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Vol. 15 No.10 February 2017 `75 Pages 48

YES digital transformation Less stressed Brazilian Gujarat banks’ biz outlook RRBs in Gujarat www.bankingfrontiers.com

SBI powering banking in Digital India

Mrutyunjay Mahapatra Shiv Kumar Bhasin Editor’s Blog N. Mohan Mobile : 9322895820 Email : [email protected]

February 2017 - Vol. 15 No. 10

Group Publisher : Babu Nair Group Editor : Manoj Agrawal Facing the Uber moments Editor : N. Mohan Editor BizTech : Brian Pereira t was Antony Jenkins, former CEO of , who coined the phrase Uber Editorial moments in 2015 to explain how disruptions would impact and Mehul Dani, Ravi Lalwani, Ibanks would be forced to close down and V. Raghuraman, Surekha Galagoda lay off people. Jenkins then said the disruptions may happen over the next 10 years. Similarly, Research Editors Francisco Gonzalez, who heads Spain’s BBVA, Prof Venugopal Iyengar, V. Babu, said at Davos that many technology start- Ratnakar Deole, W.A. Wijewardena, ups are ‘attacking’ different parts of banks’ Sanchit Gogia, K.C. Shashidhar, businesses and not every lender is equipped L.S. Subramanian, Ajay Kumar to survive. Advisor Alliances Today, we are seeing really significant Ateeq Siddique disruptions already happening and massive investments going into fintechs that are reinventing Marketing virtually the whole of the banking system - Zahid Siddique, Wilhelm Singh, payments, currencies, finance management, Ravi Wadhwa , funding (like P2P lending), et al. Events & Operations The trend today is that while the traditionalists continue to go to banks and other Gautam Magare, Shirish Joshi, formal financial institutions to meet their needs, the millennials are seen to be opting for non-financial services companies (to be specific to India those providing wallet Stalin Saldhana, Pramod Jadhav, services, P2P lending). These institutions appeal to the millennials with their versatility, Amit Gupta, Bharat Solanki, their dependence on technology and their ability to offer real-time and wholesome Shweta Kadam, Varun Kataria, solutions. They are capable of beating the banks on price in areas such as international Durgesh Nadkarni money transfers and remittances. Design While this is threat, there is a big opportunity too for the banks. They have very basic Somnath Roy Choudhury advantages. One, banks cannot be separated from the society, because people engage with them more often than any other sector. Two, people in general trust them, notably Published By because of the regulatory reforms. Three, they can interact with their customers in a Glocal Strategies & Services more effective and efficient manner basis the reams of data that is at their command D-312, Twin Arcade, Military Road, Marol, and the availability of tools like analytics, artificial intelligence, etc. Andheri (E), 400059, India. But, these advantages fade into insignificance when banks fail to offer customized, Tel: +91-22-29250166 / 29255569 personalized experiences to the customer. Fax: +91-22-29207563 To be successful, they have to first integrate banking into a person’s daily life. Secondly, the innovations they come out with have to be customer-centric. Thirdly Printed & Published by Babu Nair on and most importantly, they must adapt regulation as a part of their innovation process. behalf of Glocal Strategies & Services and Otherwise, there could be an Uber situations where the cab service provider had run Printed at Indigo Presss (India) Pvt Ltd., into trouble in various countries. Plot No. 1C/716, Off Dadoji Konddeo Cross Surprisingly, a state-run bank in India is successfully handling this Uber moments. The Road, Between Sussex and Retiwala Indl. State is taking up digital initiatives in such a manner that in about a couple Estate, Byculla (E), Mumbai 400027. of years’ time, there could be a visible digital face for the bank. It is understanding the Editor: N. Mohan (Responsible for selection needs of the customer and evolving solutions that meet the needs of this customer. That of news under PRB Act) a government-owned bank could initiate change and manage the change successfully speaks high of the vision of the management and the skillsets of the executives. The bank has indeed understood that the customers would not wait forever.

Banking Frontiers February 2017 3 Project Pipeline to have new CSOC PNB seeks IS Andhra Bank wishes to set up a cyber security operations consultant center along with network and is looking for an security tools and it has sought information security consultant who can proposals for undertaking this advise the bank in securing its network, task and future maintenance. communications, systems, application The bank has an existing SOC software, data bases, data and information where security tools like SIEM, and ensure the availability of resources vulnerability scanner, DAM, including the network to authorized users HIPS, antivirus solution, without any disruption or degradation. firewall, NIPS, WAF etc are The enterprise wide network of the bank functional. The contract with is being maintained by the bank’s network the existing system integrator for facility management service with AMC is ending integrator and security measures are already in October 2017. The selected service provider has to ensure the integration of all the enforced at various levels. The consultant existing and new tools to SIEM and suitable correlation rules are created to identify would undertake a comprehensive study any security threat to bank’s assets. The bank wants the service provider to take this as of the IT infrastructure and look for any an end-to-end project and the all the items required for making the tools operational lacuna in the infrastructure. should be considered by the bidder. Bank of India RRBs to have AML solution The 4 regional rural banks sponsored by the Bank of India will implement an anti- wants money laundering solution. Bank of India has sought proposals from service providers consultant to implement the solution at , Lucknow, Jharkhand Gramin Bank, Ranchi, Narmada Jhabua Gramin Bank, Indore and Vidharbha Konkan Gramin Bank, Nagpur. The bank wants the service provider to be a system integrator who can take up end-to-end implementation of the project and the solution has to be upgradable and should be interfaced with the CBS and other third party solutions used in the banks. The 4 RRBs together have 1568 branches and 29 regional offices. The data center is at Navi Mumbai and the DR site at Bangalore. The total number of transactions the 4 RRBs do is approximately 3.84 lakh per day and the total number of accounts approximately 201.61 lakh. Punjab & Sind Bank to have SOC Punjab and Sind Bank is proposing to set up a security operations center (SOC) and Canara Bank is intending to engage a is looking for a security system integrator to undertake the task. The bank intends to consultant to advise it on launching strengthen its information security setup as per the guidelines of the G. Gopalakrishna digital banking operations. The selected Committee Report and recommendations on information security, electronic banking, consultant would be required to study and technology risk management and Cyber Frauds. The SOC is being set up to identify analyze the current limitations, challenges and prevent information security vulnerabilities and prevent these vulnerabilities envisaged in the area of technology/ through implementation of adequate security solutions. The SOC will also handle security risks and bench marking across reporting and logging of information security incidents using appropriate ticketing the industry - domestic/global - on core tools and continuously improve the operations. The bank wants the solution to be process, technology, products, sales and deployed to be modular, scalable and should be able to address the bank’s current services. The consultant would be required and future requirements. to undertake detailed assessment of current processes, current customer experiences to engage QAA for IT systems across key interfaces, channels and Vijaya Bank is on the lookout for a quality assurance agency to assist the bank in services and prioritize key front and back the procurement and installation of new IT infrastructure needed for its ongoing end processes for digital transformation. initiatives. Broadly, the selected agency will assist the bank by identifying a list of In addition, he would be taking up a study suitable hardware manufacturers and suppliers, providing latest / appropriate of the technology development happening specifications of hardware from different standard manufacturers, technical in the market with a view to compare evaluation of offers, offer advice on the suitability or otherwise of the offered competitiveness of strength and weakness hardware and conducting pre-despatch inspection of the hardware. The equipment in the market and suggest suitable path for include PCs, laptops, servers, kiosks, switches, routers, enterprise storage systems the bank and define a strategy for digital and security appliances. transformation of the bank.

Banking Frontiers February 2017 5 Tech Enablement is on the cusp of a digital transformation Ritesh Pai, senior president and country head, Digital Banking at YES Bank, outlines how the bank is evolving into a digital entity:

Brian Pereira: What are the technologies cross-sell and customer servicing for that you invest in heavily? various businesses. Chat ‘Bots’ are being Ritesh Pai: YES Bank has embarked on used for transactions, cross-sell and as the journey to be ‘Finest Large bank in India personal banking assistants. by 2020’ and customer service plays a key role • We have partnered with Lastmile. in determining the success of this journey. mobi and used Qualcomm Snapdragon Core banking and intelligent middleware, processors to launch iris and EMV ready CRM, mobility platform and data analytics payment solutions. The device integrates platform have been identified as four key retail application, card & UPI payments pillars, which will determine our ability to using eKYC. The launch engage with customers through various touch comes close on the heels of RBI circular points. In the last few years we have been advising banks on using Aadhaar- investing in the above-mentioned areas with based biometric authentication for card an emphasis on digitization of workflows and present transactions. providing digital payments. Further, with • We are ready to implement ‘location- increase in digital natives, there is a strong based’ personalized offer services to our focus on enabling payments and customer select customers on the back of a robust service on social messengers/bots. Ritesh Pai is delighted that analytics engine. These offers will be YES Bank is the first to launch available on our mobile app based on Where do you see yourself in the digital an API banking platform in the vicinity of the customer location to transformation journey? India that has been the merchant. The journey of digitization started in 2012 implemented across leading • Over 3.5 million YES Bank co-branded and we have now digitized major workflows virtual cards have been issued on the in the areas of corporate businesses and retail eCommerce, logistics and MasterCard platform since launch liabilities. Last year, when we embarked on brokerage platforms in January 2016, the largest ‘Virtual the journey of offering retail credit and credit Prepaid Card’ program in the world. cards to the customers, we have started excellence, we have offered superior ‘tech- • Over 44 million YES Bank-powered with digitized flows from day zero. Further, enabled’ banking solutions to our valued Freecharge Wallets have been issued we have initiated core banking upgrade, customers. In our current phase, we are since launch in September 2015. deployment of which is due for completion progressively evolving into primarily in this financial year. We have implemented a technology and innovation driven In this age of disrupters, innovation is the mobility platform and rolled out few customer company, which excels in providing new- key aspect for traditional banks. How are facing apps in this year. The focus now shifts age mediums and digital technologies to you doing this? on the enterprise applications that will be achieve a heightened customer engagement At YES Bank, we believe in working created with an intelligent mix of CRM and and experience. Some of the bank’s key in tandem with the fintech companies core system APIs at the backend. All in all, digital initiatives revolutionizing payments and collaborate with innovation cells and over the last couple of years we have set up the ecosphere are: research labs to create a digitally advanced platform and now we are on cusp of unveiling • We are the first bank to create UPI ecosystem, which is a win-win for all the the moments of customer delight with in compliant mobile apps for large stakeholders including the end customers. interplay between customer data, analytics eCommerce players using our UPI SDK As digital banking and payments are platforms and customer touch points. solution. Over 1 million YES Bank’s UPI gradually becoming an important part of partnered apps have been downloaded customer relationships, we are investing How do you plan to use fintechs to support till date. to build strategic alliances in the digital and achieve those goals? • We are the first bank to implement ‘Bots’ world to deliver mobile banking and In the initial years of operational technology for customer acquisition, payment experiences that are simple, non-

8 Banking Frontiers February 2017 intrusive, rich in contextual content, and are truly cross-channel, covering social and commerce platforms. Some of our recent partnerships with the government, accelerators and fintech players are: • We signed a MoU with T-Hub, a unique public/private partnership between the government of Telangana, three YES Bank formalizing the arrangement with T-Hub of India’s premier academic institutes requirements of startups, the YES: Head- encouraged to interact with startups in (IIIT-H, ISB and NALSAR) and key STARTUP program will offer customized their domain expertise allowing seamless private sector leaders. current account, innovative digital and cash access to regulatory information to startups • We have partnered with Click&Pay, management solutions, comprehensive the bank is working with T-Hub’s portfolio company and a mobile- trade-forex advisory services, dedicated In select cases, we may also represent based payment solutions enterprise, to ‘Startup’ focused branches, personal the fintech’s product/ solution to the facilitate cashless, secure and flexible banking products / credit cards, loan regulator when they fall into the gray scale transactions for customers. As a part of products (business & personal) and useful of regulations this alliance, Click&Pay will issue YES alliances / event partnerships / mentorship Bank-sponsored mobile wallets. & guidance programs for startups. The How are you working with startups in • We have partnered with the Gujarat State launch of YES: Head-STARTUP reinforces segments such as agri-tech, healthcare, Road Transport Corporation (GSRTC) our unstinted commitment to nurturing eCommerce, loT etc? to digitize payments of bus tickets. We and promoting entrepreneurship and Amazon has announced the expansion will install over 125 PoS terminals to innovation in India of its seller lending program through a facilitate booking of tickets through strategic partnership with YES Bank. The credit and debit cards at all GSRTC What are the key challenges that fintechs partnership aims to develop synergistic bus depots. We are already live with 50 face and how are you helping? solutions for MSMEs and SMEs across the terminals and will achieve a number of In our experience, fintechs, like most country. We will help sellers on Amazon. 125 in the next couple of weeks as part startups, predominantly face challenges on in to profitably grow their business during of the first phase of implementation. the following fronts: the festive season by providing them The initiative will cover all municipal Acquiring more Customers: comprehensive financial solutions ranging corporation locations and multiple In most cases, while the bank itself from current account, trade services, forex, cities including Ahmedabad, Rajkot, becomes a customer utilizing their payment gateway, business lending and Vadodara and towns including Bhuj, technology product/ solution, in select loan products. Under the ambit of this Dahod, Palanpur and Valsad. cases the bank collaborates with fintech program, we have already commenced startups through two broad strategies: relationships with hundreds of sellers on What steps are you taking to support the • Take their product/ solution to other Amazon India with lending lines at various startup ecosystem and support innovation? corporate/ institutional customers stages of disbursement. The wave of new age Indian through joint GTM strategies We have partnered with Lastmile.mobi entrepreneurship is characterized by • Embed YES Bank payment/ lending to introduce the Iris EMV PoS solution, design, innovation and creativity-led effort. options within the fintech’s product/ which integrates card and UPI payments, At YES Bank, we believe that this phase of solution making it relevant to the bank’s Aadhaar eKYC and Aadhaar eSigning on entrepreneurship in India can be furthered customers a ready to use basis. This is one of the first using the F.I.V.E. approach, which involves • With many of the renowned PE/ VC solutions in India to implement the India support at key life-stages of enterprises firms as customers, the bank is well Stack in its true sense in line with the Digital - Funding, Incubation, Vesting and connected with the investor community India initiatives of the . Expansion. The F.I.V.E. approach involves and we offer fintechs access to this Our tie-up with ToneTag facilitates financial institutions at the fulcrum, community integration and deployment of sound based delivering catalytic change by harnessing • We have tie-ups with organizations like contactless payments on our mobile wallet the power of entrepreneurship. T-HUB/ i-Spirt/ IAN among others in YES Pay. ToneTag uses sound waves to We have launched YES: Head- the fintech ecosystem, which enables enable offline, proximity based contactless STARTUP, a full-service banking us to connect the startups with the payments and this technology will allow proposition for tech or tech-enabled investors community YES Pay wallet users to make ‘cardless’ startups, complemented by a first-of- Regulatory guidance and offline payments at merchant outlets its-kind privilege program. In keeping Our management/ leadership across through their mobile phone. with unique and specialized banking multiple product/ business lines are We have has partnered with fintech

Banking Frontiers February 2017 9 Tech Enablement

startup NiYO to revolutionise the employee benefits ecosystem in India. NiYO features an integrated solution comprising a multi- pocket card, a mobile app and a digital account with multiple wallets. Under this partnership, we, along with NiYO have rolled out the “YES BANK NiYO Benefits Card” that makes it easy for organizations to give employee benefits, and for employees to claim the benefits. As regards private sector, we look login into a separate app for carrying out Another area is financial inclusion. Our at the focus areas/target clients of the banking transactions. SIMsePAY is a strategic partnership with firm, mode/ frequency of the firm’s • YES PAY is a across Android Taisys Technologies aimed at redefining engagement with stakeholders, its brand and iOS mobile platforms. Apart from delivery of financial services to all Indian value and its network and ability to garner mobile recharge and bill payment which citizens. The solution - YES PAYMENTS incremental business through that firm/ its are the key offerings for most digital - will enable any user owning any type of stakeholders. wallets in India, YES PAY also features mobile phone with any telco, to make mobile functionalities that allow both ‘users’ and payments from anywhere, anytime without How is technology helping you to drive ‘non-users’ to send and receive money. internet connectivity, in a completely secure customer engagement and improve • PhonePe, a Flipkart Group company, manner. YES Bank and Taisys India work experiences? and YES Bank have partnered to launch together on a platform to issue ultra-thin The Indian landscape is primed for India’s first UPI-based mobile payments mobile payments wafer SIM, a worldwide entrepreneurs using technology to promote app, in a move aimed at disrupting the patented technology from Taisys. This financial inclusion. As much as 60% of digital payments landscape across India. collaboration allows mobile phone users to Indians are unbanked and 90% of small PhonePe and YES Bank will leverage the enjoy secured fund transfer, wallet transfer, businesses have no links to formal financial UPI to provide a hassle free, convenient merchant payment, VAS payments across institutions. Yet 80% of Indians own mobile payment experience to consumers across the entire segment of mobile devices phones, and 32% will own smartphones the spectrum. including feature phones. It will be done by 2017. As a bank, we have always been • We have tied up with NamasteJi to by integrating Taisys’ mBanking platform at the forefront of innovation through our launch a co-branded prepaid card with our YES Money platform. products and services. This, we believe, will for auto drivers who are part of the help in transforming India into a hub for NamasteJi Program to book auto To what extent do you go to open up APIs new generation software products rides from NamasteJi booths across and share infrastructure with startups and Ahmedabad. The purpose of this card ecosystem partners? How are you preparing for the cashless is to enable customer payments backed We are the first to launch an API payments wave in India? by YES Bank’s comprehensive financial banking platform in India. API provides YES Bank is at the forefront to make supply chain solution. The customer can a secure layer to provide reliable access to India a cashless economy. Toward achieving also make payments for the auto ride at banking systems and business processes. this goal, we have taken pioneering steps: the prepaid booth. The booth will assign We have successfully implemented the • YES TAG enables users to access an auto for the customer and provide a API banking solution across leading banking service from any of the five slip to the auto driver. NamasteJi booth eCommerce, logistics, brokerage and other chat platforms – be it while chatting will load the auto driver’s YES Bank BFSI platforms. with friend(s) on Facebook Messenger prepaid card with the ride fare. The or tweeting on Twitter; or even while on driver can choose to keep the money in What are your criteria for partnerships with a Skype call with a distant relative! The the YES Bank prepaid card or withdraw government and private sector? YES TAG bot on Facebook Messenger it based on his needs. The driver can When we forge a tie-up with the is trained to understand banking withdraw money from any NamasteJi government, we ensure that the program requirements and responds by giving booth across the city. All NamasteJi matches our core areas/ focus sectors, the these banking services options for users booths will be enabled to load money target audience for the partnership should to choose from. The service is completely and withdraw cash from the YES Bank be well defined and fit well from our overall secure as financial transactions need to Prepaid Card. Cash out transactions at strategy point of view, the solutions must be authenticated by a six digit ‘social the booth level may be authenticated assist the government to render its services security code’ set by the user at the time via OTP on the driver’s registered better to the citizens better and we need to of registration. A unique benefit of this mobile number. derive marketing mileage. bot is that user does not need to open or [email protected]

