Mumbai: Imagine yourself driving on a congested highway. Just as you are nearing a toll gate, you realize that your smart card needs to be charged. You would typically struggle to veer your car to a side and try to get online to load money onto the card. If the signal is weak in that area, you may end up lining up behind the many cars that are paying cash at the toll gate. Frustrating, isn’t it?
What, instead, if you could simply speak to the dashboard: “Charge Rs500 to my toll card!” Now, stop imagining. This could soon become a reality if a tie-up between Mahindra and Mahindra Ltd and HDFC Bank Ltd to develop passenger vehicles with an integrated, voice-controlled banking app bears fruit.
This is simply a case in point. HDFC Bank is giving shape to its digital vision in a number of ways. “Our digital vision is the same as the philosophy with which we run our business. We have a full relationship context in the way we conduct our business,” said Nitin Chugh, country head of digital banking at HDFC Bank, which serves over 37 million customers through more than 4,500 branches and 12,000 automated teller machines across India.
Aiming to be “a completely customer-centric organization,” the bank has been gearing itself up digitally for the past few years. The objective, according to Chugh, is to provide services, interfaces and products in a manner that the customer can “interchangeably consume them on any of the digital channels”—such as online banking, smartphones and social media.
Consider the bank’s humanoid IRA (Intelligent Robotic Assistant) and the chat bot EVA (Electronic Virtual Assistant). While IRA can “guide” people at a branch to find the relevant counter for them, EVA can answer common queries of users who log on to the bank’s website.
The bank has also launched a Facebook Messenger bot that allows users to do transactions such as bill payments, mobile recharges and even booking Ola or Uber cabs. Chugh and his digital innovation team at the bank are now working on building more features—hotel bookings, for instance.
“In the first week of EVA’s launch, the chatbot crossed a hundred thousand interactions and on a given day, we went up to a concurrency of 750 conversations. That is something only a bot can handle,” said Chugh.
There are ambitious plans for IRA as well, which is in the trial phase. “We are testing it to see what the customers are expecting from it: Do they want to do transactions or is it good enough for them to assist and guide them or do they actually want to interact more?” said Chugh. Variations of IRA, depending on branch needs and usage patterns, are quite possible in future. “Perhaps we’ll have 10 variations of IRA as we go up to 15-20 deployments in the next year-and-a-half to two years,” he added.
Chugh insisted that irrespective of their age group, location (rural/urban) or the types of phones they use—feature phones as well as high-end smartphones—HDFC Bank’s digital strategy envelops all kinds of customers. “Even if the customer chooses to go to a traditional channel like a branch, we have digitally enabled our branches. Whether they are trying to do something on the mobile phone or the internet or social media or whether they walk into a branch—we are able to give them a similar experience.” One measure of such experiential similarity, according to Chugh, is that the customers should be able to take a loan in the same amount of time—whether they do it online or by visiting a branch.
“Our digital approach has been a platform-led approach. We figured it out early on not to take a product-specific or channel-led or segment-led approach—all these should be subsets of a platform-led approach,” he said.
Chugh explained that the bank’s digital strategy has evolved in tune with the growth of its customers.
“As we onboard customers, activate the relationships with them and as they start to use our services, we are able to process more information on the transaction side, we are able to pull in more information from the unstructured data set—Big Data, for that matter—and bring all of that into some context and keep recommending the right offerings to the customers,” he said. Digitally, too, the bank “keeps building those interfaces at each stage of the product or relationship life cycle, break them down into customer journeys...and be able to give a very good experience on the device or channel that customers prefer”.
Using its “analytics engine” to communicate with customers, the bank is able to “engage customers on all those channels in a personalized manner”. Chugh said that under its platform approach, it started “building the usage first”. “We also kept building more and more features and made the interfaces look cleaner, with more straight-through processing. We also streamlined and focused on the back-end processes as well,” he added.
