Dig­i­tal Next @ HDFC Bank

Mu­n­ish Mit­tal, CIO & Group Head-IT, HDFC Bank, shares de­tails of the dig­i­tal strate­gies adopted by the bank in an exclusive in­ter­ac­tion

Banking Frontiers - - Highlights - Amol Dethe

HDFC Bank has seen trans­ac­tions through dig­i­tal chan­nels rise from around 50% of the to­tal four years ago to as much as 84% of the to­tal as of to­day and against av­er­age of 5 mil­lion cus­tomers adopt­ing the dig­i­tal then, there are to­day av­er­age of over 20 mil­lion cus­tomers en­gag­ing dig­i­tally with the bank.

Ex­plain­ing this transformation, Mu­n­ish Mit­tal, CIO & Group Head-IT of the bank, says: “About 4 years ago, we ob­vi­ously had a com­pre­hen­sive in­ter­net bank­ing. Then came ‘chutki mein loan’, and Mo­bile App grad­u­ally be­came the pre­ferred ‘on-the-go bank­ing’ ve­hi­cle with ‘bank aap ki muthi

mein’. The jour­ney con­tin­ued with DAP, our dig­i­tal ap­pli­ca­tion plat­form for loan and card prod­ucts, fol­lowed by UPI, IMPS and dig­i­tal pay­ments. All these for­mats have im­pacted our dig­i­tal trans­ac­tion pro­cesses and trans­ac­tions through these

Mu­n­ish Mit­tal, CIO & Group Head-IT, HDFC Bank, shares de­tails of the dig­i­tal strate­gies adopted by the bank in an exclusive in­ter­ac­tion:

chan­nels have risen man­i­fold,” says he, adding: “Ob­vi­ously, this has led to a sharp re­duc­tion in the costs of trans­ac­tions and thereby in­creased ef­fi­ciency and pro­duc­tiv­ity, which in turn has im­proved the bot­tom line. A branch trans­ac­tion to­day costs from `100 to `500 de­pend­ing on the ‘type of trans­ac­tion’. Us­ing DAP and the Smart Ac­count Open­ing App, open­ing an ac­count can be just a frac­tion of this cost and mind you there is min­i­mal man­ual in­ter­ven­tion like KYC check.”


He main­tains that HDFC Bank has been a dig­i­tal bank right from the start. “We were the first in the coun­try to in­tro­duce cen­tral­ized core bank­ing, cen­tral­ized ATM switch, debit cards and if you fast for­ward, we are the largest is­suer of credit cards. In the last 5 years, we have made sig­nif­i­cant progress in at­tempts to make pay­ments and bank­ing more dig­i­tal,” says he.

He cites the ex­am­ple of the bank’s lat­est flag­ship prod­uct in the dig­i­tal do­main -

‘chutki mein loan’ - and points out that it fa­cil­i­tates sanc­tion­ing of a loan in about 10 sec­onds or less.

He ex­plains: “We have ‘baked the en­tire in­no­va­tion pro­cesses around cred­it­wor­thi­ness and propen­sity to ‘pay or de­fault’ to pro­vide credit for per­sonal loans, two-wheeler loans or to up­grade a credit card. This prod­uct is avail­able to our ex­ist­ing cus­tomers; it is mainly in­tended to pro­vide con­ve­nience. This also gives the abil­ity to our cus­tomers to ‘Pay Later’. The cus­tomer comes to our web­site and he is pre­sented with the of­fer. Once he se­lects the of­fer, the amount and puts in the ten­ure and clicks sub­mit, he gets the loan.”

Mit­tal is con­fi­dent that with the dig­i­tal

revo­lu­tion hap­pen­ing in the last 5 years, the dig­i­tal should cre­ate the abil­ity to gen­er­ate an at­ten­tion span and then lead it to an en­gage­ment with the cus­tomer, which will fi­nally cre­ate ad­vo­cacy among the cus­tomers. If the cus­tomer has got a good ex­pe­ri­ence, then he will share the ex­pe­ri­ence with other cus­tomers, says he.

