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Business News/ Money / Calculators/  Branches will expand, but digital will become equally big
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Branches will expand, but digital will become equally big

Kotak Mahindra Bank's Shanti Ekambaram and Deepak Sharma talk about the bank's retail banking strategy and evolving trends in the digital space

Aniruddha Chowdhury/MintPremium
Aniruddha Chowdhury/Mint

Last year, Kotak Mahindra Bank Ltd acquired ING Vysya Bank Ltd, and it hopes to complete the integration by April this year, said Shanti Ekambaram, president—consumer banking at Kotak Mahindra Bank. Ekambaram and Kotak Mahindra Bank’s executive vice president and head-digital initiatives, Deepak Sharma, spoke to Mint about the bank’s retail banking strategy and evolving trends in the digital space. The bank plans to digitise all its existing products and launch new features in its mobile banking app. Edited excerpts:

What trends do you see among retail customers?

Shanti Ekambaram: The urban retail consumer space continues to be robust in terms of consumption and spends compared with the corporate sector. We hope to complete the integration with ING Vysya Bank by April this year. This will give us a network of 1,400 branches. We will leverage the spread for customer acquisition. According to data, 90% of customer acquisitions still happen around physical infrastructure as customers have psychological comfort in this. The industry average on digital acquisition is about 3%; for us it is 6-7%. So, physical infrastructure continues to be important but customers are increasingly using digital infrastructure significantly for transactions and checking balances.

Branches will continue to expand but at some stage, digital will become an equally large force. When that happens, the pace of expansion for the industry will go down. Then you will need to only invest in physical infrastructure to be at the right location. You will leverage digital infrastructure both for customer convenience, servicing and incremental digital acquisition. As regulations open up, I expect new norms to come out. For instance, last mile of KYC (know your customer) is still physical.

How does digital banking convert a bank account holder into a primary account holder?

Ekambaram: We have seen adoption of digital banking through apps to make payments, investments and check balances. We have also seen that when a customer starts using digital banking extensively, the savings account balances go up. Hence, there is a link between offering good quality digital banking experience and higher balance in savings account. As customers get more engaged, they move their family’s banking needs too. Hence, the banking industry is trying to acquire the customer digitally at the time of enrolment itself. Around 30% of our retail customers use mobile apps. For both Internet and mobile, it would be 46%. These are only Kotak customers. We are yet to integrate ING Vysya customers.

Deepak Sharma: Digital banking has become a primary medium. Earlier, we used to call someone who did four transactions a month a primary customer. With digital banking, an engaged customer uses the mobile app about 10 times a month. The extent of engagement has increased because you have far more channels to interact.

Do you plan to launch any new retail products this year?

Ekambaram: Our aim is to keep on improvising on the existing products. Our focus will also be to cross-sell existing products and customer acquiring customers. Currently, we are looking at digital transformation as a long-term project. For a bank there are three parts to going digital—digitisation, products and customer acquisition. To give a good digital experience you have to digitise all the processes at the backend. For instance, for opening a bank account we can capture the images of KYC documents and open the bank account within a day or two. We want to take each process ultimately to a customer touch point.

Transformation happens when a bank digitises its products, services and internal process. In a bank, a lot of back-end work is still physical.

Products and services are largely about lifestyle and digital acquisition is part of this. In the next 4-5 years, the percentage of customers acquired digitally will increase significantly. Physical infrastructure will still be there, but its look, size, feel and format will change.

Sharma: We want to bring in a tangible change. These initiatives should reduce turnaround time, enhance customer experience or reduce cost.

What are your focus areas in mobile banking?

Sharma: We looked at some major categories in the online space and realised that the service sector is growing rapidly. Close to 61% of e-commerce transactions happen in the travel category. This segment has migrated to mobile, as has bill payment. Travel as a category is growing 56% at a higher base. So, we have integrated travel and bill payment. We are integrating merchants. Gifting is another category that we will launch in the app shortly. Soon, you will also be able to apply for an IPO (initial public offering) using the mobile banking app.

Ekambaram: We will bring in e-ommerce on banking. We are seeing growth in adoption in travel, food and entertainment.

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Published: 11 Feb 2016, 07:21 PM IST
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