Change is always easier with someone who knows it. That explains why Akhil Handa was cherrypicked to lead the digital transformation of Bank of Baroda, India’s second largest public sector bank.
Handa’s varied career trajectory makes him well versed at handling and orchestrating change at a 110-year- old public sector bank. He has been a fintech entrepreneur, industry analyst and investment banker with JP Morgan and a founding member of CAG – the professional support group for PM Modi’s 2014 campaign.
In his current role as the Advisor to MD and CEO and Head of fintech and new business initiatives at Bank of Baroda, Akhil Handa is working zealously to make Bank of Baroda’s transformation into a digital bank possible and plausible.
Not so long ago, Bank of Baroda was perceived as an old-line public sector bank; way too old and antiquated in its business processes. With its business model trapped under a bloated bueracratic system, Bank of Baroda sorely needed a crusader of change who could set it free from the shackles of a lumbering legacy.
And now with Akhil Handa as its change champion, the public sector lender appears to have muscled its way to find its rightful place under the sun. Today, it is the second most innovative public sector bank after SBI. And this couldn’t have come at a more opportune time. With the merger of Vijaya Bank and Dena Bank, Bank of Baroda will become the third largest lender in the country, with advances and deposits market share of 6.9% and 7.4%, respectively.
“BoB today is a different place, far more open to the changing trends in banking and fintech space,” says a visibly enthused Akhil Handa, Advisor to MD and CEO and Head of fintech and new business initiatives at Bank of Baroda.
During a meeting with Sneha Jha, Handa in vast detail recounts the various measures he has undertaken to put Bank of Baroda on the path to digital transformation and touches on all the bullet points of the digital drive.
In the five years since you joined Bank of Baroda, you have led a radical transformation. Could you talk about those early days when you joined BoB? What did you find at BoB when you joined and what were the changes that you introduced?
When I joined Bank of Baroda, I did a gap analysis on where the bank was and where it needed to be.
When I came in, I realized that bank we did not also have an online or digital proposition for our customers. We sold through our branches. As a result, we had gained traction only with the high touch customers who preferred a physical channel of the transaction. Our penetration into the millennial and digital savvy customer base was really low. So we invested in a robo advisory platform that we launched to provide a good user experience for wealth management solutions. This was launched in 2016.
We did not have a wealth platform when I came in. This was a huge gap in our portfolio considering the fact that this is the age of wealth management products. Consequently, the mutual fund industry has skyrocketed. We needed to play catch up in this area.
I figured that the core assets were anchored in the past. For instance, our core banking system was a dated one. When we moved to a new system, our IT department did a great job in the transition, which is a very critical exercise. It was like operating on a person who is walking. It took us 18 to 20 months to stabilize on that platform.
Bank of Baroda has been in the throes of a massive digital transformation drive by using technology as a lever for modernization. Can you describe both the rationale and the methods you have used to do that?
The first pillar of Bank of Baroda’s digital strategy is strategic partnerships, based on an API platform. We connect to most of our partners through APIs. The PSB loans in 59 minutes is an API connect. As is payments through Truecaller App – which are powered by Bank of Baroda.
I realized we can’t build all the propositions on our own in the short order of time to catch up with the pace of innovation in the ecosystem. I offer payment products, deposit products, wealth products, and credit products. If we platformize core systems and let others build on top of it, it gives us the ability to scale vertically. Think about the ‘sign-with-Facebook’ API from Facebook that many internet companies use for sign-in and authentication. That is what I want to offer. After evaluating hundreds of potential partners, we currently have 31 partners and expect to take the number to 40-45 partners.
The second tenet of our digital strategy is digitizing the core assets. While I can’t do everything on my own, there are certain things I need to do on my own and that becomes the second pillar. We have three Centers of Excellence (CoEs) - one is around IT, the other is around analytics and the third around services. And these are horizontal. Everybody needs them across the organization.
If I do not have an IT center of excellence that does not have the ability to work on multiple projects in an agile way, then as required I cannot be ready for the future.
We are also establishing a leading edge Innovation Centre, which will act as the fountainhead for innovation for the entire BoB group – including asset management, insurance, capital markets, etc. Overall, there’s a clear understanding that I cannot outsource my core assetsthat ensure future-readiness.
The third key aspect of our digital strategy is investments. We are looking for good companies that are investable propositions and have a bright future. We haven’t done it in a scaled up fashion due to less bandwidth, but are establishing a 100-ideas program to support entrepreneurship and startups.
A large part of your digital transformation efforts are focused on modernization, fintech partnerships, new business initiatives and technology advancement. Traditionally, older public sector banks have technology from various decades housing extremely important data in silos, and the process of modernization and simplification can be a challenge owing to a rigid organizational culture that is indeed quite deep rooted. Could you talk about the way in which you are tackling this challenge and its implications on the broader digital transformation? How are you fostering culture change to make Bank of Baroda a forward-looking and innovative public sector bank?
We have been able to layer down the red-tape prevalent within the bank. And that in large part is due to the consistent efforts of our MD &CEO, Mr. P.S. Jayakumar. When I had to conclude the first partnership, which was with Snapdeal, I had to take 12 approvals. By the time the partnership was concluded the company got into rough waters. Now, we have realized that time is premium and we can’t let processes get stuck in a bureaucratic quagmire.
