Shekhar Bhandari, president – Global Transaction Banking at Kotak Mahindra Bank, discusses the post-covid impact and the emerging opportunities in transaction banking:
Ravi Lalwani: What is the impact of lockdown on the existing transaction banking business? How have you responded?
Shekhar Bhandari: Covid created an initial shock across all major industries and segments and brought them to a near standstill. The immediate impact was a significant drop in volumes and transactions across all the sectors and banking products; in some cases it had impacted 80-90% of the businesses. The impact was also on the internal and external processes mainly related to sending, receiving and signing of documents.
However, on the positive side, as the businesses began to come to terms with it, there was a seismic shift towards digitization across both products and processes. Many customers, who did not move to digitization for 5-6 years, moved in under 20 days. Hence, technology became the biggest beneficiary from this crisis while also being the biggest enabler for business continuity. A classic example is the movement of all meetings and conferences to online conferencing tools, which ensured that the business interactions could continue while also resulting in significant revenue growth for their providers.
Which are the new emerging opportunities for transaction banking in India?
Digital and non-touch transactions are expected to increase significantly due to the crisis, as it ensures the user’s safety and adheres to the social distancing norms. Some of the examples include UPI and contactless payments. In a longer term, this has provided an opportunity for a seamless and 100% digitized customer journey across banking services, cash and trade products – starting from the intent to purchase to the actual payment and delivery of products and services.
Can you share some case studies on how Kotak Mahindra Bank’s transaction banking service has helped its clients?
We have introduced services like paperless trade transactions, paperless banking transactions and video KYC for our transaction banking customers.
Paperless transactions: Since the clients were facing challenges in submitting executed copies of documents to the bank due to the lockdown, we launched a paperless digital offering for our trade customers, wherein once registering themselves on the eMudhra website, the customer can start uploading the documents and share with the bank’s designated corporate service managers.
Paperless banking transaction: In this process, after receiving the details of the reviewer, signatory and the individuals who would be making the stamp duty payment, the bank initiates the request through the sign desk platform to the customer. Once the document is reviewed and the stamp duty payment is made, the signatory can then sign the document using their digital signature certificate (DSC), Aadhaar based signature and legally acceptable digital signature mode.
Video KYC: Transformational product of Kotak bank ‘811’ moved a step further in acquiring customers digitally. Video KYC enables the customers to open an 811 bank account instantly wherein, after entering their details, they can get on a video call with the bank executive to complete their KYC process, thus removing the requirement to visit a branch to complete the KYC.
What about collaboration with fintechs to empower your business?
We have collaborated with several fintechs to provide superior working capital solutions. Popular among them are dynamic discounting to the anchor companies with vendor onboarding support, dealer financing, platform integration with vendor and OEM, plug and play with the bank for discounting, giving platform for providing acceptance on the invoices, bills raised by the vendors on the OEMs, accepted invoices can be discounted by the bank through plug & play with the platform.
What is new in risk and compliance for transaction banking in the last couple of years? Return of capital is critical and more important than return on capital. The bank continued with this philosophy on risk. The bank embraces technology to increase the risk surveillance to prevent any frauds or malpractices, especially during covid period. Risk management can be automated, but one of the things about data is that you make assumptions for the future based on the past. Those assumptions may or may not be correct. Common sense remains supreme risk management in addition to AI, robotics and analytics in this technological world.
What are the key factors that will impact the shape and size of transaction banking business this year?
In a fast-changing digital world, business will become more efficient and effective through the combination of digital and physical presence. Digital is a massive game changer in banking. Banks are increasingly becoming technology-oriented companies. Transaction banking needs to focus on in-depth understanding of client requirements and ability to deliver tailored solutions. Driven by innovation and leveraged on robust technology and specialized product solutions, transaction banking is the future. Economy will recover post covid and digitization levels would be all time high. The new processes incorporated during this period will continue. Some of the practices that will be shifted towards digitization will be in terms of payments, processes and even interactions.
