‘The human touch still matters in digital banking’

“The Federal Bank saw as many as 92 percent of its transactions move to digital services during the first wave of the COVID-19 pandemic,” said Shalini Warrier, Executive Director of Federal Bank at the BFSI Leadership Summit, hosted by YourStory and EnterpriseStory on July 16.

Watch the BFSI Leadership Summit 2021 theme ‘Banking On The Future’ here.

She said the digital migration in Federal Bank has enabled bank branches to focus on other things, while customers have the ease and convenience of banking digitally when they want.

Warrier joined Federal Bank as Chief Operating Officer (COO) in November 2015 to ensure operational excellence, and digital innovations. Before being elevated as Federal Bank’s Executive Director in mid-January last year, she had been assigned the additional responsibility of business head for retail banking products in May 2019.

In her keynote address on Friday, Warrier pointed out that while digital transformation was apt and appropriate earlier, the pandemic made it even more important.

“Leaders and laggards in the banking industry were literally identified by their ability to transform themselves into this digital experience, and exceed customer expectations on digitisation,” Warrier said.

Now, customers expect banking to be as smooth as ordering food from Swiggy or buying products on Amazon. The big difference, she asserted, is that customers expect banking to be more safe and secure. This has led to a plethora of innovative efforts at the front-end of the customer interaction, and in areas that are regarded as banking back-office, Warrier added.

Key priorities of transforming banks

Warrier highlighted three pillars of digital transformation: the confluence of digital and human, open banking and collaborations, and enhanced data privacy and data security.

While Federal Bank has brought digital banking to the fore, the human element is still the core, she said. “The relationship banking, which Federal Bank is famous for, is embedded in our branches to make sure that the human element of interface with customers is not lost,” she added.

That’s why, Warrier said, Federal Bank recognised instances during the first COVID-19 wave when customers would need bank branches. A customer availing a gold loan, for example, had to visit the bank to deliver the gold.

During the lockdown, there were government norms restricting the working hours and the number of people at each bank branch at any given time. Customers had to wait outside the branches for their turn.

This propelled Federal Bank to innovate a web capability called ‘FedSwagat’. It allowed customers to book an appointment for a branch visit, indicating the purpose of visit, and so on. “During the second wave, we extended this capability to our Android app for added customer convenience,” Warrier said.

She also cited Feddy—the bank’s AI-powered personal assistant that assists customers, and takes them through their preferred channels like WhatsApp, Alexa or Google Assist, or the bank’s website.

While Feddy can answer a range of customer questions on basic products, Federal Bank is the first bank in India to integrate Feddy with Google Business Messages, allowing branch location-search among other things.

Business Messages is Google’s mobile conversational channel that combines entry points on Google Maps, Search, and brand websites to create rich, asynchronous messaging experiences. “FedSwagat and Feddy epitomises for us that the future of digital is human,” Warrier said.

The second pillar of digital transformation is open banking and collaborations.

To make this possible, traditional players must look at new-age players as collaborators, instead of competitors, Warrier said. "The market out there is huge, and banks and fintech ventures have complementary roles to play,” she added.

Warrier cited Federal Bank’s partnerships with neobanks, like Bengaluru-headquartered epiFi Technologies and Mumbai-headquartered Amica Financial Technologies. Neobanks address the large segment of salaried millennials, and help them with actionable recommendations to grow their savings and investments.

The other aspect of open banking is based on Federal Bank’s philosophy of being “branch light, but distribution heavy”. While Federal Bank has been expanding, and has 1,280-odd branches, it has realised that bank branches are not the only channels to get in touch with customers.

That’s why there are alternate channels like relationship managers, the call centre, and a range of other capabilities. “We have added all our fintech collaborations to these channels to get in the banking lives of customers,” Warrier said.

Federal Bank embarked on open banking three years ago through an API-banking gateway. API, or application programming interface, is a set of definitions and protocols to integrate software applications. While strengthening its technical capabilities, Federal Bank adopted an open approach for partnerships. “That’s how we started tie-ups with Google Pay, Paisa Bazaar, Pine Labs among a range of fintech ventures,” Warrier said.

Banks’ responsibilities have increased

Warrier’s third pillar for digital transformation is data privacy and security. As customers become more aware of their rights, banks are also aware of their obligations, she said.

“As financial institutions, we have a greater responsibility because we know a lot about customers. This is compounded by the fact that there are newer technologies coming in,” Warrier noted.

In an interconnected world, a banking chain is only as good as its weakest link. “Therefore, the whole concept about how we manage our service providers and partners also becomes important,” she added.

Warrier listed several safeguards like taking minimum customer information for transaction purposes, ensuring data encryption whether at rest or in motion, having adequate and more control on end-points, building capabilities around data leakage prevention, and conducting a plethora of data privacy and data security audits to curb breaches.

“These measures are taken to give the customer—our most valued stakeholder—the confidence that banks are absolutely committed towards maintaining privacy and security,” Warrier said.

Watch videos of all the session from the BFSI Leadership Summit 2021 here.