To increase process efficiency, we constituted a very high-level standing committee on Fintech, which comprises the MD & CEO Mr. P.S. Jayakumar, all three Executive Directors and five seniormost General Managers. Now, we take this committee as a single window of approval. This committee is empowered to take a decision on all aspects.
We have been able to make it a lot more risk based. The refashioning of mindset, putting in place committees and the approval process has been our biggest victory, and the credit goes to our MD & CEO Jayakumar for leading from the front.
We have also stepped up our focus on digital financing- retail and MSME. To provide loans to MSMEs associated with large corporates is TReDS, a versatile online platform that helps MSMEs unlock working capital through a completely digital journey. We are front-runners on the TReDS platform with about 10-15% market share. We have on-boarded all three Reserve Bank of India approved Trade Receivables Discounting System (TReDS) platforms i.e. A.TREDS, RXIL, MYNDSOL, thereby becoming the first Bank to support this novel Fintech initiative. This online platform enables discounting of invoices of MSME sellers through a bidding process to ensure the prompt realization of receivables.
Over a period of time, we have been able to transform the bank into the frontrunner in some areas. If you take some of the Fintech department initiatives like TReDS, PSB loans in 59 minutes, these are great opportunities where we got to innovate and succeed.
Can you enlighten us on the translation of these digital business initiatives to the way in which you are using technology in concert with the business?
Today, you name a technology and BOB uses it in some format or the other. For example, robo advisory in wealth advisory, data analytics in underwriting, Natural Language Processing (NLP) in Chatbot, Cloud for productivity, etc.
We use customer segmentation and analytics to analyze cusstomer needs better since we have so much transaction data on these customers. Our analytics CoE runs marketing campaigns for look-alike models so we can gauge the customer who is likely to take a loan basis his profiling.
Over a short period of two months, we have generated around 15 lakh UPI customers through our partnership with Truecaller Pay. These customers are young, have a smartphone in their hands, are aware of Truecaller and UPI – so in summary, a good customer. Selling more products to him is introducing a young, upwardly mobile target group into the bank.
The other area is crunching the data to fit them into a model and this is where we have to use analytics. It’s a core area of competitive advantage.
Our Fraud Risk Management department is instituting an enterprise fraud risk analysis system, which is based on real-time analytics. So, if a customer resident in Mumbai has a transaction in San Francisco, then they can flag up the anomalies basis the behavioral data. It’s not post-facto, but pre-facto for transaction fraud. We are doing this for our mobile, ATM, core banking, digital channels and we are able to take a holistic view of the enterprise.
We were the first ones to adopt the cloud for our office suite. We have put emails, our productivity tools, office suite on the cloud. Many of our Fintech partners are on cloud, which gives us the ability to scale as desired. Contactless MSME lending (PSB Loans in 59minutes.com) is a recent example where post the announcement by Prime Minister Shri Narendra Modi, the Fintech platform saw a deluge of applications – which it could handle ably only due to scalable cloud based architecture.
BoB has digitized and centralized the E-commerce loan acquisition and processing because we have realized that the customer is also looking for good service. We are able to maintain a sanction Turn-Around-Time (TAT) of three days (including offline inspection) due to the digital processes.
Through the contactless lending platform, we have digitized the small ticket MSME loan acquisition and processing to less than an hour.
Having said that, I believe we have to continue to increase our depth and usage of the emerging technologies and embed more of these in BAU.
Now that you have created a fertile ground for innovation at Bank of Baroda, how are you fostering partnerships with fintechs to take advantage of the ecosystem? Specifically, what are some partnerships that you are beginning to leverage?
Bank of Baroda launched the first of its kind “Digital Portable Branch” in Indian Banking Sector. Digital Portable branch is a pre-fabricated branch equipped with Self Service Machine like Account Opening Kiosk, Cash Dispense, Passbook Printer etc. to provide round the clock retail banking services like account opening, cash withdrawal, passbook updating, balance inquiry etc. to customers without any manual intervention. These branches can work as a full fledge branch.
We partnered with a Fintech company ToneTag for contactless proximity communication using sound wave. The app SDK is integrated with Bank of Baroda’s M-Connect Plus mobile banking application for making payment on ToneTag enabled POS terminals.
We have collaborated with Razorpay, a payment gateway with the aim to revolutionize online payments by providing clean, developer-friendly APIs and hassle-free integration.
Bank of Baroda is a founding member in two major blockchain communities to explore, build and implement blockchain solutions in a collaborative environment. The bankchain community has total of 37 member banks across the globe. This community was formed to pilot multiple use cases. Another community is centered around a specific use case (Trade finance).
The Bank introduced “Baroda Finathon Challenge”, a hackathon contest, inviting techies, developers, students, and start-ups to come up with exciting, innovative, novel and viable solutions themes such as Innovation, Customer Acquisition, Customer Experience, Conversational Banking, Collections, Compliance and Operational Efficiency. We received an overwhelming response with around 4,600 teams participating for the challenge.