Digital Initiatives
Online
Acquisition Payments Lending
Digital Adoption &
Analytics
Digital Transformati
on
Traditional Banks
Branch network
Large investments in physical assets
Legacy systems
Compliance, regulation
Structure built around product, P&L lines
Larger staff base
Slower pace of change
Traditional Bank ModelRevenue Pool for Banks Range (approx)
NII 80% – 75%
Non-NII 20% – 25%
Fees 14% – 16%
Transaction Charges 2% – 4%
Others 4% – 5%
3
The world is witnessing a massive shift in financial services
Enablers
• Traditional financial services are witnessing significant disruption
• Increased customer comfort with technology driven models
• Reduced Barriers to Entry
The new normal
• Rapid Unbundling of services
• Democratization of information and services
• Uber-ification of the customer experience
• Dramatic Increase in speed
Banks follow a top-down approach while disruptions are focused bottoms up
IndividualsEnterprises
Internet FinanceTraditional FS
Micro Enterprises Masses
SME Mass Affluent
BIG Corporates
Wealthy Individuals
IndividualsEnterprises
Micro Enterprises
Masses
SME Mass Affluent
BIG Corporates
Wealthy Individuals
Sh
are
of
Re
ve
nu
e
Area of Disruption
Disruptive trends
Payments –Apple Pay,
Google wallet Samsung Pay
Block chain
Digital banks & Digital currency
Lending –P2P, Social & psychometric credit scores
Digital Payments –
Wallets, Bharat Bill pay, UPI
Artificial Intelligence -
BOTs
Digital Branches
Security –more use of Biometrics
Global India
Transactions/Platform
• Retail Payments
Risk Management
• Retail Lending
• Corporate Lending
Knowledge & Skill
• Wealth Management
• Advisory Services
• Investment Banking
High Medium Low
Intensity of Disruption
Areas of Disruption
High
Low
Leve
l of
Dis
rup
tio
n
Payments and Txns
Distribution
Third Party Products
Core Products – CASA & High End Loans
Impact on Revenue High
Disaggregation in BankingLeading to higher efficiency
Bank Employee DSA / DSTAggregators – Bank Bazaar / Snapdeal
Cash Debit / Credit card Mobile wallet
TelcosNeighbourhood
stores Wallet/Bank
Lending
Payment
Mobile Recharge
Fixed Cost Model Variable Cost Model Low Cost – Digital
Example
E-commerce and Fintech are coming together
Source: MXV Consulting report
Globally Digital bank models are finding their footholdsIndia Payments banks could be form similar platforms
Product Retail Banks
Leader
Digital Banks
Challenger
Liability Focus
(Narrow Product)
Asset Led
Full portfolio
Banks with digital focused strategy
• Youth & Digital Savvy
• Pricing Led10
Population 1285 Mn
Digital - An imperative for Indian banksIndia’s Key Digital Statistical Indicators
Mobile Penetration -
79%
Internet Users –28%
Social Media -13%
Digital infrastructure rapidly expanding
•~270 Mn urban internet users in sep 2015
•>651 Mn smart phones by 2019
Regulatory changes becoming more facilitative
•Aadhaar – eKYC (UIDAI accounts rapidly expanding)
•Information bureaus for instant credit appraisal
Customer digital readiness rapidly increasing
•~60% customers with internet digitally influenced for banking
•> 40% express strong interest for right digital solutions
Integral part of the changing competitive context
•Digitization top of the agenda for incumbents
•New / non-banks putting digital at centre of strategy
•Revenue pools coming under threat
*smart phone users – 220 mn
Partner Compete
Digital demands continuous evaluation of options
Reimagining Customer
ExperienceBuild Afresh
Transformation Pure play digital
E Commerce
Compete Acquire
Fin Tech
Collaborate
Re-engineering
Digital Approach
Digitalization is Organisational Journey not IT Projects
Transactional and1-to-1
Conversational; Many-to-Many
Customer Interaction
Standardized and Inflexible
Differentiated and Fluid
Process Approach
Operational Metrics
Customer Based Metrics
Process Metrics
IT Driven Strategy
Two-Speed IT –Innovations and BAU
Role of IT
Banks need to be a part of Consumer daily life cycle
Morning
Going to office (Taxi, Metro payments )
During the Day
Travel & Canteen requirements
Evening
Buying Grocery, music, movies
Night
Dining out, home orders
Routine Payments
Recurring Payments
Savings
Investment & Insurance
Organized Payments
Bill Payments, Society, school fees
Unorganized Payments
Monthly payments to house helps
Spend
Shopping
Capture thru Digital Offerings
Technology choices for transactions
Technology choices for transactions
Banks play a role in
bridging the technology
gap
Kotak’s Digital DNA
Agile
Design Thinking
Customer Centricity
Collaborative
Fail fast- learn fast
Innovation at heart
Skill based resource
Geography is history
Attracting Talent from other industry/ ring
fence them
Governance structureDesign Thinking
Employee first
Stakeholders alignment
Customer Experience
Design at core
Improving Customer Experience … with Innovations
Hashtag banking - First bank to integrate twitter with banking
Kaypay – First Bank-agnostic P2P Payments Platform
Jifi – World’s 1st Digital+ Social bank a/c
Bharat Banking – 1st Offline multilingual app
In app shopping - highest rated banking app
Digital Focus @ kotak
Online
Acquisition
Digital Payments
Lending Digital
Adoption & Analytics
Physical & Digital Co existence
Digital Transformation
Digital Platform focused Transformation focused
Performance in global benchmarking metricsKotak leading bank in digital sales
Results as per finalta Global benchmarking survey, conducted in 2015 -16 on 100+ banks. Aus/NZ scores included as global leaders in digital metrics.
