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Target 2025: 50 million debit cards, 0.5 million credit cards

Chennai based Indian Bank focuses on advanced analytics, innovation, and digital transformation to leverage customer experience on digital products:

Foundation day of the Indian Bank every year coincides with the same day as the independence day of the nation. Indian Bank commemorated its 115th foundation day with the country’s 75th independence day on August 15, 2021, through a virtual celebration, held in the presence of MD & CEO, Padmaja Chunduru. The centenary year celebration was inaugurated by the then President of India A P J Abdul Kalam in 2006. Indian Bank, incorporated on March 5, 1907 commenced its business on August 15, 1907. The Indian Bank became 100% Core Banking Solutions (CBS) compliant in 2008. Bank of Thanjavur (BoT) with 157 branches was amalgamated with the Indian Bank in 1990. The government of India announced in 2019 amalgamation of Allahabad Bank, a bank with 155 years legacy into Indian Bank. The integration of CBS systems of both the banks was completed on 14 Feb 2021. Indian Bank has 5809 domestic and 3 overseas branches as well as 5238 ATMs & BNAs (bank note acceptors). Shanti Lal Jain assumed charge as Managing Director & Chief Executive Officer of Indian Bank on 1st September 2021.

  1. Bharathi, General Manager, Digital Banking Division (DBD), Indian Bank, provides insightful updates in the digital journey of the bank in recent years.Mehul Dani: How the digital strategy of Indian Bank has been implemented in the last and current FY so far, post covid, for employees as well as customers? How it has been different from yesteryears?
  2. Bharathi: Digital adoption has become the neo-norm for customers as well as banks. Especially the pandemic has accelerated the digital adoption rate. During FY 20-21, the digital and ATM transactions at the bank have improved significantly to 64% from 51% during the preceding year. On the other hand, the transactions at the branch counter reduced by 13% from 49% to 36% during the FY 2020-21. This shows the clear trend in acceptance of digital transactions by the customers.

The digital strategy implemented in the last FY has been multi-pronged spanning: (i) Concerted efforts to increase the debit card base to savings customers. (ii) Provided facility to customers to apply for loans through the mobile application. (iii) Cyber security initiatives were implemented for enhanced security of the digital transaction. (iv) Developed a lead management system to monitor the conversion of leads into business. (v) Integrated loan origination system with NeSL for digital document execution. This will help customers to execute the document online. (vi) Provided insurance, MF products through mobile platforms. (vii) Introduced small merchant UPI QR App to register/generate the UPI QR, accept the digital payment and view the statement. (viii) Provided ease of banking to customers via an online platform for the opening of public provident fund (PPF), new pension scheme (NPS) and online nomination facility, e-mandate registration, and verification through net banking. (ix) Facility for online registration for various social security schemes (PMSBY, PMJJBY, and APY).

Digital strategy, that has been well laid down for current FY, for the benefits of customers, includes (i) Introduction of video KYC facility for account opening. (ii) Improved customer loyalty through enhanced customer experience through up-gradation of net banking, mobile banking, the introduction of online dispute resolution (ODR) system, providing customer spending insights for better financial planning, etc. (iii) End to end digital lending model for all retail and MSME and mid-corporate loan products through mobile and internet platforms. (iv) Provided insurance products through online platforms. (v) Introduction of corporate merchant UPI QR App to register/generate the UPI QR, accept the digital payment and view their transaction statements. (vi) Introduction of FASTag mobile app. (vii) Mutual fund services through internet banking. (viii) EFRM solution for secured banking. (ix) B2C UPI digital prepaid voucher for covid-19 vaccination. P2P prepaid voucher is under development. (x) Introduction of Digi Voucher – eco-friendly paperless banking to leverage technology for cost-cutting and improving efficiency. (xi) Strengthening ATM security, with the implementation of TLS 1.2 switch /terminal end-to-end to deter man in middle attack.

Mehul Dani: Please describe the underlying technologies of your company. What is the progress in deployment/use of AI, ML, blockchain, etc. in banking operations?

Indian Bank focuses on advanced analytics, innovation, and digital transformation to leverage customer experience on digital products. To support decision making, power BI & data analytics models are implemented providing a 360-degree view of the customer having capabilities for cross-selling of products, improving the business, profitability, and reducing cost.