“Among the many ini­tia­tives in the last 5 years, we have one such ini­tia­tive through HDFC Bank‘s SmartBuy. Us­ing SmartBuy, a cus­tomer can use his HDFC Bank debit or credit cards to shop and then re­ceive bar­gains and dis­counts. This way, we brought the mar­ket place to the cus­tomers. The dis­tri­bu­tion com­mis­sion is passed on to the cus­tomers. They can to­day do ‘com­pare & shop’, make travel book­ings, etc us­ing HDFC Bank card. We pass all the ben­e­fits to the cus­tomers and this helps them max­i­mize ben­e­fits,” says he.


He stressed that dig­i­tal is not for just those out­side the bank. The bank has heav­ily fo­cused on the in­ter­nal dig­i­tal or as­sisted dig­i­tal for it to be prof­itable and use­ful.

“We have cre­ated a Smart Ac­count Open­ing app for our per­sonal bankers, our re­la­tion­ship man­agers, our di­rect sales agents, etc. In 3 or 4 clicks on this dig­i­tal ac­count open­ing app, the re­quired forms are filled in, val­i­da­tion of KYC is done, and the ac­count is opened. We have opened about 100,000 ac­counts through this plat­form just in the month of Au­gust 2018. We are look­ing at 250,000 to 500,000 ac­counts to be opened this way per month in the near fu­ture. Sim­i­larly, us­ing our DAP, cus­tomers can ap­ply for auto loans, per­sonal loans, etc as well as ap­ply for a credit card on­line. The other no­table of­fer­ing is our PayZapp app, which is a com­plete pay­ment so­lu­tion, giv­ing you the power to pay in just one click. Us­ing this, cus­tomers can do taxi book­ing, pay util­ity bills, do mo­bile/DTH recharge, com­pare and shop at on­line marts and book movie tick­ets,” says Mit­tal.


Mit­tal elab­o­rates on the tech­nolo­gies that the bank would adopt in fu­ture. He prefers to di­vide these into two:

“The first is ‘hy­giene tech­nolo­gies’. Here, we are talk­ing about scale. We do over a bil­lion and half trans­ac­tions in a month, out of which ~85% are dig­i­tal. These have to be per­sisted in a sys­tem of records and avail­abil­ity of in­for­ma­tion means a lot to us. We are there­fore in­vest­ing heav­ily in build­ing the next gen­er­a­tion of scale such as in­fra­struc­ture scale, cloud scale, in­ter­net scale, in­fi­nite scale. We have be­gun our jour­ney of ag­ile with adop­tion of DevOps and tech­nolo­gies like Dock­ers and Ku­ber­netes to build in­fi­nite scale. Sim­i­larly, elas­tic­ity is re­quired to ex­pand and col­lapse de­pend­ing on work­loads and sea­son­al­ity. The pe­riod from Jan­mash­tami to Di­wali is the high­est con­sump­tion pe­riod for con­sumer durables, auto loans, etc. Han­dling this would re­quire a scale up from 2500 to 5000 to 10,000 trans­ac­tions per sec­ond. And this would need adop­tion of tech­nolo­gies like cloud, Dock­ers, Ku­ber­netes, etc. We are rewrit­ing our ap­pli­ca­tions to be cloud na­tive.

“The sec­ond is ‘avail­abil­ity’. At HDFC Bank, we are all ob­sessed with avail­abil­ity. Il­lus­tra­tively, we have in­vested on run­ning our RTGS ap­pli­ca­tion in Ac­tive-Ac­tive mode from across 2 data cen­ters. We have about 18% RTGS vol­ume across the coun­try. As much as roughly 36% of the coun­try’s daily money set­tle­ment pay­ments pro­cess­ing passes though HDFC Bank and an­other bank. We need to be highly avail­able. We have worked with IFTAS/ IDRBT and reengi­neered the RTGS sys­tem. For core bank­ing, we have a 3-way DR be­tween the pri­mary site, the DR site and the near site. We are in­vest­ing a lot in our DR/BCP prac­tice to en­sure zero data loss for core bank­ing - per­haps the only In­dian bank to­day run­ning zero RPO on Core bank­ing from DR/BCP per­spec­tive.”