10 Banking Frontiers February 2017 Cover Story

SBI powering banking in Digital India

State Bank of India is investing highly in technology not just to simplify banking but to pursue its ambition of become a global behemoth:

leading private sector bank launched the convenience of withdrawing cash online banking and ATM services. With online 19 years ago. from anywhere. Credit/debit cards came their extensive network of branches, ASoon after, more private and foreign to be launched around that time but the their focus turned to the semi-urban banks followed. But, where were the public initial uptake for these channels was and rural customers. In fact, the second sector banks? In 1998, no one imagined that slow. There were demographic changes wave of technology adoption by banks is a public sector bank could be tech-savvy. happening too – the country’s population really aimed at the unbanked population Mired with bureaucracy, tight government was getting younger. - the segment that is at the bottom of controls, slow decision making and legacy Bankers then knew that their new the pyramid. infrastructure, these banks were laggards customers and new business opportunities is one of the early at technology adoption even though India would come from the youth segment. adopters of technology. Today, it has a was on the cusp of a technology revolution, Embracing technology was not an option, firm foothold in the digital space, with its with internet services and mobile telephony it was an imperative. So, a few years later, internet banking, mobile banking apps, getting introduced. Then came ATMs and public sector banks started launching ATM machines, social media banking,

12 Banking Frontiers February 2017 eCommerce apps, and a network of Mahapatra says SBI’s innovations will swanky digital experience centers called be centred on four core focus areas: sbiINTOUCH. It is not far off from • Making user experience as seamless launching a completely digital bank with as possible next generation payment gateways. With • Giving the customer instant feedback on a massive digital transformation plan money spent and his balance and infrastructure upgrades, SBI plans to • Making authentication and security scale up transaction volumes by a factor of seamless yet robust 100x, reduce cost-income ratio, and grow • Creating a market place for digital its digital payments and card transaction products and services businesses. It also aspires to grow its The bank is already making some customer base through the introduction big changes to all the products launched of credit risk score engines, feature phone in recent years. For instance, the SBI banking and Aadhar-enabled apps. Could Buddy app will soon have the capability all this make it one of the top 10 global to withdraw money or cash-out from any banks that it wants to be? SBI ATM, without the need to have a debit/ SBI is also dead serious about making ATM card. This would be highly convenient the banking experience simple and highly for someone who needs cash urgently, but accessible for all its customers; it will is not in possession of the ATM/debit card. leverage digital for this. It speaks confidently Explaining the advantage of this about using blockchain, analytics, robotics, over conventional wallets, Bhasin says: Mrutyunjay Mahapatra machine learning, NLP, AI and chatbots – “The wallets that exist today do not have to improve service levels. To enable all this, stresses that wallets have cash-out. You have to move the money the bank actively collaborates with fintech to keep on reinventing and to accounts. Customers of some popular innovators. In doing so, it sets an example repositioning themselves in wallets complain that the money is not for even the private sector banks. Surely, order to overcome competition going back to their accounts (you have to that should change our perception of public spend that money in the wallet). Some sector banks. wallets charge a fee to move money from media banking platform for Facebook accounts to wallets.” DIGITAL PUSH and Twitter users, SBI Smart Watch, a Mahapatra maintains that wallets The push for digitization at the bank watch banking app for iOS and Android are facing severe competition from other comes from its forward-looking chairman devices, a partnership with Flipkart to products like BHIM and SBI Pay (a UPI- Arundhati Bhattacharya. When she offer ‘pre-approved EMI’ for consumers enabled payment solution). In addition, assumed office three years ago, she took a and most importantly sbiINTOUCH – a there are many other products running hands-on approach with digital initiatives digital banking facility with self-service on direct authentication and direct debit. such as mobile apps for retail, SMEs and facilities such as instant account opening, “Therefore, wallets have to keep on corporate customers. She put in a massive where a customer can open an account reinventing and repositioning themselves,” effort to promote digital-only branches, in 12 minutes. And then there were apps says he. then a unique initiative in the Indian like NO Queue and State Bank Buddy, The intention, says Mahapatra, is to banking industry. Then, she introduced which is a mobile wallet. The bank has make the chairman’s vision to position the artificial intelligence and robotics for also undertaken an initiative to adopt bank as ‘the banker to digital India,’ and credit analysis, risk management and 100 villages in India and convert them to reach out to the common man a reality. better customer service. Bhattacharya’s digital villages. vision was to position the bank as ‘the Says Mahapatra: “Some of our TECHNOLOGY STACK banker to digital India’. applications have been recognized as the Mahapatra says the emphasis this time will Bhattacharya is supported by a tech best in class. Our internet banking, for be on the simplification of banking and savvy team that includes two highly instance, is one of the best examples of taking banking to the common man. But experienced executives - Mrutyunjay how you can take technology to an absolute that poses a grave challenge. He explains: Mahapatra, DMD and CIO, and Shiv cutting-edge level, in terms of giving a “It is not difficult to roll out services and Kumar Bhasin, CTO. The technology thrust comprehensive range of services.” do proof-of - concepts at the high end of that is seen today in the bank can largely be The bank is now taking all these the spectrum. But in SBI, we believe in attributed to these two managers. initiatives, products and services to the next scaling up and in having a technology In 2016, SBI launched a couple of level, enabled by Aadhaar, biometrics, AI, stack designed for the common man on digital initiatives - SBI Mingle, a social bots and machine learning. the street.”

Banking Frontiers February 2017 13 Cover Story

He says as he travelled around the world, get a digital debit card and instant internet he observed two things are really important banking privileges. After he downloads and - ease of reach and brand trust. He strongly opens the app, all banking services will be believes that one should be able to combine enabled and become available on the same these two things. “Take the mPesa example app,” says Bhasin. (in Africa). This successfully leveraged the SBI launched an app called NO Queue USSD (feature) phones for mobile money last year. It is a mobile-based virtual transfer, while fulfilling the needs and pain queuing application for customers to book points,” he says. an instant queue ticket for select services But, he also believes that banks need at select branches. Based on the services to develop alternate revenue models, as selected, the app shows the list of branches there would be very little ‘float’ in future, offering those services with addresses especially at the bottom of the pyramid. within a configured radius of 15 kms. “The question is: how do we make a little Bhasin says the next version of NO Queue money on the volumes and let the machine will take more details from the customer do most of the work,” he says. about the service he is requesting from the He is confident that most people- branch. And based on his request, bank centric activities can be done with AI, officials will service the request and keep automation, machine learning and constant Shiv Kumar Bhasin reveals the required info or documents ready. So, repositioning. SBI is about to launch a new when the customer visits the branch, he will version of internet banking with not have to wait. The customer would quote SIMPLIFYING EXPERIENCE the service reference number and the teller Mahapatra reveals that SBI is investing enhanced user interface for would commit the transaction, without heavily in user experience and the high- better customer experience any delay. This saves a lot of time for end technology to enable it. It is constantly the customer. modifying its applications and adding new with its own biometrics enabled solutions, Another major initiative that is being innovations. Creating third-party enabled signature scanning, and connectivity in launched this year is Digital Marketplace, security validation, like Aadhaar, go rural areas (where bandwidth is lacking). a collaborative platform service. hand-in-hand “We subscribe to the prime minister’s “With this we could go beyond banking view that banking needs to be greatly and do many things based on customer simplified. His saying, ‘Your finger is journeys. Let’s say there is a home loan your bank’ is about simplification and journey, then all brands associated with real enhanced user experience. You should estate will come to our platform and services have minimum knowledge to transact in will be exchanged for things associated with the virtual world,” says Mahapatra. home buying,” informs Mahapatra. Bhasin confirms that SBI is doing a lot It is evident that SBI wants to win on the customer experience side for internet customers and nurture long-term banking. The bank is about to launch a new relationships through convenient and version of internet banking, which will have highly innovative and useful services such an enhanced user interface. “This will be as Digital Marketplace, NO Queue and launched on 1 April and subsequent updates card-less ATM withdrawal among others. will occur in the following months,” he says. But this innovation can only be enabled SBI is also enhancing the experience on through the adoption of cutting edge the ATM screens. The user interface will technology like analytics, blockchain, robo be simpler and more functional. New fonts advisory and chatbots. and more white space will give the ATM screens a simplified look. LEVERAGING HI-TECH But the icing on the cake will be a large Analytics and algorithms are important digital initiative that is coming. Bhasin says for business and customer insights. Bhasin this initiative will have a complete supply knows that all too well and says that chain and complete fulfilment of services. through transactional analytics the bank “With this, there will be no need for a will have insights into the lifestyle items customer to visit a branch. He would be able purchased by customers. This will be done to open an account anytime, anywhere and through machine learning algorithms that

