Consolidation Kotak Mahindra Bank: Bigger, Bolder, Better

Aruna Rao, Group CTO, and Jay Kapadia, Executive VP, explain how Kotak has successfully leveraged Calypso to support the bank’s impressive growth

ike its climate, the banking industry in India is A New Era of Integration intense. For Kotak Mahindra Bank, one of the world’s Lfastest-growing private banks, this has fueled the The relationship with Calypso dates back nearly a decade, opportunity for growth that its founder, Uday Kotak, and when bank management recognized the advantages of his management team thrive on. To support its rapidly an integrated approach to technology. As with many of expanding operations, the bank requires increasingly their banking initiatives, Kotak was the first in India to work sophisticated risk management and technology solutions. with Calypso in developing a comprehensive technology The evolution of Kotak Mahindra Bank has been solution. The choice of partner was only partially due to impressive since it was founded as a bill discounting Calypso’s reputation as the premier provider of back office business over three decades ago, but the bank will smartly technology. The deciding factor was their local office use its accumulated experience to safely navigate its presence, which provided a level of trust required for what course into a future of broader, more integrated financial was recognized as being a long-term solution. markets. Still, few would question the long-term outlook for “From the beginning, we knew that retooling our Kotak Mahindra Bank, for which the latest stepping-stone technology was not only a question of importing to growth in the retail sector was the acquisition of ING functionality, but also of streamlining our entire workflow Vysya Bank in 2015. and operations,” said Aruna Rao, Group CTO, Kotak The drive into new financial markets is having a profound Mahindra Bank. effect on Kotak Mahindra Bank’s use of technology. An The first step in the technology rethink was to integrate increased digital presence – for example, the introduction the back office functions and processes of the bank. While of online F/X trading and the development of a range of Calypso provided the platform, the bank decided to mobile applications – is requiring the bank to integrate its utilize internal resources for the implementation project. people, products, and processes. This is not only to ensure Their commitment to training staff and cultivating internal a seamless customer experience but to precisely and expertise has been key to the reliability and efficiency of efficiently manage the risk profile of the bank, which now the solution in the years since. has 45,000 employees and approximately 1,300 branches “While the initial roll-out took longer than expected, it in India. gave us the confidence to move ahead with the complete front-to-back transformation of the technology stack,” said “We think technology Rao, who has worked with the bank for nearly 10 years. The full implementation of Calypso’s enterprise solution should be a priority for all has taken several years, but it was essential for the bank to take a measured long-term approach to building the banks” foundation for growth.

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“From the beginning, we knew that retooling our technology was not just a question of importing functionality, but of streamlining our entire workflow and operations” The patience has paid off, as Kotak is convinced that market data and methodologies,” said Kapadia. “For their technology infrastructure gives them a competitive example, there are certain regulations that determine how advantage. “It’s a way of differentiating ourselves,” said the back office must compute valuations, but those are not Rao. “Not only do we have the ability to support all kinds of necessarily the same as the valuations that Risk or the Front products, but we can also provide top-level client service, Office wants to use.” including online access and extensive straight through Executives at Kotak Mahindra Bank talk about the processing. We think technology should be a priority for two strategic pillars of the Calypso program: improving all banks.” operational efficiency and straight-through processing, Although the Indian regulators prohibit the use of exotic and evolving their valuation and risk management instruments, the bank has successfully implemented a capabilities. With a large number of objectives already wide range of vanilla products such as bonds, F/X options, achieved in operational efficiency and STP, the focus is now currency swaps, and repo. Over the years their business on leveraging the risk management abilities of Calypso. has grown substantially. “Since we deployed Calypso, our With no signs of slowing down, and recent developments like entering the general insurance business and partnering “Calypso allows us to with Airtel M Commerce to start a payments bank, Kotak’s robust technology foundation will be critical to the firm’s define different pricing continued prosperity. environments… certain regulations determine how the back office computes valuations, but those are not the same as the valuations that Risk or the Front Office wants to use” transaction volume has quadrupled,” said Jay Kapadia, Executive Vice President – Treasury Business Solutions & Process Re-engineering Group, Kotak Mahindra Bank. Same Data, Unique Views

The second major phase of the Calypso implementation was the introduction of the enterprise risk solution. The introduction of a common risk platform enables the front, middle, and back offices to receive real-time updates of the same underlying trade data with views customized for their specific needs. “Calypso allows us to define different pricing environments across the bank. This enables us to run Aruna Rao, Group CTO, Kotak Mahindra bank different sensitivities and valuations based on different

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