KOTAK INDIA AVG GLOBAL AVG AUS/NZ
Public Site Secure Site Mobile App
Digital Sales133
8074
118
Per 1000 active customers
Kotak has 133 customers acquired through digital sales per 1000 active customer Vs. India avg. of 80 & global leader avg. of 74.
Kotak’s YOY growth of 47% vs Indian average of 10%
Evolved Ecosystem
• Real time Fund Transfer via NEFT, IMPS, CTS
•ECS, NACH for Recurring payments / EMIs
•Digitization of Bill Payments
•P2M via PG
Digital Payments @ Kotak Driving by improved customer convenience
Building Convenience• Single click payment through mStore and eStore• In-app merchant integrations for customer’s travel and stay requirements• P2P platforms (KayPay, Mail Money, Message Money)• Leveraging Social and Hashtag Banking and Social Commerce
Evolving
•Social, Mobile, email based payments
•Card-less cash
•Contactless Payments (tap n-pay)
•Biometrics & Ultrasonic
Kotak Innovations Journey in payments so far
Digital Payments
Mail Money – Email ID based P2P
Message Money –
Mobile no based P2P
PG – P2M tie ups with merchant
aggregators
mStore –P2M – Flight
& Hotel bookings
Hashtagbanking –P2M via twitter
Payments Journey Ahead
Payments App & Kotak Wallet
UPI
Bharat Bill Pay
Domestic Remittance Platforms
Reimagining Payments - Road Ahead360 degree presence in payments
Instant Pre approved personal Loan
Digital Lending @ KotakDelighting internal and external customers
• Instant credit & complete paperless process takes < 60 seconds
• Digital agreements, all a customer needs to authenticate with their Netbanking passwords
8.1
3.9 3.64.2
KOTAK INDIA AVG GLOBAL AVG AUS/NZ
10
8.1
5
3.1
KOTAK INDIA AVG GLOBAL AVG
AUS/NZ
Change in 90-day digital and mobile activity Percentage point change
Digital activity Mobile activity
Kotak leads over Indian and global banks. Kotak’s digital activity level change is at 8.1 pp vs India Avg. 3.9pp and Global leader avg. 3.6 pp
Mobile activity change for Kotak at 10pp vs India avg. 8.1pp
Monthly Login frequency on mobile highest in the country
Performance in global benchmarking metrics Digital activity levels grew at the fastest pace
Results as per finalta Global benchmarking survey, conducted in 2015 -16 on 100+ banks. Aus/NZ scores included as global leaders in digital metrics.
Sr. No. Bank Name Volume (Actual) Value (In Rs'000) Share of Mobile Txns Share of Mobile value
1 STATE BANK OF INDIA 1,51,83,778 17,63,60,419 38.4% 36.0%
2 ICICI BANK LTD 70,01,721 10,57,72,562 17.7% 21.6%
3 AXIS BANK LTD 60,28,436 6,26,78,529 15.3% 12.8%
4 HDFC BANK LTD. 39,13,278 8,71,68,948 9.9% 17.8%
5 KOTAK MAHINDRA BANK LTD 17,00,472 2,32,48,260 4.3% 4.7%6 CANARA BANK 6,87,099 39,64,850 1.7% 0.8%
7 YES BANK LIMITED 5,96,699 31,24,548 1.5% 0.6%
8 BANK OF BARODA 5,73,786 22,41,224 1.5% 0.5%
9 CITI BANK 5,71,462 67,63,207 1.4% 1.4%
10 UNION BANK OF INDIA 5,68,990 39,18,494 1.4% 0.8%
Top 10 banks in mobile transactions Kotak is 5th largest both in terms of value and volume
Source: Mobile banking transactions report, RBI, Dec 2015
0
5
10
15
20
Apr-15 Mar-16
VolumeIn Lacs
0
1000
2000
3000
Apr-15 Mar-16
Value in cr
Kotak Mobile banking Transactions
Analytics led approach for product design Online customer transaction behavior analysis led to launch of Kotak Jifi
50% of applicants were below 35 years
of age
Looking for A/c which suits their digital
lifestyle
55% of the existing Kotak
customer were on Facebook
Social behaviour suggested applicant
trusted reviews of their friends
more than marketing
60klogin attempts exited at DAC page
Kotak Website visitors search for matrimony options
7%
Delay in receipt of DAC
Opportunity to target this segment
Introduction of Voice DAC and Auto DAC
Promotion through Third Party Websites
(Matrimony Portals)
Big Data & AnalyticsWeb trends & Google analytics helping improve transaction experience
Analytics
Insight
Action
Transforming Customer Experience
•Customer Transaction Convenience
•Cost savings
•Increasing Productivity
•Enhancing revenue generation
Physical & Digital Co-existence Digital Transformation
Process Reengineering
• Physical movement of documents
• Wet Signature Processes
• Assistance Driven Processes
• Multiple Hand-offs and manual interventions
Re-imagining Branches Teller Automation & Self Service Kiosk Cash Deposit/Cheque Deposit Kiosk
Digital Performance Framework
Productivity
Efficiency
Revenue
Acquisition
Customer Experience
Cost Reduction