical character recognition (OCR) to streamline many of its internal processes. 

A survey conducted by CyberMedia Research found that 74% of decision-makers in BFSI feel that they can use AI to provide proactive and personal customer support, which is their primary business objective.

RPA is also expected to generate 200,000 jobs in India by 2021, according to a report published by EY in February 2018, titled ‘Banking of the Future: Embracing Technologies’.

How analytics will bring in more customers

Chief information officers at banks have said that Big Data and analytics have helped them either on board new customers or cross sell products.

“We are using Big Data for campaigns with existing customers to understand them better, using the information available in our database. Once we understand our customers better, we can cross-sell. Simultaneously, using the customers' transaction profile, we can identify fraud and do risk-management analysis,” RBL Bank’s Bolloju said.

Data analysis also helps lenders launch new products. ICICI Bank introduced a digital credit facility targeted at new employees, while HDFC Bank has been working on offering custom deals and offers based on partnerships with different retailers.

ICICI Bank has also been working with startups such as CreditVidya to analyse tertiary loan profiles for new customers, Madhivanan said.

How blockchain will ease trade financing ops

According to an EY report, the blockchain market is expected to grow at a CAGR of 37% till 2024. Indian banks are already working on blockchain solutions to solve issues related to information sharing and trade remittances among other things.

ICICI Bank first used blockchain in October 2016 to execute transactions in international trade finance and remittances in partnership with Emirates NBD, a leading banking group in the Middle East.

“This April, we announced that we have brought on board more than 250 Indian companies on our blockchain platform for domestic and international trade finance,” Madhivanan said.

Bolloju of RBL Bank said that they have been working with a consortium of lenders to use blockchain technology for inland trade requirements. The network has been built using Finacle Trade Connect, a blockchain-based solution, he said.

On the other hand, HDFC Bank and Kotak Mahindra Bank said that they were working on blockchain projects currently in the development phase.

Interestingly, a consortium of banks along with IBM will launch an information sharing-based hyper ledger.

As the industry’s dependability on newer technologies grows, it is increasingly becoming vulnerable to cyberattacks, data privacy breaches, frauds and brand and reputational damages.

According to the EY Global Information Security Survey 2017, threats from malware and phishing have grown by almost 50% between 2013 and 2017.

(With inputs from Anirban Ghoshal)

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