The bank will also in­vest in ar­ti­fi­cial in­tel­li­gence and ma­chine learn­ing tech­nolo­gies, says Mit­tal. He de­tails the plan: “Like RTGS and NEFT, we are a very high scale vol­ume player in clear­ing. In fact, in clear­ing, the vol­ume is stag­nant, but still we are amongst the largest clear­ing pro­cess­ing play­ers. We have in­tro­duced ML for sig­na­ture ver­i­fi­ca­tion with 50% suc­cess in au­to­mated pro­cess­ing. We re­cently put an­other ap­pli­ca­tion for op­ti­miz­ing our of­fers to achieve real time of­fers to our credit card cus­tomers. My dream is to cre­ate a work load di­ag­nos­tic en­ter­prise level ma­chine learn­ing API im­ple­men­ta­tion at our data cen­ter, which is adapt­able and ca­pa­ble of us­ing hy­brid cloud tech­nol­ogy in pub­lic cloud at a fu­ture date.”

He re­veals that many of these tech­nolo­gies are not com­mer­cial grade and are in the early ma­tu­rity stage or some even in the in­cu­ba­tion stage. “For ex­am­ple, our Eva is a flag­ship prod­uct in ar­ti­fi­cial in­tel­li­gence and ma­chine learn­ing. Eva is ca­pa­ble of an­swer­ing cus­tomer re­quests, it can solve cus­tomer prob­lems. Very soon, it will al­low re­demp­tion of loy­alty points for credit cards. It will help in hot list­ing lost debit cards of cus­tomers; it will carry out trans­ac­tions us­ing con­ver­sa­tion bank­ing. Ul­ti­mately, Eva will do bank­ing trans­ac­tions for cus­tomers. I am of the view that AI re­quires sig­nif­i­cant learn­ing and there are nu­mer­ous chal­lenges in the learn­ing pe­riod as well as time is re­quired to bring about this learn­ing. EVA will be a life­long stu­dent.

The en­gine needs to be trained, one needs to know what the cus­tomer wants, nat­u­ral lan­guage pro­cess­ing needs to be ac­cu­rate and un­der­stand what the cus­tomer in­tended,” says he.


The sec­ond area for him is ‘around tech­nolo­gies’ which need an ecosys­tem to de­velop and grow. Blockchain is an ex­am­ple. He points out that there are lot of chal­lenges in cre­at­ing a trusted multi-node blockchain net­work. There are ques­tions like is it fast? is it com­mer­cially vi­able? is it just about a dis­trib­uted data­base? can a core bank­ing ledger be con­verted into blockchain? can we cre­ate it? are the core bank­ing soft­ware ven­dors ready?

Does he think the bank’s ecosys­tem is ready? How is he trans­fer­ring tal­ent to use that ecosys­tem?

Mit­tal re­sponds: “In the past, we have ap­pointed net­work ad­min­is­tra­tor and data­base ad­min­is­tra­tors. Then, we grad­u­ated to have a sys­tem ad­min­is­tra­tor, se­cu­rity ad­min­is­tra­tors, etc. For a pub­lic cloud, I need a cloud ad­min­is­tra­tor. With­out a cloud ad­min­is­tra­tor it is dif­fi­cult for the CIO to adopt pub­lic cloud. The cloud skills are not eas­ily avail­able in the mar­ket. We are rewrit­ing ap­pli­ca­tions to make these cloud-na­tive. Legacy ap­pli­ca­tions are not pri­vate cloud ready by de­fault. We are do­ing on the ground pilots and we are learn­ing from these. There­fore, these cloud ad­min­is­tra­tion and cloud ad­min­is­tra­tor skills will grad­u­ally build up with these learn­ings on the ground through a se­ries of pri­vate cloud and con­tainer­iza­tion pilots”.

He em­pha­sizes that a cloud ad­min­is­tra­tor is DBA, a sys­tems ad­min­is­tra­tor, a net­work ad­min­is­tra­tor and se­cu­rity ad­min­is­tra­tor - all rolled into one. Where does this ex­ist in our present eco sys­tem, he asks.

Mit­tal avers that HDFC Bank is a Plat­form to ‘Pay, Save, Bor­row, In­vest, Shop & have Fun too’.