The bank has deployed data analytics tool for identifying the customers’ need for various loan requirements using AI & ML techniques and provide pre-approved loan offers to expand the loan portfolio. These models are largely put to use for business monitoring/ development, leads generation, identifying potential customers for retail / MSME loans, asset quality monitoring, cost optimization, ATM profitability etc. Implementation of robotic process automation (RPA) in the various areas to automate the manual business process to improve the productivity of the business is under progress.

We have implemented a loan management system (LMS) to enable the bank for end-to-end digital lending. The DDE (digital document execution) is also integrated with the LMS system. Presently, the MSME portfolio is enabled through LMS and other credit portfolios will be enabled during 2021-22.

Mehul Dani: Please quantify/ estimate usage patterns of apps, chatbots, digital platforms, digital payments, etc, at Indian Bank.

During FY 20-21, our bank has processed an average of monthly 52.8 million through mobile banking including UPI transactions of 49.4 million, 12.4 million transactions through IMPS, and 2.8 million transactions through net banking. In the month of August 2021, the bank has processed 72.5 million transactions through mobile banking including UPI transactions of 70.2 million, 12.9 million transactions through IMPS, 3.1 million transactions of net banking transactions, and 3.4 million transactions through other online channels. As our main focus is on improving the customer journey and experience in banking, we witnessed extensive growth of 37% mobile transactions, 21% growth of net banking transactions, compared to the previous year.

Mehul Dani: How has been the growth of internet banking, mobile banking in the last 3-5 years? How many of your customers resort to mobile-only interaction?

Our bank has seen a substantial increase in the adoption of digital channels by the customers for their day-to-day operations. During the last 3 years, customer adoption to net banking has increased by 105% and mobile banking by 243%. There was a significant shift seen in customers moving from internet banking to mobile banking due to the ease of operations, security, flexibility, and privacy.

The bank has been able to record tremendous growth of internet banking, mobile banking in the last 5 years. The number of net banking customers has increased to 5.98 million as of August 2021 from 2.92 million as of March 2018. Similarly, a number of mobile banking customers has shot up to 5.76 million as of August 2021 from 1.68 million as of March 2018. UPI has seen growth from 0.56 million as of March 2018 to 9.04 million as of August 2021.

Mehul Dani: How much overall business approximately is garnered online, digitally by your company in the current FY and y/y growth in it?

Deposits account opened digitally increased to 253,620 in 2020-21 from 157,848 during FY 2019-20 and the amount garnered increased to Rs18.11 billion in 2020-21, from Rs9.32 billion a year ago. The loan account garnered online went down to 268 in FY20-21 from 324 during FY19-20.

Mehul Dani: How is your company associated with partnering /investing/ supporting Fintechs and start-ups? Please name the top 3 entities.

Our bank has integrated with FISDOM (a SEBI registered investment advisor) in mobile banking for offering mutual fund services to the customers. Mutual fund services will be soon introduced in internet banking. Our bank has done integration of Nuclei and Cheggout Services for booking and shopping facilities in mobile banking. Finwizard Technology and Cheggout Services are our partners in this.

Mehul Dani: In the present scenario, what are your targets for IT, digital initiatives, tech-led business growth in the current FY, and what are the plans for the next 3 years?

We aim to achieve a 1.3 billion digital transaction volume in the current FY. Our endeavor will be for reaching the target of 50 million debit card base and 0.5 million credit card base before 31 March 2025.

Our major plans include implementation of the end-to-end digital lending platform; construction of centralized data repository (data lake/ data warehouse); strengthening additional customer touchpoints through the deployment of additional ATMs / cash recyclers & passbook kiosks and leveraging data analytics for business growth as well as risk management.

We also have planned for the introduction of (i) WhatsApp /voice-based transaction/ tab banking, integration of channels with enterprise fraud risk management solution, (ii) up-gradation of ATM EFT switch infrastructure, (iii) up-gradation of net banking, mobile banking under omnichannel platform, (iv) integration of third-party products like insurance products through channels and bank’s payment gateway/integration with bill payment modules/merchant aggregator modules/merchant banking software.

Our bank is targeting digital transactions to be 65% and ATM transactions to be 25% of the total transactions by 31 March 2023, with the improved customer base and enhanced digital products/features.

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