Kotak Mahindra Bank invests digital rupees on wholesale and corporate banking

Kotak Mahindra Bank is extending its digital investments on the retail-commercial and corporate side, while keeping an eye on retail customers, said Dipak Gupta, Joint Managing Director of Kotak Mahindra Bank, in its earnings call for the first quarter of fiscal year 2023.

Gupta cited Kotak.biz, a mobile app in the retail commercial space that offers an all-in-one bundled merchant proposition. "A lot of digital generally tends to be largely focused on the retail side, (but) we’ve actually invested significantly also on the wholesale and corporate side," he said.

He also pointed to Kotak Mahindra Bank's transaction-banking offering, Kotak FYN, which it unveiled in March 2022. This enterprise portal is exclusively for business banking and corporate clients. "We’ve added a lot of functionalities to FYN."

After receiving an in-principle approval from the Government of India for agency business, Kotak Mahindra Bank has also gone live with customs and income-tax payments for its customers. It plans to go live with Goods and Services Tax on receiving necessary approvals.

Kotak Mahindra Bank's broad technology strategy continues to be three-pronged, Gupta told equity analysts on July 23, 2022. "First, sharpen the customer-acquisition engine. Two, enable customer-engagement. And three, enhance customer-experience," he explained.

The introduction of products on the tax payment side will help Kotak Mahindra Bank build government deposits, and acquire new customers, while helping existing customers in their transactions, Gupta noted.

The digital initiatives in the payments space will witness continuous technological developments, driven primarily by Unified Payments Interface, and other person-to-person and person-to-merchant segments.

Kotak Mahindra Bank recently launched Spendz, which is a prepaid account for existing retail customers to manage their daily expenses. "We have seen a lot of traction from customers on this proposition," Gupta said. "You secure your small payments without exposing the main account or debit card through the Spendz account."

In the retail lending segment, Kotak Mahindra Bank's key focus using technology and analytics is to improve the customer-acquisition metrics, convert or cross-sell to a larger base of our existing customers. "A lot of work is going on in the unsecured retail segment in this area," Gupta said.

Two, the bank wants to improve customer-journeys through DIY (do it yourself), and assisted digital processes. "Our ongoing endeavour in all these digital pieces is to continuously improve the customer experience. So, a lot of work is on the mobile, websites and several other channels that the customer chooses," he said.

Around 98 percent of Kotak Mahindra Bank's savings-account transaction volumes are in digital or non-branch modes, according to its latest investor presentation.

Once DIY and assisted digital processes fall into place, a chunk of customer-acquisition costs, particularly manpower-related acquisition costs, will start evening out, Gupta said. That impact will take at least three quarters to start reflecting on the books.

"But it will happen big time because we are changing acquisition journeys practically across all asset products including non-retail ones, so that will have a significant efficiency over time," Gupta said.

Shanti Ekambaram, Group President - Treasury, HR, CSR and ESG, said Kotak 811 (a digital zero-balance savings account ) continues to contribute to digital customer acquisition. "We continue the focus on asset cross-sell to our customers across the retail consumer and commercial spaces. This was driven by deep analytics and that helped deepen our customer base," she said.

Over 40 percent of personal loans continue to be sold digitally, she added.