14 Banking Frontiers February 2017 will constantly monitor transactions and The bank is also building its own Digital journey milestones then introduce offers for products on online blockchain platform to reduce its fee shopping sites. “When the customer tries to overheads paid to SWIFT. This will improve Early 2000s: State Bank of India buy that product, we will offer our payment the speed of payments, asserts Bhasin. began cross linking its banking network instruments like card products, personal SBI is now working on the with its ATM network and internet and loan etc,” says Bhasin. implementation of OFSAA (Oracle telephony access - rolling out anytime, He is also looking at employing robotics Financial Services Analytical Applications) anywhere access. and robo advisory to improve service levels. and a comprehensive state-of-the-art CRM. 2002: The bank succeeded in “Even when we digitize our processes Microsoft Office 365 is also being deployed networking 3000 profitable branches. end-to-end, we would still need to issue across the organization. OFSAA enables 2013 – 2015: The bank’s mobile physical cheques. So robo advisors will speed financial institutions to measure and meet banking users grew to 13.5 million from up the process. It would monitor the usage risk-adjusted performance objectives, 6.2 million. of customer cheques through a transaction cultivate a risk management culture, lower 2013 – 2015: Internet banking log and as soon as the customer issues the the costs of compliance and regulation, and users grew to 22 million from 13 million. 8th cheque leaf in the cheque book of 10 improve customer insight. 2013 – 2015: ATMs increased to cheques, the system would automatically 55,000 from 33,000. raise a request to issue a new cheque book SECURITY FIRST July 2014: Launches 6 digital (without the customer needing to ask for The introduction of new or enhanced digital branches labelled sbiINTOUCH. it). If the usage of cheques is heavy, then channels raises security and authentication April 2016: NO Queue virtual it would issue a bigger cheque book with concerns. After all, the reputation of the queuing mobile app. more leaves,” he explains. bank is at stake, not to mention the trust of July 2016: On its 61st founding Bhasin also sees other potential its large base of customers. And then, there day, the bank announces 7 products: applications for robotics. For instance, is a need to adhere to compliance mandates SBI Buddy, Mingle, State Bank Scribe, a customer may have a home branch, yet issued by the regulator. SBI Digi Voucher, SBI Video Statement, he does most of his banking transactions Mahapatra speaks about a SBI Smart Watch, and the Digital through another branch, perhaps in comprehensive ‘Security First’ policy and Village program. another city where he lives and works. The says the bank is spending a lot to create July 2016: The bank ties up with robot (algorithm) would detect this and security awareness. This is done through online shopping site Flipkart to offer ask the customer if he wants to change his social media platforms, particularly consumer durables purchase on EMIs home branch. Facebook and Twitter, as well as through to its account holders. Chatbots will also play an important other modes. November 2016: The bank role in understanding customer behaviour, “We also invest heavily on doing our launches SBI Pay, a UPI-based app. though the applications are in the proof-of- risk management tooling. Security has an January 2017: The launch of concept stage now, says Mahapatra. inverse relationship with user experience. branchless banking called SBI Digi Bank.

If you make it more secure, more steps are introduced. It should not appear complex to the user, yet the IT assets should be protected,” says he. Elaborating further, he says security should be optimized but at the same time the back-end security needs to be robust, based on continuous velocity analysis. “Let’s say there is a scenario where someone has not spent much in the last 2- 3 months and suddenly you have a lot of activity in his account. The system should generate and send alerts,” says he. The analytics solutions that the bank deployed play a role here - not just to service the customer but to protect and give a better experience. SBI will soon introduce Aadhaar-

Banking Frontiers February 2017 15 Cover Story

enabled banking and this will facilitate the pyramid -customers who use feature instant and accurate authentication. It phones and do not speak English. That is also working on its own biometrics is why its Buddy app supports 13 Indian solutions with 2-factor authentication. languages (with support for more languages soon). There is also a strong focus on SMS CREDIT RISK SCORE or feature phone banking. Another important initiative for the bank is the introduction of credit risk score FEATURE PHONE BANKING engines. “We want to instil credit growth in Smart phone usage in India is steadily this country and so we are coming up with increasing. In fact, nearly 40% of all phones various credit risk score engines based on in India are ‘smart’. Mahapatra says that social media, cognitive and behavioural everyone overlooks the fact that while people analysis,” says Bhasin. in the urban areas may own more than one Once this is in place the bank will be in smart phone, those living in the rural areas a position to offer pre-approved loans for may have just one phone per person or one existing customers, based on transaction phone per family. And it is most likely to be behaviour, annual quarterly balances, or a feature phone, he says. “We have to work past repayment history of existing loans. with USSD, SMS Banking, and hash code to Bhasin mentions that the bank will also deliver value at the bottom of the pyramid. be offering paperless process for application App-based and Assisted banking are the gamification and incentives built into these of loan. The customer can scan and upload other areas to address. In SMS banking, tools. Bhasin speaks about a points-based his documents. Verification of the physical the user responds to an SMS to say that system with multiple levels, based on how document can be done later, at the branch. he is happy or unhappy with the service. much the teller sells in a month. He says “Turnaround time is a major issue because With Assisted banking the user may dial a chatbots and NLP will be utilized to train there are physical teams and legal teams number, listen to the IVR and then press a the staff to use these new tools. involved to scrutinize documents. We hope number to choose an option. For instance, if Apart from productivity, the new tools to reduce the TAT when we launch this he presses <2> for account statement, then are also aimed at improving collaboration enterprise-wide,” says Bhasin. it is generated in USSD format, and SMSed among staff. “All branches will have access Of course, this will involve massive back to him,” he explains. to enterprise collaboration tools (like business process re-engineering and With the exception of an actual money Skype). With these tools in hand, we expect extensive digitization, says Bhasin. transaction, most services can be done by their productivity to increase. Security will Elaborating, he says the bank is digitizing responding to an SMS. And that is a big also improve since the documents will be not just the front-end but also the back-end proposition for SBI to service every feature stored centrally. With Skype, our staff will processes as well. It is digitizing business phone user. have video access to subject matter experts processes end-to-end, and it involves (in other branches), in case escalation is complete digitization of the branches. STAFF PRODUCTIVITY required,” explains Bhasin. The bank has set a goal to reduce the The SBI customer will be the key There were security concerns about cost-income ratio through digitization. beneficiary of the transformation that is staff who worked from home who need According to Bhasin, this ratio is currently happening in the bank. However, the bank to access core banking applications and at 50+ for SBI. To set a benchmark, a private also thinks about the internal customer - its sensitive data. Sales staff on the go also tend sector has the best cost-income staff. It is introducing a new set of tools to to store customer data on their personal ratio of 37 and that’s a number to aspire for. enhance staff productivity and to improve devices. These challenges arise even if the Apart from this, SBI will also introduce collaboration. “We are launching some new data is encrypted. The bank got around this scalable cash management solutions, which tools for the staff that will help them to serve challenge by deploying an Enterprise Mobility will help it scale up transaction volumes by the customer better. At present, their actions Management solution that offers secure shell a factor of 100X. are limited to the information displayed on access on remote or personal devices. The bank is also working on the next the menus on the screen; they may not have “We are launching an Enterprise generation payment gateways, says Bhasin, all the details about the customer to provide Mobility Management Solution and this will with the intention to grow various digital the most suitable services. The intelligent enable our staff to work from any location. payments and card transactions. tools that are being planned will provide the Based on rank, they will have access to Technology is a great enabler for services teller with all details about the customer, some of the applications from home on that appeal to high net worth individuals and he will be able to cross-sell and upsell,” their own devices. The applications will be and millennials, But SBI knows that a informs Bhasin. virtualized,” says Bhasin. chunk of its customers is at the bottom of Interestingly, there will be elements of [email protected]

