I have had hundreds of calls with clients around the world to discuss digital transformation. The best question is always, “what business benefits have you measured?” The usual answer is wishful thinking, as most customers are not far enough along to calculate the benefits.
That’s why I was happy to talk to Avinash Raghavendra, Head of Information Technology at Axis Bank, as well as a long-time partner of Infosys Finacle, because Axis Bank is very much on the digital transformation journey to calculate the business benefits.
Axis Bank is the third largest private sector bank in India, offering a full spectrum of financial services across all customer segments. Axis Bank is one of the new generation private sector banks that started operating in 1994, therefore unaffected by the legacy infrastructure that has slowed down the digital transformation of many banks.
High expectations and a path to success
Axis Bank wants to be the most valuable bank in India. The way forward was to delight and retain customers by investing in the latest technology and tools to improve the digital journey. The bank’s overall business strategy for growth, profitability and sustainability determined the digital strategy.
On the other hand, there are four conditions for digital transformation: delivering products faster using technology, enabling key capabilities, improving stability, and achieving goals in a sustainable way from a cost perspective.
Enabling key capabilities involves building a unique IP for the bank based on the customer journey and connection touch points. Bank products are basically the same all over the world, so it’s a matter of connecting additional value to the customer, ultimately determining the market’s perception.
Given the fact that everything is digital, there is an operational risk that leads to greater attention in terms of stability. Axis has invested heavily in resilience through initiatives such as software-defined networking, infrastructure standards, zero data loss practices and governance.
Technology costs were controlled by streamlining operations whenever possible. The approach is cloud-first. Avinash put it succinctly “wherever we have to reach customers, wherever we have to do something that’s original and new, we’re looking at cloud-first architecture.”
As part of cost-saving efforts, Axis has introduced more than 1000 automated processes to reduce manual steps, speed up service deployments and restarts, improve service delivery, and gain greater insight into application performance. Business-critical applications now rely on application performance monitoring (APM), tracking critical application performance metrics using monitoring software and telemetry data.
Standardizing applications has reduced licensing, maintenance, upgrade and patching costs. Seventy-eight applications have been retired, and twenty-two have been consolidated.
Adopting modern methods has improved time to market for products and services by approximately 40% and increased the number of offers tenfold.
The in-house team created customer journeys related to the mobile banking app and multiple integrations, which include more than 330 APIs on the developer site. APIs issued support credit cards, Aadhaar (Aadhaar is the world’s most comprehensive biometric identification system), deposits, loans, and FASTag/e–Toll collections (India’s electronic toll collection system).
Axis Bank is working with Infosys Finacle to fully digitize the corporate banking journey. Avinash noted, “for most banks, when it comes to digitization, the focus is on the customer journey for retail banking. We also see opportunities on the corporate side such as handling bulk payments, entire supply chain journeys, on the of business. , or even treasure.” A common microservice architecture provides opportunities to integrate to provide more value to the customer.
Another key to success is a strong senior management team to help deliver value through these transformational initiatives.
Solving the cloud puzzle
Axis was among the earliest companies to use basic banking services on premises, but all digital offerings for customers are available online. Axis has a joint venture with
Amazon Web Services (AWS) and Microsoft Azure, while talks are ongoing with Google Cloud. In the Indian ecosystem, Axis must adhere to data localization regulations, and all three public network providers have fully Indian data centers.
Purpose determines the choice of cloud provider. For example, the conversation with Google Cloud is because one of the largest providers of payment services in the country is Google Pay, and the goal is to improve interoperability in terms of joint transactions. Workforce productivity tools run on Microsoft Azure, and everything else on the client side based on AWS.
Axis does not have the challenge of managing multiple clouds because, depending on the purpose, there is not much interaction to require multiple DevOps teams.
That said, Axis is evaluating tools from companies like VMware, which provide a holistic view across multiple clouds.
I like that way. I’ve had hundreds of calls with customers, and everyone is using multiple clouds. The advantage is avoiding lock-in, but the challenge is to prevent major disruption of the three DevOps teams. I believe that as an industry, we will figure this out and make it easier.
Infosys Finacle Relationship
The choice of Infosys Finacle as a partner was very natural, given the long-standing relationship. Axis has been on Infosys Finacle’s core banking platform for twenty years. Relationships run deep.
Apart from core banking, Axis has deployed many solutions with Finacle, such as online banking, treasury and wealth management. Axis conducted an RFP to determine which digital engagement platform is right for the bank. Finacle’s digital engagement platform was best suited to the needs of the bank and is the core of management, customer interface and products.
Measuring business success and profitability
As I mentioned earlier, it’s rare today for companies to have business performance metrics at the time of my interview because they just started, are in the middle, or didn’t get what they needed. Axis is too far along in the digital transformation journey to measure notable results.
- Digital Transaction: 91% of Digital transactions based on all individual customer transactions (FY22)
- Credit Card: 78% of credit cards issued through phygital (not a typo but the concept of using technology to connect the digital world with the physical world) and digital situations (FY22)
- Active Customer: 76% customers using digital (Q4FY22)
- Savings Accounts: 70% New SA acquisition through digital account opening process (FY22)
- Fixed deposits: 68% of fixed deposits are opened digitally (FY22)
- Unified Payments Interface (UPI): 15% market share in UPI (FY22)
- Personal loan: 46% PL is delivered through physical and digital channels (FY22)
Back then, we didn’t always think of banks as early adopters of technology. With digital alternatives, some banks are kicking it into high gear. Still, digital transformation is essential to remain relevant and competitive with ever-increasing customer expectations, regulatory changes, new (non-brick and mortar) banks, and FinTech startups. In short, it means accelerating digital transformation to improve the quality, stability and resilience of underlying technology to support ever-changing customer needs.
Additionally, key business operations and operational capabilities continue to be enhanced to support businesses in creating meaningful customer journeys.
Axis Bank recently announced the acquisition of Citibank India’s consumer business. The merger of these two businesses and the resulting access to an additional franchise of large and wealthy customers would have been more difficult if not for the technology base that Axis Bank has established.
What’s next for Axis Bank? Avinash notes, “we must continue to expand our reach to customers. We need to go where the customer is. There used to be certainty when customers walk into a branch; now, it’s a mobile app or website. . In the new partnership model, banks are also partnering with FinTech companies. The partnership will grow, and our focus on collaboration will be very high.”
Note: Moor Insights & Strategy writers and editors may have contributed to this article.
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