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Karnataka Bank: DCoE drives, ACoE navigates

Karnataka Bank has migrated 93.17% of customer transactions to digital means. KBL Xpress cash adoption is 100%, KBL Xpress car loan is 79%, KBL Xpress home loans is 76%, KBL Xpress MSME loans is 75% and KBL Xpress SB account is 59%:

Karnataka Bank: DCoE drives, ACoE navigates

Karnataka Bank was among the first to deploy a Core Banking System in the year 2000. To ensure that its customers have the best, the bank has deployed the state-of-art technology from the best players in the industry like Infosys, Sun and Wipro. Mahabaleshwara M.S., MD & CEO at Karnataka Bank, provides insightful updates on the digital initiatives and IT transformation.

After successful completion of his first term of 3 years, RBI re-appointed Mahabaleshwara M.S. as MD & CEO for a further period of 3 years with effect from 15 April 2020. He has over 37 years of banking experience both at operational and administrative levels. He has done his M.Sc. with specialization in agronomy. He is also a CAIIB and Honorary Fellow of Indian Institute of Banking and Finance (IIBF) and holds Post Graduate Diploma in Business Management (PGDBM).

Mehul Dani: What are the changes made in the digital strategy for Karnataka Bank’s customers in this FY? How has your bank benefited?

Mahabaleshwara M.S.: Under wave 2.0 of ‘KBL VIKAAS’, a holistic transformation journey has taken place and put digital banking on fast forward mode. ‘KBL NxT’ concept was launched in the year 2021, with an objective to eventually emerge as the ‘Digital Bank of Future’. As part of KBL NxT journey, the bank has implemented latest technologies for enabling digitization under various verticals viz. customer experience, operations, human resources, technology, cyber security, digital marketing, partnerships, etc. Cost optimization, better analytics, risk mitigation, reach, ease & experience are the key KPIs envisaged out of the product journey re-imagination, and the underlying infrastructure of digitization was aimed at enhancing the speed to market our future products and to position ourselves as ‘Digital Bank of Future’.

Digital Centre of Excellence (DCoE) of the bank was established in January 2019 to play a significant role in the bank’s holistic transformation. Today DCoE is the hub for incubating various digital products, driving process innovation, increasing automation, digital marketing and social presence, for increasing customer engagement, customer satisfaction and operational excellence for the bank. DCoE’s vision is to continuously innovate, build best in the class products and processes using agile methodologies, partner with fintechs, focus on UI/UX and increase AI/ML adoption with compliance to regulatory guidelines.

DCoE has developed digital journeys covering retail and MSME loan products using business rule engine for automated verification, income assessment and credit underwriting. Account opening products leveraging the potential of India Stack and officially valid document (OVD) verification process are enabled through tab and web. A few key highlights of these journeys are as follows:

  • End to end digital self-journey is available for cash loans, with ‘time to cash’ in less than 10 minutes.
  • Constant adoption on the digi-eligible applications of over 80% across the retail & MSME loans.
  • Best in-principle sanction time, thus significantly improving the TAT.
  • CSAT scores ranging between 4.30 to 4.80 on a scale of 5 across various loan and on-boarding products.
  • Customers are on-boarded digitally, resulting in opening of an account in less than 5 minutes with End-to-End (E2E) paperless digital process, which has presently touched an overall adoption of over 60%. Self on-boarding journeys along with V-CIP (video-customer identification process) is also enabled for the convenience of the customers to open accounts from their place of choice.
  • Decisioning powered by business rule engine & custom-built score card, along with the required integrations to bureaus and anti-fraud solutions.

Karnataka Bank has also started an Analytical Centre of Excellence (ACoE), as a key enabler for data-driven decisions, under KBL-NxT initiative. This will create a ‘data driven decisioning’ culture at the bank, and positively impact profits through revenue growth and operating cost optimization. The scope of ACoE covers stages from assessing current data, building & cleaning it, creating infrastructure to host, acquiring platforms for modelling, prioritizing use cases, building maturing scaling predictive models, adapting the business process for input model outputs, training and screening right skills, from close to 100+ use cases already in use in the banking industry with various degrees of impact.

Please describe the underlying technologies at Karnataka Bank. What is the usage patterns of apps, digital platforms, etc.

Bank has deployed Finacle as core banking system (CBS). Various delivery channels are integrated with it through middleware. We have obtained API gateway to onboard APIs to enable API based banking. This will make the business processes more effective, as it allows different slices of the organization to work together in a synchronized manner.

The Information Security Management System (ISMS) of the bank has been accredited with ‘ISO 27001:2013’ certificate, encompassing the bank’s data center / IT cell, near line site (NLS) and information technology department including the DR site (IT & DR). State-of-art IT set up which has enabled anytime anywhere banking through alternate delivery channels such as (i) ATMs, VISA International Debit Card, RuPay Debit Card, Cash recycler, etc. (ii) Internet banking, mobile banking, IMPS, e-lobby, national common mobility card (NCMC), co-branded credit card, and (iii) 2 DBUs (Digital Banking Units) and 4 Digi Centers, which facilitate various digital activities and includes digital onboarding of customers.

How many of your customers use mobile onboarding / trading / banking?

Bank has introduced KBL MobilePlus (mobile banking) and BHIM KBL UPI (KBL SMARTz for UPI payments) as its digital products for digital payments apart from traditional internet banking and debit card. Around 93% of customer transactions are through digital means.