16 Banking Frontiers February 2017 Research Report Giving security options to customers A global survey by Capgemini Consulting reveals how customers trust financial services institutions on their data but these institutions are lagging behind in protecting the data:

global survey shows that as much strategy, Privacy-passives, who have a services organizations need to revisit as 83% of consumers trust their highly-secure data environment but lag in their data usage and protection strategies Abanks and insurers when it comes terms of implementing strong data privacy through the lens of the consumer. The study to data even when 1 in 4 institutions have practices, and Laggards, who have only says over a third (35%) of respondents are reported being victims of hackers. And basic data privacy and security tactics in ready to pay for enhanced security. Of all interestingly just 3% of their customers place across the enterprise. age groups, millennials expressed greater believe their own bank or insurer has ever 49% of the organizations take 3 propensity to pay, signaling that they clearly been breached. Capgemini Consulting months to 1 year to patch and manage value privacy the most and are willing to go carried out the survey covering 180 senior vulnerabilities. The more time it takes to the extra mile to guard it. data privacy and security professionals patch vulnerabilities, the higher the risk of and 7600 consumers across the world and critical systems being compromised. This 3-TIER SECURITY brought out a report titled ‘The Currency of is because around half of all exploitation The report advocates organizations Trust: Why Banks and Insurers Must Make attempts by attackers occur within 10 to should implement a 3-tier security and Customer Data Safer and More Secure’. 100 days, points out the report. privacy portfolio. One of the key findings is that 29% of the The report also mentions that breach Bronze level: Offers industry- organizations queried offer both strong detection controls would be significantly standard security and privacy solutions data privacy practices and a sound security strategy. In fact, just 21% organizations are highly confident that they can detect a How Pace-setters outrank Laggards cybersecurity breach. Have robust and fully automated cyber 73% Capgemini, however, feels that with threat intelligence capabilities to proactively identify sophisticated threats 20% the advent of General Data Protection Regulation (GDPR) in EU, there could be a Cybersecurity vision & strategy is 81% change in this trust factor as transparency widely understood across the firm; is 48% increases. Under GDPR, financial a regular board room topic organizations have to reveal a data breach Update the data consent clause 23% within 72 hours after the incident. The whenever there is a policy refresh 12% consultancy therefore feels that banks and insurance firms have a clear incentive to Annual audits or assessments of data 100% protection compliance take place fortify their defenses. “Addressing security 84% concerns will drive greater adoption of low-cost digital channels. We found Control procedures to limit external 100% vendor’s access to personal that security concerns deter nearly half information are in place 78% of consumers (47%) from using digital channels. It will also reduce churn and Pace-setters Laggards attract competitors’ customers - 74% of consumers would switch their bank or improved if they were backed-up by at no additional cost with full compliance insurer in the event of a data breach,” says coordinated and automated security to all major regulations and data the study. intelligence systems. However, only 40% of privacy standards. organizations said they had fully automated Silver level: Offers advanced security 4 CATEGORIES cyber threat intelligence processes. Instead, and privacy services, for consumers who The study lists 4 categories of players organizations are relying on manually would be willing to pay for it and/or are emerging: Pace-sette­­rs, who have a highly- patching together data from a wide willing to share their personal data. compliant data privacy policy backed variety of sources to create the necessary Gold level: Offers premium security and up with a best-in-class security strategy, intelligence. As a result, response times privacy services with full anonymization in Security-sloths, who have a fairly strong lengthen and risk increases. markets where it is not mandated by law. privacy policy but relatively weak security The study advocates that financial [email protected]

Banking Frontiers February 2017 17 SLBC 2016-17: Gujarat looks at 12% credit growth Vikramaditya Singh Khichi, Convenor, SLBC Gujarat, provides detailed insights in the prevailing banking scenario in Gujarat, with updates in 2016-17 on the various parameters:

ujarat has one of the best banking and advances in Gujarat registered a growth networks in the country. Dena of 5.49% and 3.99% respectively over March GBank is the convener of SLBC in 2016, which is almost at par with the growth the state. registered for the corresponding period of the previous year. The aggregate deposits of Mehul Dani: How many branches and the banks in Gujarat increased by `14,710 ATMs of all the banks operate in Gujarat crore in absolute terms from `552,990 in 2016-17. How many more will be added crore as of June, 2016 to `567,700 crore in the current FY in the state? as of September, 2016 registering a growth V.S. Khichi: Over 9176 branches and of 2.66% as against 3.26% growth for the over 11,130 ATMs of all banks operate in corresponding period of the previous year. Gujarat as of September 2016. The number On y/y basis, deposits increased by 10.28% of bank branches increased by around and advances increased by 11.13%. The 400 whereas the number of ATMs have average CD ratio of all banks in Gujarat as registered a growth of around 500, over of September 2016 stood at 79.05% which September 2015. During the quarter ended has marginally increased by 0.60% over September 2016, total number of bank Vikramaditya Singh Khichi Q2, 2015-16. branches increased by 88. During the quarter, the highest Ahmedabad, Surat and Vadodara hold feels banks will see business percentagewise deposit growth was registered the top 3 districts having the most number growth as large corporates and by private sector banks (4.98%) followed by of branches, whereas Dang, Botad and 5 lakh MSME units in the state GSCARDB (4.84%), RRBs (3.69%), State Narmada districts stand at the bottom. need funds Bank of India group (3%), nationalized Besides the above outlets, banks in the banks (1.83%) and DCCBs (1.24%). The NRI state have engaged around 5800 business Gujarat Gramin Bank (BGGB) and Dena deposits increased by `1787 crore during the correspondents (BCs), for serving the Gujarat Gramin Bank (DGGB). These FLCs quarter under review and stood at `66,976 allotted villages. impart the financial literacy in different crore forming 11.80% of the total deposits as Analyzing the branch opening statistics villages of the district in coordination with of September, 2016 as against `65,189 crore of previous years, it is expected that around the rural branches of the banks. (11.79%) as of June, 2016. 200 new branches and 300 new ATMs may Total 28 RSETIs, established by the Reviewing the sector wise performance be opened in the state during the current 3 lead banks, operate in the state and till Q2, the upward trend in credit growth financial year. Before preparing the branch providing training to rural unemployed is observed in agriculture, tourism and expansion plan, banks need to consider youth, which will enable them to take up transport while a negative trend ins seen various factors as demand in the market, any income generating activity. Till date, in manufacturing, real estate and availability of resource with the bank and all RSETIs in the state have trained more professional services. various other compliance parameters. than 1.6 lakh persons. As of September The demonetization process has 2016, there are total 2.33 lakh SHGs in the disturbed the credit growth during Q3 How many FLCs, RSETIs and SHGs actively state, which have opened savings account but due to various measures taken by operate in Gujarat? with the banks. government, it will gradually get back There are total 49 Financial Literacy to normalcy. Considering all these, it is Centres (FLCs) operating in the state, of What is the increase in deposits and loans expected that the y/y growth will revolve which 33 FLCs are set up by the 3 lead by all the banks in Gujarat in 2016-17? around 10-12%. banks - SBI, BoB and . The What are your estimates for overall banks’ remaining 16 FLCs are set up by 3 RRBs business growth in Q4 in Gujarat? Which are the major sectors in Gujarat for - Saurashtra Gramin Bank (SGB), Baroda As of September 2016, the total deposits banks’ lending? Will they create notable

26 Banking Frontiers February 2017 scope for credit growth and increased in various sectors, which will also give an How is the movement of banks’ NPAs in economic activities? add-on effect of credit growth. In this line, Gujarat in 2014-15 and 2015-16 and what The major sectors in Gujarat many banks in the state have done the MOUs is the NPA position this FY? include engineering and auto, agro and with state government for financing various The gross advances of the banks in food processing, dairy, chemicals and projects, during the Vibrant Gujarat Global the state of Gujarat is `448,744 crore and petrochemicals, textiles and apparels, oil & Summit 2017. During this event, Dena Bank gross NPA is `29,277 crore i.e 6.52% as of gas, pharmaceuticals, biotechnology, IT and has also entered into the strategic MoU with September, 2016. The trend of NPA rise in tourism. With the rolling out of the aerospace government of Gujarat for partnering into Gujarat is in sync with national level. To and defense related production plans in the rural development activities, apart from support the banks in NPA management, Gujarat, the credit growth will certainly get signing the MoU for funding various large, SLBC takes up this agenda in every quarterly a big momentum. Economic activity of allied mid and small enterprises. meeting and support from any quarter like MSMEs will also increase significantly, state government, DRT and block level which consequently will increase the credit What is the progress in Stand-Up India officers, various agencies/ organizations, growth in MSME segment. initiative in Gujarat this FY so far? is sought so that the banks may get their The prospects of growth of banks’ business Under Stand-Up India scheme, till date the blocked fund back for further deployment in Gujarat is very bright because besides the financial assistance has been extended to in the sectors which are in need of credit. large corporates, the state is an operating more than 1060 beneficiaries in the state. In view of the demonetization, the ground for around 5 lakh MSME units. The state comprises of 21% of its population relief extended by RBI regarding providing Gujarat also ranks 1st in integrated overall as SCs/ STs and 48% as women. Good an additional 60 days to small borrowers, performance of MSMEs at national level, as beneficiary base is, therefore, available for beyond what is applicable for recognition of per ISED Small Enterprise Observatory. this scheme in the state and with all out a loan account substandard, will also help Moreover, various steps are being efforts of the banks, the desired progress the banks in keeping their NPA in control. taken in the state to promote investments under the scheme can be achieved. [email protected]

