Our tech budget will keep increasing over the next three years: Kotak Mahindra Bank CTO

Achieving better customer experience is one of the primary objectives for banks and Milind Nagnur President & Chief Technology Officer (CTO), of Kotak Mahindra Bank, is planning to take customer experience (CX) one step ahead. He believes that in today's digital-first world, CX equals technology experience. With a focus on software-based engineering and building a strong talent pipeline, Nagnur says that banks should start thinking like a tech company to ensure they are providing a service that their customers want and enjoy. Edited excerpts.

Which technologies are making a difference in the way the bank operates and excites you the most?

I see software-focussed engineering - which is often underrated - as the most important technology for us at Kotak Mahindra Bank. In the past, banks have relied on vendors to develop software stack and most people viewed IT as a service function. But customers are increasingly evaluating banks based on the quality of the digital experiences they offer. Hence, with the emergence of apps making lives faster and easier, we see a need to recreate that customer experience. Where many banking apps have failed to do so, we are trying to create experiences wherein people start loving their apps and readily embrace them. We develop the technology for all our critical customer-facing properties such as mobile banking and net banking channel in-house and do not rely on external vendors. This gives us more flexibility and autonomy to create the best possible customer experience. Ofcourse for a technology like CRM (customer relationship management), we use a vendor like Salesforce. Building technology in-house of course requires us to attract the best engineering talent.

How do you tackle the human capital challenge?

It is a big transformation to start your own software engineering teams, where firstly, you have to attract the best software engineers who can write really good quality software for you. Secondly, once you onboard them, you have to give them an environment, the tools and the processes – say, builder tools, DevOps pipelines, etc., plus create an environment where the best software engineers can thrive. For example, our technology floor looks more like any software or technology company, with various facilities and recreational activities our employees can access. We have a team of 3,000 plus people (in IT). The composition is changing substantially. We have onboarded 250 new software engineers already in the last one year and plan to add another 350 engineers by this year end. These engineers are proficient in app development, cloud architecture, AI/ML and are mostly hired from tech companies like Amazon, Ola, Twitter, and Microsoft among others.

How is your tech budget changing?

Our technology budget is growing. And the next three years are going to be a technology investment span for us. Meaning the budgets will keep increasing at least for the next three years, because digital transformation is happening in every line of business across the firm, whether it's consumer assets, consumer liabilities, commercial, etc. As our CEO also emphasised that we are rapidly transforming to become a tech-first company where tech is driving the next set of transformations across the firm across back office, front office, customer experience. So internally we don't see budget as a constraint. The constraint is on capacity planning and how much we can take on in a given year. Because the demand for tech projects far exceeds the capacity to deliver, which is a healthy problem to solve.

What are the technologies that you are going to focus in the next one year and why?

To begin with, we are investing heavily on builder tools that enable software engineers to produce high quality code, leading to super-faster responsiveness of web portal or mobile app, besides 99.99% of uptime, and so on. These automated tools are much faster and can perform in-depth code review for issues such as security, code style, errors or bugs, etc. We are also investing heavily in our mobile app, which is used by 30 million plus customers for banking transactions. We are investing in conversational AI through chatbots, both customer facing and customer service agent facing chatbots in order to make internal agents more productive.

In the last one year, can you think of any case where technology has been used as an enabler and helped improve your business revenue as well as your customer experience.

What comes to top of mind is a number of self-service do-it-yourself (DIY) journeys that we have launched on mobile and internet platforms. Today, Kotak Bank has some of the best corporate salary products. This entire customer journey for a salaried employee to automatically receive their payroll, salary compensation and other benefits from the bank has been built over the last one year. Likewise for DIY journeys for liability accounts, loan accounts, and credit cards. We have also introduced video KYC to provide a branch-like experience anywhere, anytime. Recently, we introduced ActivMoney, a facility of automatically sweeping out funds above a threshold from your current or savings account to a fixed deposit account for 180 days. In case of insufficient balance in your account, the FD will be broken prematurely and the required amount will be transferred to your account. All these initiatives are data driven and needed a strong backend technology for which we heavily relied on data analytics, AI and machine learning techniques.

If you look at the competitor benchmarking among Indian banks, then what are the key technology areas you wish to focus more?

Our vision is simple and straightforward. We want to become the best digital bank and want people to love the kind of experiences and services they can get with us. Hence, we are critical of ourselves and constantly evaluate our IT (systems) to achieve the best results. We will keep pushing the boundaries forward to reimagine our mobile channel and branch channel. Say, when a customer interacts with our mobile app or calls our call centre or walks into our branch or starts chatting with a chat bot, we want to be contextually aware of what job the customer is trying to get done and intuitively be there for him or her with that solution. Some of the back-end technologies we are already using such as AI, ML, data and analytics, contextual awareness, biometric authentication, contextual awareness of the customer preferences and would keep improving on those areas.