Around 60% of the customers are registered with the mobile banking, which provides features of deposit opening and closure, QR code scanning, bill payments, fund transfers, submission of 15G/H, recharge online, FasTag issuance & recharge, travel booking, online investments in mutual funds and insurance, school fee payment, applying for lockers, applying for digital loans and many more. More and more features are being provided through mobile banking platform, which facilitate increased digital payments to customers.

Karnataka Bank has introduced BHIM KBL UPI mobile app for UPI transactions. BHIM KBL UPI app is a mobile application for all transaction needs, which facilitates bank’s customers to add own and other bank accounts linked to his/her registered mobile number and initiate payment and collect fund transfer request based on virtual ID, Aadhaar number, bank account number with IFSC code, mobile number with MMID.

The bank is also issuing KBL QR codes to its merchants to ensure less cash transactions and provide better customer experience, through UPI mode. The bank provides POS to its merchants for their digital payments, which enables the merchants to accept payments through cards (debit, credit, food, gift, etc.)

The DIGIDHAN Mission set up in June 2017 under MeitY (Ministry of Electronics & Information Technology) is publishing the scorecard on digital payment transactions from 2017-18 after reviewing the performance of the banks under various parameters. As per the DIGIDHAN dashboard for FY 21-22, our bank is ranked number 1 under small & micro bank category and 6th under overall banks category, which indicates the big stride made by the bank in digital space.

What percentage of business is generated from digital channels and how is its adoption?

Bank has introduced a suite of digital products both under liability and asset side. Various digital loan journeys have been introduced viz. KBL Xpress Cash Loan, KBL Xpress Car Loan, KBL Xpress MSME, KBL Xpress Micro Mitra Loan, KBL Xpress Business Quick Loan, KBL Xpress Ghar Niveshan and 2-wheeler loan KBL Xpress Easy Ride.

On the liability side, bank has introduced customer on-boarding through web and tab-based Xpress SB account, instant online account opening through video KYC (VCIP), online locker booking, online Re-KYC etc., with several new products.

93.17% of customer transactions are through digital means. KBL Xpress cash adoption is 100%. Adoption of KBL Xpress car loan is at 79%, of KBL Xpress home loans 76%, KBL Xpress MSME loans 75% and KBL Xpress SB account 59%. Going forward, I believe that, at least 80% of all our retail loans underwriting will be under the digital channel.

How strong is the bank’s presence on social media? What have been the online marketing & promotional efforts undertaken for the current FY and planned for the next FY?

With reference to the presence on social media, banks today have evolved to cater to the ever-changing demands of the customers and have become accessible 24×7 by establishing a strong online presence. To increase brand visibility, the bank is managing multiple verified handles such as Facebook, Instagram, Linkedin, Twitter, Youtube and Koo.

Through social media, bank has been able to build brand awareness, public awareness, promote financial education, PR updates, etc. Bank executes focussed campaigns and social media marketing on the basis of scientific profiling of target base, in order to reach the stakeholders, and this method prevents dilution of brand strength. The bank has been able to update content related to product, services, offers, enhancements, etc, and deliver them to customers and also receive instant feedback from the customers on such products and services. The instant review by the customers has enabled the bank to take corrective actions and develop a much better/suitable product based on the preferences of customer. The bank has been able to generate quality leads through various organic campaigns.

Social Employee Engagement Development program was initiated by the bank to encourage the employees to actively engage with the bank’s official social media handles within the set framework. This would have a ripple effect thereby increasing our visibility and word of mouth. The bank has created and executed various campaigns in line with topical days, promoting the Xpress digital loan products, cyber security, etc. These campaigns have reinforced customer trust and helped to connect emotionally with the customer.

The bank is staying connected with the analysts, investors, corporates and high-profile customers using professional handles such as Linkedin. Senior management of the bank is actively engaged on Linkedin by posting various articles, sharing industry insights, etc. The bank’s social media has complimented the bank’s transformation journey to achieve growth with excellence and innovation. Third party publisher network and Google Display Networks along with few ad exchanges are in line to be initiated. To stay relevant, innovative 360-degree marketing approach for inorganic campaigns will be executed to have a strong and vibrant social media presence.

What are your targets and plans for IT, digital initiatives for the current FY to increase business and to expand customer base?

Bank is taking various digital marketing initiatives to acquire new customers & connect to existing customers across various channels. Have a look at few major IT/digital initiatives taken up/envisaged by us:

  •  a) Video – Customer Identification Process (V-CIP) for online account opening is made available to public.
  • b) Analytical Centre of Excellence
  • c) KYC automation
  • d) MSME Banking platform
  • e) Account Aggregator
  • f) Centralized Service for Grievance Redressal (CSGR)
  • g) Government Business Module
  • h) KAFKA: Change Data Capture
  • i) Virtual Desktop Interface (VDI)
  • j) Digital Insurance Application
  • k) Trade Finance Automation
  • l) ADF MIS & RBS Solution
  • m) Government Business: Tie up with Central Board of Direct Taxes (CBDT) & Central Board of Indirect Taxes & Customs (CBIC) related online challan payments.
  • n) Door step gold loan.
  • o) WhatsApp Banking
  • p) Mobile Banking and Internet Banking enhancements
  • q) AI based Chatbot
  • r) Omni channel Solution
  • s) Co-lending platform.

The first phase of bank’s transformation project KBL VIKAAS, which began on 29 Nov 2017 and completed on 31 March 2021, enabled the bank to build a strong foundation for its digital transformation. Based on this foundation, KBL NxT, an advanced digital initiative under KBL VIKAAS 2.0 was launched on 1 April 2021 with an aspiration to emerge as the

‘Digital Bank of Future’. The bank is totally focussed to emerge as strong, vibrant and digital bank.

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