Banks commit `590 billion for lending in Gujarat he 8th edition of Vibrant Gujarat Global industrial park. Six cement plants are also TSummit (VGGS) touched a record likely to come up in Gujarat with various 25,578 MoUs and the total committed companies signing MoUs for an investment investment is estimated to be over `30 ranging from `2500 to `5500 crore. lakh crore. SBI, NABARD, Dena Bank and China's Tsingshan Holding Group has also have actually inked proposed a `5500 crore steel plant. MoUs worth over Rs590 billion. SBI signed Saudi Arabia committed to invest MoU for extending bank credit, especially `7020 crore in Gujarat by inking 6 MoUs in priority sector. As per the MoU, SBI will in solar power, chemicals and IT sectors give `30,000 crore worth loans over a with the state-run Gujarat Narmada 2-year period. Valley Fertilizers Corporation (GNFC). NABARD inked MoU for rural Saudi Arabia is looking for investments in financing worth `13,000 crore. Dena Bank retail, e-commerce, and financial services. has also entered into the strategic MoU Around 60 companies from France showed for partnering into the rural development their interest to invest in Gujarat in the activities in the state, apart from signing renewable energy sector including waste- the MoU for funding various large, mid to-energy ventures, and in aviation. and small enterprises along with financing Mukesh Ambani, Chairman, Reliance Dena Bank’s regional HO at Ahmedabad different activities under priority sector. Industries, said investment that has been committed in MoUs with the government. Dena Bank has committed `11,000 cr for made his company in Gujarat is the largest These investments will be completed by the purpose. While Union Bank of India by a single Indian corporate house in one March of this year. Adani Group Chairman entered into a pact for providing `5600 state so far. Reliance Industries’ cumulative Gautam Adani announced `49,000 crore crore of bank finance across various sectors. investments have been worth over `2.4 investment in capacity expansion of 3 ports Japan, which has been associated trillion to date in Gujarat. `1.25 trillion in the state and foraying into water and with VGGS as a partner country since were invested in the last 4 years alone, it was cement businesses over the next five years. 2003, is keen to set up a dedicated Japan `100 billion more than the company had [email protected]

Banking Frontiers February 2017 27 RRB Gujarat is fertile ground for RRBs

Two RRBs remain relevant and profitable in the distant mofussil areas of Gujarat:

anchmahal Vadodara Gramin loans, loans for consumer durables, Bank, Surat Bharuch Gramin Bank household appliances, etc. Pand Valsad Dangs Gramin Bank, Patel, says: “Staff members are well amalgamated in to a single entity named aware about the geographical area of the Baroda Gujarat Gramin Bank (BGGB) with bank and also aware about the requirements its head office at Bharuch on September / needs of the customers which helps us 12, 2005. Saurashtra Gramin Bank (SGB) in extend better customer services and to too is an amalgamation of 3 erstwhile satisfy their needs. We also conduct street rural banks. plays by joining hands with Kalamunch Acting Academy (renowned name in Spreading Branches Rajkot) to educate the people about the SGB has 251 branches in 11 districts of banking facilities and also to inculcate Gujarat as on 30-09-2016. It does not have saving habits amongst them which will ATMs of its own. Sawant says: “13 branches definitely help in covering maximum have been added up to 30/09/2016. Our number of customers in our banking fold.” customers have free access to ATMs of the sponsor bank, namely SBI.” Expanding Business BGGB has 233 branches across 14 Deposits of SGB the bank increased to districts of central and south Gujarat. `3625 cr as on 30-09-2016, registering a Present staff strength of BGGB is 810. B. B. R. Patel claims the bank y/y growth of 21%. Outstanding advances R. Patel, chairman, says: “Bank plans to maximizes profit through of the bank have stood at `2651 cr as on expand its branch network by opening increasing CASA deposits and 30-09-2016, registering a y/y growth of 15 more branches in unbanked areas and addressing credit needs of all 34.8%. SGB earned net profit of 18.30 cr in potential centers during 2016-17. As far as 2015-16. The bank has been giving strategic corresponding HR plans are concerned, sections of customers training to its staff for large value SMEs and recruitment of additional 230 staff housing advances. members will be completed by 31.03.2017.” needs of the rural mass, help in covering Sawant says: “As on 30-09-2016, maximum customers in an effective deposits of our bank have grown at 13.7% Customer Base way. Local staff members, well versed in and advances are also up by 33.6% over SGB has customer base of about 12 lakh vernacular language Gujarati, is the main March 2016. Advances of the bank increased as on 30-09-2016. The bank expects to strength of the bank. y/y by a notable margin due to main focus further increase the same by around 10% BGGB creates awareness amongst on SME and agriculture advances, as same by March 2017 by opening more accounts customers about various facilities as well focus remains during current year also. through branches and BC model. There as products of the bank by way of gram In addition to this, we are giving training are a number of special features of the sabhas, financial literacy camps, banners, for liaising with high value customers and bank that distinguishes it from others in publicity materials, electronic media, etc. It Government authorities. Business growth the state. Sawant adds: “SGB ensures to has been the bank’s endeavors for retaining could have been higher but for constraints provide personalized customer service, customers and to increase the base through of staff (not getting enough new hands) tailor made products and quick delivery.” customized retail lending products like and capital.” There are 20 lakh customers with additional assured advances, education Patel explains: “There is growth of BGGB. The bank, sponsored by Bank loans, mortgage loans, trader loans, loan `904.26 crore in deposits during 10-11- of Baroda, has appointed 407 business against future rent receivables, personal 2016 to 30-12-2016 of demonetization correspondents, who cater to the banking loans, marriage loans, car loans, 2-wheeler period). Our bank strives for profit

36 Banking Frontiers February 2017 maximization through increasing CASA app by 3I Infotech, RuPay/ATM Card by deposits and addressing credit needs of BOBCARDs, eKYC-biometric and micro all section of customers. We have been ATMs by Smartchip and CTS App by focusing on financing real estate sector, sponsor bank’s support.” auto loan and other non-priority sector lending to get better yield on advances. Expansions, Targets For 2016-17, the bank is aiming to increase SGB has already overshoot the full year retail lending to the tune of `167 crore and business targets at the half year juncture, SME loans to `130 crore.” so it will register much higher deposits and BGGB targets to disburse `600 crore loans by the current financial year end. of crop loans during the current FY. It BGGB plans to expand its branch network plans to increase investment in agriculture by opening 20 more branches in unbanked sector through agriculture term loans, for areas and potential centers during 2017-18. agriculture assets creation and improving BGGB intends to increase agriculture agriculture infrastructure. The bank term loan for promoting high tech targets to invest `75 crore in 2016-17 for agriculture through financing for green the purpose. house, poly house, drip irrigation, sprinkler Patel reveals: “Our plan for focused irrigation etc with an aim to achieve more lending in dairy sector is through tie-up crop per drop of water. The bank is targeting arrangements with leading dairies like C B Sawant states SGB has lending to bio-technology sector units using Sumul, Vasundhara Dairy, Panchmahal already overshot the full year high tech agriculture techniques like tissue Dairy, Amul etc. The bank targets business target at the half year culture lab for promoting increasing in disbursement of `15 crore in dairy sector juncture agriculture productivity. during 2016-17.” BGGB also aims to increase financing Special lending scheme has been to grain grading, cleaning & sorting units launched for agro processing units and food extended facilities in terms of ASCROM for and service units by offering post harvest processing units. Working capital and term classification of advances, NEFT / RTGS management services. Special drive will loans with credit linked subsidy schemes for for fund transfer, CTS clearing, E-banking, be undertaken for lending to dal mill, rice agro processing & food processing sector, is mobile banking, IMPS, Amlock and NACH. mill, poha mill, floor mill, atta mill, milk offered for limit up to `20 crore. Patel informs: “We have to incur capital product manufacturing and processing expenditure and revenue expenditure units and other food processing units. Technology Plans (recurring expenses) for these facilities. BGGB will also target to support farming SGB is planning to introduce the internet All the staff members of our bank are community to increase efficiency by banking, mobile banking and e-commerce imparted training from time to time as per adopting effective farm mechanization by for the customers which can facilitate requirement by conducting local training lending for tractors, power tillers, trailers, customers and ultimately improve business programs. We also have been deputing thresher, combine harvesters, improved of the bank. Currently the bank has enabled staff to different training centers for some new generation equipments for paddy RUPAY card, AEPS, Micro ATM, APBS/ specialized training.” transplantation, sugarcane transplantation, DBT, ACH-Cr/ACH- Dr through CBS. potato plantation etc. Sawant claims: “There is lot of Key IT Vendors BGGC has set the target to increase emphasis on improvement of skills of C-Edge Technologies, a joint venture of crop loan disbursements by 33.3%, retail staff. We use NABARD/RBI/sponsor bank TCS/SBI, is the service provider for CBS lending by 34.73%, housing loans by 23.5% training system for regular role based software to SGB. Data center of SGB is and MSME lending by 34.6%. The bank trainings. Newly recruited officers go situated at Mumbai, managed by C-Edge. targets disbursement of `25 crore in dairy through orientation program at NICBM, Sawant informs: “They are offering AML, sector during the next FY. The bank has Gandhinagar. We also invite faculties and MIS, loan origination within CBS. For the aimed to promote 1000 JLGs to cover more external experts for motivational trainings. CTS, bank is live with YES BANK and using than 5000 farmers. There is a lot of stress on role specific one CHI server of YES Bank as sub-member.” Patel concludes: “Next financial day workshops.” BGGB has a number of basic IT year’s recruitment planning will be BGGB is on CBS Platform since 2010- applications. Patel states: “CBS application decided according to business growth 11. All 233 branches are fully computerized Finacle and internet banking is provided as on 31.03.2017 to ensure adequate and on CBS platform. New branches are by Infosys, mobile banking app by FSSNeT, staff strength for smooth functioning of also made live on CBS from the date of loan classification app by D2K Technology, banking operations.” opening. The bank has implemented / SMS alerts by solution by Infiny, AMLOC [email protected]