He also sounds fu­tur­is­tic: “In our at­tempt to cre­ate an en­gage­ment be­tween the bank and our cus­tomers, il­lus­tra­tively, the fun part comes from ‘aug­mented re­al­ity’ and con­ver­sa­tional bank­ing. Our ‘OnChat’ in FB Mes­sen­ger is an ex­am­ple of the fun fac­tor. We be­lieve that the cus­tomer should get happy and en­ter­tained us­ing our mo­bile and on­line bank­ing fa­cil­i­ties. EVA is a lot of fun to in­ter­act with. With Arya in our Se­cu­ri­ties & Bro­ker­age sub­sidiary, our cus­tomers are buy­ing mu­tual funds on­line. The cus­tomer should be able to watch a movie in our app. Such an ap­proach will help the bank take on com­pe­ti­tion from tech­nol­ogy plat­form com­pa­nies as well.”


But, then how can the bank en­sure that it stays ahead?

“The plat­form ap­proach has cre­ated a com­pet­i­tive ad­van­tage for us,” ex­plains Mit­tal. “Our at­tempt is to cre­ate a user ex­pe­ri­ence across the as­pects of con­ve­nience and sim­pli­fi­ca­tion, choice of de­vice, choice of place, time and lo­ca­tion, which the cus­tomer uses for all the bank­ing needs. So, we will at­tempt to of­fer both the op­por­tu­ni­ties to our cus­tomers - whether they want to pay now or pay later, whether they want to choose mo­bile phone or come to our branch or go to an ATM. It is the omni-chan­nel ex­pe­ri­ence, a sim­ple user in­ter­face, an in­tu­itive one. Even­tu­ally, if we can get to a seg­ment of one and make our­selves rel­e­vant us­ing dig­i­tal tech­nolo­gies, I think we can cre­ate an en­gage­ment with our cus­tomers and the cus­tomer will bank with us for sure.”

Mit­tal un­der­scores that the ‘fun’ part. “For ex­am­ple, when you see a lux­ury car on the road and if you point your HDFC Bank ‘Va­hanGyan’ mo­bile app to the car, you will get de­tails of the fea­tures of the car and dealer lo­ca­tion. You can as well book a test drive. As the next steps, we as a bank should be able to say when you would be able af­ford it, and you can set a goal around it to save enough or avail ‘chutki mein loan’, in sim­ple fun filled steps. Sim­i­larly, some­day cre­at­ing an en­gage­ment and ex­pand­ing the one-stop shop model, we would like our cus­tomers to buy their mu­sic, movie and TV sub­scrip­tion on the app and con­sume there it­self. No doubt, all the fa­cil­i­ties on the app would re­quire a ro­bust and fast tele­com in­fra­struc­ture,” says he.


He says one of the top items in his wish list is to have a rea­son­able fast high-speed broad­band net­work. While In­dia has come a long way in the space of tele­com in­fra­struc­ture, there are lot more af­ford­able and in­no­va­tive data plans, new par­tic­i­pants and healthy com­pe­ti­tion, the ba­sic ques­tion is whether the net­works are fast and re­li­able enough. “I am not very sure,” he says, main­tain­ing: “We still have chal­lenges about OTP on SMS not get­ting de­liv­ered. At times, I won­der whether we even have a 3G, which is om­nipresent and omni-per­va­sive? The strong­est wish I have is about a ro­bust high-speed mo­bile broad­band. I wish 5G could come faster. With­out high-speed mo­bile broad­band, we can­not lever­age 300 mil­lion smart­phones in the hands of cus­tomers and stream a fa­vorite video or mu­sic or deal with aug­mented re­al­ity in the fron­tend. To­day, to deal with the lack of high speed mo­bile data net­work, in­dus­try is cre­at­ing lite apps along­side main­stream apps, which is dou­ble the cost. Lite app is ob­vi­ously with­out many fea­tures and func­tion­al­i­ties.”

Mu­n­ish Mit­tal avers thatHDFC Bank is a plat­form to­day to ‘Pay, Save, Bor­row, In­vest, Shop & have Fun too’ for the cus­tomers and tech­nol­ogy only has helped in cre­at­ing such a plat­form

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