Chugh called these efforts as “the first wave of digital”, wherein the bank was trying to build “behaviour and usage and also the capabilities at the same time”. In the “second wave of digital”, the bank started working on newer technologies about a year-and-a-half ago. These were emerging technologies and included artificial intelligence (AI), robotic processes, inter-connected devices under IoT (Internet of Things) and “some experiments on blockchain”.
It also involved HDFC Bank’s deeper engagement with the so-called fintech companies. For instance, for EVA, it worked with a fintech firm called Senseforth, while Facebook Messenger integration was done along with another fintech partner, Niki.ai. “We are currently working with at least 25 fintech companies in areas ranging from AI and marketing to risk, analytics and payments,” said Chugh.
Catering to all users
One of the objectives for HDFC Bank to engage with fintechs is to move from “a multichannel to an omnichannel experience” when it comes to customer service and delivery. “New launches like IRA or EVA are use-cases but our approach continues to be platform-led,” said Chugh.
About six months back, HDFC Bank announced that Netherlands-based Backbase, along with Tata Consultancy Services Ltd, would help it build omnichannel capabilities.
Explaining the concept of omnichannel, Chugh said, “It goes something like this: a customer starts a (transaction) journey on the mobile phone, completes two steps over there and decides to leave it for some reason; he then comes back after two days and logs onto the Internet on his desktop and not on the mobile phone—in this scenario, we will be able to pick up the conversation from there. That’s how we’ll try and give them a seamless, omnichannel experience.”
That kind of a seamless experience, according to Chugh, would have a lot more visualization, a lot more context and a lot more usage of contemporary technologies. “It is really the presentation layer, if I can put it this way,” he said.
Not jumping at everything new
Chugh insists that HDFC Bank does not “really get tempted by something that is new and looks nice”. It has to fit into “our overall road map, our business model and our strategic vision”. He cited the example of “holographic conversations”—a technology it chose not to pursue. “It sounds good, but are our customers ready for something like this? Would they want to talk to a banker who is really a holographic image? Probably not—not yet.”
And then there are some experiments that didn’t go as well as planned or anticipated—smartwatch banking, for one. “Smartwatch banking is something we launched but could not scale up because of no other reason but the fact that the watch itself did not do well!” Chugh said. However, he remains “quite bullish” on the smartwatch as a potential banking interface. “There’s talk of a new smartwatch that works even if you leave your smartphone at home: it doesn’t have to be paired with it. Effectively, it means the watch also starts communicating on its own and you can have multiple things connect to the watch. Personally, I think it has a good future, provided the market accepts it as a device,” he said.
Chugh is optimistic but cautious about the emergence of blockchain (which is a distributed, secure ledger technology for transactions). The bank, like its peers in the industry, is looking at some potential use cases. “We are still at the stage of building proof-of-concepts. So far, we have come up with about a dozen use cases,” he said.
Among the possibilities that look promising, he cited know your customer, trade finance transactions, anti-money laundering or even employee databases within organizations. “So far, it seems to be a robust technology but we have to try it out,” he said.
The multiple digital initiatives undertaken by HDFC Bank, as well as similar moves by others in the industry, are indicative of the changing contours of the banking industry in today’s hyper-connected age. In fact, some analysts and consulting companies opine that, in the foreseeable future, non-banks may become as integral to the banking value chain as some of the large incumbent banks.
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Accenture Plc estimates “competition from digital players could erode as much as one-third of traditional retail bank revenues by 2020” (accntu.re/2qspvgn).
While many banks have undertaken or are undergoing a digital transformation, much remains to be done. A report titled Ovum Decision Matrix: Selecting a Digital Banking Platform, 2017–18 by research firm Ovum Ltd noted, “Banks are under pressure to deliver an experience on digital channels that matches the ever-increasing expectations of customers. They also need to provide customers with secure digital banking services, as well as increasingly generate sales on digital channels and support further innovation on them.”