Banking Frontiers February 2017 37 Conference

LEAPING INTO THE FUTURE

Banking Frontiers organized a seminar alongside IBEX 2017 for cooperative banks to explore new strategies. Highlights:

Keynote Address by S. Gupta, CGM, digital is not an option. Challenge is how to Nabard (Chief Guest) go ahead. Recently FICCI and IBA gave an Lending and adopting technology are assignment to Boston Consultancy Group similar. They are like riding a lion. Once for a digital banking survey. The result you adopt technology, there is no way back. pointed to 30% increase in productivity and You have to keep adopting more and more. increase of CASA by 20%. Some cooperative banks have gone one D.M. Changadkar, CEO, Saraswat step further - like Saraswat Bank which is Infotech: We have been providing offering technology to other banks. technology solutions to banks. Over a period There are two things that have come of time, Saraswat Bank and its customers out from demonetization. (i) People adapt. have witnessed a shift from branch banking (ii) The amount of cash in the market will to alternate channels. Usage of ATMs has not be the same, as announced by the increased to 70%. Recently, Saraswat prime minister and the finance minister. Bank launched mobile banking in a new Why many cooperative banks cannot adopt form and we had 50,000 downloads. It technology is that size is a problem. What mobile banking, but many have not applied is not for banks to drive, but the need felt I have learnt from CBS implementation in for mobile banking license to RBI. by customers. 210 cooperative banks, is that cooperative If you are not on mobile banking, banks have to cooperate with each other. chances are you will not be able to leap into Satish Utekar: There is need for quality We got a fantastic rate from vendors when the future. I was not using mobile banking, data - including updation. How has your we put together these 210 banks. For small as I was comfortable with internet banking. bank updated the data while migrating to banks with few branches, you cannot Once I started with mobile banking, I gave the new platform? manage CBS on your own. You have to up internet banking. Laxman Kamble, GM, PMC Bank: go for pay as you use model. RBI is also If you want to keep jumping into the At PMC Bank, we have switched to Finacle providing subsidy via IFTAS. future, you have to ride the lion. CBS. Before switching over, we spent 10-11 One issue is I have to discuss is the What model will be most suitable for months cleaning our data, which is a KYC future technology. Two things are certain. cooperative banks? I can say that clearly the issue. We have engaged Oracle for taking Since there is less cash, transactions have cloud model is the best. But there are risks. over IT functions in HR. We are inclined to to take place electronically. RBI has stiff So, you have to be on a good cloud. Today, go for cloud based solution. It is very costly guidelines for becoming part of mobile every computer and mobile is infected. on outright purchase. What companies have banking. So, one option is to join hands These devices will be talking to your CBS. done is they have bundled some solutions with some wallet companies. But chances So, you have to have adequate protection in the cloud itself, such as payroll, benefits, are they may take your customers. YES to mitigate the risks. NABARD also has etc. The monthly charge is not enormous. Bank has tied up with a Taiwanese company shareholding in IFTAS. Or else you can join We can also take help of other cooperative to provide mobile banking using a feature hands and float an organization that serves banks. phone. This can help cooperative banks to the needs of all the coop banks. Imagine a bypass RBI guidelines by partnering with cooperative card that gives transactions free Satish Utekar: What are the strategic YES Bank. across their ATMs. alliances of Yes Bank? What are the major You should join hands to ask for a sub- data issues? group. A NABARD study showed that CEO Panel Discussion Sanjeev Pandey, senior president, about 100 DCCBs are eligible to launch Satish Utekar (Moderator): Going YES Bank: One part is touching customers

42 Banking Frontiers February 2017 through various channels. The other is building the organization structure for decision making, which is the first phase. We help cooperative banks with data management, MIS, etc. This is important for managing the transactional requirement of the customers. YES Bank partners with close to 400 cooperative banks. Most of these banks are non-cooperative with others. Partnering is important for cost efficient sharing and meeting regulatory The CEO panel discussion in progress compliance. We are giving sponsorship on RuPay cards, cheque clearing, etc. We Utekar: Technology is a change management bank retains the retailer. They get a referral have launched SimSePay, which works for employees and customers. It is said that fee. They also get a commission. Cooperative on SMS gateway. This it an encouraging the bottleneck is at the top. What is the top banks in Telangana and Andhra Pradesh breakthrough. We have 34 banks including management thinking? banks have deployed 1500 POS terminals. 6 DCCBs, in 1 1/2 months. It has bill D.M. Changadkar: A staff member Madan Gopal Swamy, chairman, payment, recharge, etc. We have kept an could garner more than 100 customers for Adarsh Cooperative Bank: During 2009, open architecture for adding local vendors. registering for Chiller. He spent Rs 1 per we implemented biometric ATM. At that For example, a cooperative bank in Pusad customer on his own. There are various time, we were not connected to NPCI. We has added local water body for bill payment. innovations that staff members can do. were disbursing cash to illiterate customers, The biggest challenge is getting regulatory Banks must internalize all these. Banks’ who cannot sign and who cannot remember refinement in some areas. RBI should job is to simplify and explain to customers. PIN. The focus was on disbursing pensions take into account the CRR balances of Everyone is hearing about digitization but of few hundred to 1000 rupees. We reduced these banks. customers do not know. the queues. When we connected with NPCI, we got RBI mobile license which is in the Satish Utekar: Is alliance with corporate Satish Utekar: Any HR initiative to train final stage of completion. Some 15 of our a threat or opportunity for cooperative employees? customers have won the prize in prime banks? Laxman Kamble: We are paying `1 minister Narendra Modi’s scheme and we Shekhar Desai, CEO, Thane Bharat to staff for `5 transaction. Once the staff have publicized this. This has considerably Sahakari Bank: I think it is a threat. Airtel is well versed, they can train the customer. increased digital banking. We are behind in or Payments Bank Satish Utekar: I see demonetization data management and analytics. We should - they are coming up with 6 lakh BCs and as an opportunity. Lots of retailers are go for cloud technology, analytics, cyber are offering 7.25% as interest. With this concentrating on e-payments. security, loan processing automation, etc. competition, where will we be? This is a N. Rajendran, NPCI: There are 642 challenge for PSU banks too. Cooperative cooperative banks on RuPay platform today. Shekhar Desai: Max 1% can be charged banks can even fund corporates. We can The first question is can we put a POS for up to `2000. Why not cap transaction have few more currency chests. We had to terminal, because some other bank is coming charge in RTGS, etc? wait to get cash. We had to pay 25 days float. and hijacking the customer. A cooperative N. Rajendran: At a POS terminal, fees An attentive audience comprising coopetrative bankers are for interchange, switching and MDR. MDR is regulated by RBI. It is is now capped at 1%. Switching fee is minimal. Interchange is the fees which the acquirer pays to the issuer. The interchange is a percentage. For NPCI it has been jointly decided by the banks that set up NPCI. They have to come together to change it. Sanjeev Pandey: We have partnered with a number of banks and this has enabled them to do business. If you do not give the services, the customer will go to someone else. So, it is better to partner with somebody and move on. [email protected]

