Using chatbots, big data to add and engage customers: AU Small Finance Bank’s Sridhar

Jaipur-based AU Small Finance Bank was born in April last year when it transitioned from a non-banking finance company, AU Financiers, into a small finance bank that, by mandate, can undertake basic banking activities such as accepting deposits and providing small-ticket loans. The bank’s target market is micro and medium enterprises, marginal farmers and other underserved consumers.

Like most banks, AU Small Finance Bank is increasingly integrating digital technologies into its operations. It plans to soon launch new services such as UPI and USSD (Unified Payments Interface and Unstructured Supplementary Service Data) in Tier-2 and 3 towns. It also has plans to introduce digital lending, digital payments, digital liabilities and digital wealth management. 

To roll out all these services, the bank appointed Dayakaran Sridhar, who earlier led digital operations at Axis Bank, as its chief of digital banking and digital strategy last month.

In a conversation with TechCircle, Sridhar talks about the bank’s strategy to deploy emerging and deep technologies in its core operations. Edited excerpts:

How will AU Small Finance Bank use chatbots to improve customer experience?

Chatbots are an integral part of AU SFB’s strategy to provide seamless customer experience. For the bots to operate successfully, they should be able to converse in natural language and the conversation has to be contextual in nature. We are in the early stages of testing our solution and hope to launch it on all our digital properties, including voice-based bots. From a business perspective, we would like to use them across engagement, servicing, transactions and acquisitions in that order.

Are there other new technologies being used to make operations faster and bring down the cost of customer acquisition?

We have stabilised our banking operations in the last 18 months and are managing best-in-class turnaround time across our product portfolio. For our next phase of improvement, we want to adopt solutions in optical character recognition (converting images of text into a code) and robotic process automation to bring in further benefits through automation and digitisation. We are in advanced stages of engagement with technology vendors for the same.

How important are big data and analytics in targeting new customers?

Data and analytics are key to running any successful business and digital banking is no different. We are in the process of setting up a state-of-the-art analytics stack using big data to not only serve our existing bank customers but to also acquire customers at scale.

Is the bank working with other payment or fin-tech companies to try new modes of payment?

At AU SFB, our digital strategy is to test, learn and scale. On payments, we are developing customised solutions for our customers and are in advanced stage of interactions with a fin-tech partner.

Is the bank experimenting with blockchain technology? If so, how do you plan to do so?

We are slightly distant but do plan to leverage blockchain when we get there, be it remittances, trade finance, supply chain finance, etc.

Can you comment on the investments made or planned for human expertise and expenditure for the bank in employing new technologies?

We have significantly invested in our technology stack and have implemented advanced applications catering to the entire lifecycle of customer engagement. This involves lead generation and loan satisfaction, including digital onboarding of customers, core banking system, human capital management, risk management and expense management, among others. Apart from these, we are also aggressively partnering with new age fin-techs to come up with solutions for customers and for backend operations.

When do you expect to see the return on investment from these emerging technologies?

One of the key questions to be answered is whether the investment is adding value to the customer. ROI will be the measure of this value created for the customer and has to be measured across parameters such as customer satisfaction, new business generated, expense reduction, enhanced productivity, etc. Our investments have already started giving us returns across all these sectors and we shall see an increase in the next 24 months.

Has the headcount at AU SFB stayed the same or reduced due to the use of newer technologies?

We are an 18-month-old bank and are ramping up our operations in our existing geographies. We have been launching new products (agri loans, gold loans, two-wheelers and consumer durables) and building a robust distribution system via branches and banking outlets. In our expansion, we have increased our headcount to approximately 12,000 employees as we speak. We expect our next phase of incremental growth to come from our existing distribution channels as improved operational efficiencies will lead to increase in productivity.

We are on track to significantly increase our productivity from our sales and operations on the back of mobility fulfilment channels and digital properties we are setting up. On the branch banking side, 90% of our savings accounts were opened through a tab-based application and we are on track to extending the same for current accounts too.