Integrating IT and banking: Anil Jaggia

Jaggia speaks about new technology bets the bank is making, IT budgets for 2014 and the role of IT in the bank’s evolution

Jaggia says HDFC Bank has leveraged technology as a key strategic element, not just as an enabler.
Jaggia says HDFC Bank has leveraged technology as a key strategic element, not just as an enabler.

Bangalore: For India’s largest public and private sector banks, keeping up with the latest innovations in the world of technology has acquired greater significance, as more people take the plunge into the digital arena and concepts like mobile banking take precedence. HDFC Bank Ltd, India’s second largest private bank, is betting on new areas of technology such as Big Data analytics to help it stay ahead of rivals. In an interview, HDFC Bank’s chief information officer Anil Jaggia spoke about new technology bets the bank is making, information technology (IT) budgets for 2014 and the role of IT in the bank’s evolution. Edited excerpts:

How has IT helped your bank evolve over the years and helped you ensure differentiation from rivals?

We obviously understand that for a bank of our positioning, the only way we could have got where we have so far over the last 20 years is by leveraging technology as a key strategic element, not just as an enabler. Technology for the wholesale side is important but is even more important from the retail side. So, we have the best of technology, we’re aware of what’s happening, we’re early adopters and at the same time we don’t travel in the hobby zone—for us it’s millions of customers, so we experiment in a small way, controlled and measured experiments. And whatever works in that controlled, measured environment, we deploy for our customers.

Going forward, what are the key strategic bets you’re planning to take in terms of deployment of newer technologies?

As I said, we look at technologies early on and put them in a controlled environment and see what makes sense, before we take it and roll out to large customers. We’ve been around for nearly two decades, so we’re now at a stage where we’re into the second or third phase of the same technology. It’s not that we deployed something 10 years back and that’s good enough to last forever. We recently refreshed our entire core banking set of customers. We are in the middle of refreshing our entire data warehouse and structured analytics which we deployed in 2002. Our structured analytics will go into a complete refresh cycle and will be ready to use somewhere around April or May, very early in the financial year, and that will give us a lot more teeth on the area of structured analytics. And we’re building on that for our unstructured analytics where we will take measured steps to see how the adoption of that in the Indian environment makes sense, whether we’re able to deploy that in a meaningful way to get good RoI (return on investment) for us. And that’s the Big Data space, so that is one area of focus for us.

Also, what’s your business mix like on the IT side—how much of it is outsourced and what percentage is developed internally?

We don’t really outsource much—what we do outsource is our entire field support. So the PCs (personal computers), printers, managing those systems, managing the networks in the branches, all that is outsourced. Data centres we largely manage ourselves. Largely, the management of IT is done in-house; we don’t outsource that.

Your approach is different from many of your Indian banking rivals who have outsourced large portions of their IT to service vendors.

IT, as I said, is a very key element of our strategy, so for us we like to manage our own IT. We see technology as a strategic advantage. We want to be able to control and influence our own destiny. We want to influence it in a way that we want to do it.

As you look ahead at this year, what does your technology spending budget look like?

See, we want to ensure that we don’t overspend or underspend—underspending on technology is counter-productive for any medium to long-term strategy. We maintain ourselves in a tight corridor and as long as our revenues are growing, our IT spends are growing—obviously slower, because if you see our 2013 numbers, our revenues grew slower than previous years. As long as the economy keeps growing at 5%, our IT spending will grow, but it won’t grow at a fast pace. So, while we’re looking to increase our IT spend, we’re not looking to increase it in a big way.

And how do you break up that spending?

A big chunk of the money goes in maintaining and sustaining the businesses. Refreshing and removing all obsolesces that we have, because if you don’t invest in technology, your systems become obsolete. That takes a fair bit of continued spend. Second is growth—we’re adding so many branches and more customers every year, so we need to invest to sustain the growth. Third is what we call enhance, where we take our existing capabilities and we enhance it, add more features and functionalities, more capabilities, and so on and so forth. And the fourth is transformational.

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