Banking Frontiers February 2017 43 Cooperative Driving ahead on social, economic and technological parameters

A state cooperative bank pushes itself to new heights and pulls along its customers:

he Gujarat State Cooperative Bank was established in 1960. of the banks and also helping them to It enjoys the status of a scheduled bank. Since 2009, it maintain the required CRAR as per Truns under the leadership of Ajaybhai Patel, a renowned RBI directive.” cooperative leader and experienced banker. The bank organizes ‘Khedut Shibirs’ in each and every taluka/block of the Expanding Footprint state, where the bank provides know- The bank currently has 25 branches in Ahmedabad and Gandhinagar how on modern agriculture techniques, districts. Nearly 28 lakh farmers of 8100 PACS are affiliated with business development plan of the PACS, GSC Bank through 17 DCCBs and a union. and awareness of various development The bank has recently gone into . As on date, GSC schemes of the government, etc. For Bank has a network of 23 ATMs spread across the 2 districts. Ajay this purpose, agricultural scientists and Patel, Chairman says: “We have opened 10 new branches in 2016- other experts are invited for delivering Ajaybhai Patel 17 and expanded our ATM network by installation of 8 more ATMs talks on the specific subject and also to in the current FY.” have one to one interaction with farmers to resolve their queries. GSCB has a consistent history of receiving awards from NAFSCOB for its best overall performance and corporate Growing Refinance governance. It has been receiving such awards in the past as well The GSC Bank has provided finance from its own funds to DCCBs as for last 4 consecutive years. It has also received the award as the to the extent of `990.20 crore in 2014-15. While in medium and institution amongst the best performing cooperative organization long term to strengthen investment credit structure, the bank has from the National Cooperative Union of India, New Delhi. availed refinance credit facilities from NABARD. The bank took Specially, for Gujarat farmers who visit Ahmedabad or the initiative and reduced its margin on refinance in the range of Gandhinagar for their routine or special work, GSC Bank has 0.2-0.4% to provide maximum relief to DCCBs and ultimately to constructed a farmers’ hostel having 58 rooms with capacity of 300 the farmers. Patel says: “The bank’s refinance from NABARD has persons with in-house catering facility at a concessional rate. The also significantly increased from `537.25 crore in the year 2008- bank’s aim is to provide affordable accommodation in Ahmedabad 09 to `4500 crore in the year 2014-15 indicating a growth of 838% city to the farmers. within 5 years.” In another bold step, the bank has implemented a solar plant Nationally, the cooperative banks of Gujarat lead in the of 150 KWp in its HO, which has resulted in approximately saving construction of the godowns under the Rural Godown Scheme; of `50 lakh per annum. constructed through the coop credit structure. Patel adds: “GSC Bank has aggressively facilitated for procuring the maximum Increasing Business subsidy (routed through NABARD) from the Central Government In 2008-09 the total advances of the GSC Bank was to the tune of and it leads by getting the GOI subsidy of `33 crore for 4550 rural `1786.58 crore, which has increased to `5450.34 crore in 2015-16, godowns.” while deposits have grown from `3209.95 crore to `5178.04 crore. The bank has earned the net profit of `18.09 crore and The CRAR Technology Adoption of the bank for the year ended 31.03.2016 was 10.84%. Technology in banking, like in any sphere is evolving with social Patel says: “GSC Bank has been paying dividend at 15% for the media, business analytics and cloud computing disrupting well set last 5 years, from 31.03.2012 to the year ending on 31.03.2016.” technologies. In-line with business goals, GSC Bank has realized its With the initiative of GSC Bank, Government of Gujarat has technology vision to turbo charge the bank to embark on a digital supported instantly to provide 2% interest subvention to the farmer journey and transform business landscape keeping in mind the focus borrowers of all DCCBs in the state. Patel further says: “Due to this, on customer convenience and affordability. Patel shares: “The IT all DCCBs are now able to provide short term loans for seasonal vision of the bank is to leverage banking technology so as to provide agricultural operations (ST-SAO) to farmers at 7% as per GOI the banking services by adopting the digital ecosystem combining directive and thus helping all DCCBs to retain their customer base elements of customer centricity, convenience, affordability, social, as well increase their business resulting into higher profitability mobile and innovation. GSC Bank’s IT vision also encompasses

44 Banking Frontiers February 2017 to bring all cooperative banks in the state under ‘One Technology Umbrella’ so as to support smaller cooperative banks in providing the latest services to their customers.” As a part of this vision, GSC Bank along with NABARD took the initiative to bring all district cooperative banks under 1 umbrella for implementation of CBS, and as a result, by December 2013 all branches of DCCBs were brought on CBS platform on ASP model by C-Edge Technologies. GSC Bank went on to create a technology umbrella to go beyond CBS under which GSC Bank created a complete infrastructure, hardware and software along with a capable IT team to provide various new age banking services to all cooperative banks, like RTGS/NEFT, CTS, CSGL, etc. Patel adds: “This helped even the smaller banks for whom it would not have made feasible case economically to provide latest banking services development and related plans. 37 such training seminars / CEO to their customers at affordable costs.” meetings were organized by the bank and informative books / study GSC Bank has already rolled out the most popular services. GSC material was distributed to the participants. Special training programs Bank has taken NPCI’s membership for NFS network switch to were also held for approximately 7000 chairman and secretaries of nearly use RuPay member ATM’s. GSC Bank also successfully tested and 8100 PACS. launched E-commerce services for its customers to facilitate them make utility bill payments through GSCB’s ATM cum RuPay debit Future of Coop Banking card and pay at POS. It is the vision of GSC Bank to be the top most cooperative bank Patel further says: “Approximately 150 banks (DCCBs & UCBs) in the country. Patel optimistically says: “GSCB aims to promote a are utilizing internet banking (non-financial) service for their sound, strong and vibrant cooperative credit structure in Gujarat daily settlement purposes. GSC Bank is awaiting RBI approval to embedded with latest technology and computerization, providing start offering fund transaction and utility bill payment services to innovative and affordable banking products so as to be an active its customers.” partner in the progress of the state and contribute to its economic NPCI’s flagship product IMPS also comes bundled in GSC and social development.” Bank mobile app. Currently, GSC Bank is offering Person to Person [email protected] (P2P), Person to Account (P2A) services through mobile app. Customers enrolled for LPG subsidy through GSC Bank are directly receiving the government subsidies in their bank accounts. The bank provides real time SMS alerts for credit/debit transactions, cheque transactions, OTPs for password change in internet banking and for financial transactions as a second factor of authentication in mobile banking. It uses bulk SMS facility for mass customer communication and campaigns. Patel claims: “GSC Bank started offering full-fledged mobile banking services to its customers since June 2015 and the customers are fully satisfied with the features. GSC Bank is now live on balance enquiry and mini statement through *99#.”

Weak Bank Upgradation During the year 2008-09, the gross NPA of the bank was 17.9% and net NPA was 9.3% which have been gradually reduced to 2.5% and 0.12% respectively in 2015-16. GSC Bank renders constant guidance, monitoring and weekly review for the weak DCCBs. As a result, the 5 weak banks have also received banking license. All DCCBs of the state now have banking license. Except 1 DCCB, all others in the state maintain more than 7% CRAR and would maintain 9% by March 2017.” Educational and training seminars are organized for staff and office bearers of DCCBs, PACS and UCBs on various important subjects like KYC, ALM, PMLA, forged notes, BASEL II & III, NPA & recovery, deposits, advances, CTS, CIBIL, motivation and on guidelines issued by NABARD, RBI and changes in banking parameters, agricultural

Banking Frontiers February 2017 45 RNI REG. NO. MAHENG/2002/9930 POSTAL REG. NO. MCN/70/2016-2018 POSTED AT MUMBAI PATRIKA CHANNEL SORTING OFFICE, GPO, MUMBAI ON 16-17 OF EVERY MONTH PUBLISHING DATE 16th OF EVERY MONTH

Congratulates all the Winners BANKING FRONTIERS’ AWARDS 2017 BANKING FRONTIERS’

2017 TIES – The foundation of Fintech innovations

NPCI IDBI Intech YES Bank Taisys India DCB Bank PureSoftware DBS Ascent Resilience Solutions State Bank of India Sumeru Software Solutions AUDITime Information Systems IDFC Bank Vyom Labs ICICI Bank Concentrix Agriculture Insurance Co of India FIS Motilal Oswal Financial Services Servion Global Solutions HDFC C S Infocomm IIFL Pragmasys Consulting PNB Metlife Insurance CtrlS RBL Bank Infrasoft Technologies Reliance Nippon Asset Management CredenTek Software and Consultancy Baroda Gujarat Gramin Bank Vsoft Technologies Telangana Gramin Bank CyberArk Gramin Bank Himachal Pardesh Gramin Bank