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Less than two months ago, Karur Vysya Bank (KVB) was awarded Best Retail Bank of The Year by India Banking Summit. How did they beat the competition to get there? What gave them that competitive advantage? Most importantly, can other banks pull off such a feat too?

About KVB
Founded in 1916, KVB is a veteran private sector player in the Indian banking industry. Through its extensive network of 788 branches and 1803 ATMs, KVB has deposits of 56 thousand crores, and a total business of 1 lakh crores. With a capital ratio of 11.79%, KVB is a stable and reliable bank conforming to RBI’s standards. However, KVB had a thorn in its side — legacy systems.

Problems faced by KVB
KVB was started to address the need for SME loans and agricultural loans. It has since diversified its portfolio, but lending is one thing KVB has lots of experience in — all the more puzzling since KVB was being plagued by issues caused by not going digital. The loan application process was a lengthy offline process, and many customers were dropping off as a result. With dwindling customer engagement, KVB also began to witness its market attention declining proportionately. The solution to these issues was to digitalise — in fact, go paperless entirely. But how would a bank — a financial entity — do something so technically different from its core competencies? That is where Market Simplified came in.

Challenges for Market Simplified
Digitalisation is not just a matter of designing a mobile app and/or a web app, and connecting these apps to the banking system. When a client wishes to go paperless, we work closely with them to create a strategy that bakes a digital and paperless approach into the very DNA of the client organisation. The mobile/web app is mostly a supplement to a larger solution, and not a complete solution in and of itself.
In KVB’s case, the mobility solution provided by KVB’s core banking vendor was very barebones and devoid of features. This would be a concern as the mobile app would have to be designed to account for a simpler backend, which could not be altered. The journey from offline to online would need some significant changes inside KVB as well, since personnel would have to be retrained on how to deal with the new, more efficient processes. Smartphone penetration was another challenge – unless KVB had enough customers banking through their smartphones, it would not be cost effective. A closely related challenge was to drive smartphone-using KVB customers to install the app in larger numbers, by getting it good visibility on the concerned app stores. Ultimately, all this would only be applicable if customers continued to use the app — in other terms, customer engagement was a critical factor. To allay these concerns, we first analysed why KVB wanted to go paperless.

Why KVB wanted a digitalised loan module
India is one of the most complex, vast, and competitive markets for pretty much any large company to operate in. Given that the average Indian makes spending decisions by an eclectic mix of price consciousness and brand trust, the banking industry was a battlefield. KVB needed to entrench its market presence firmly, especially in the face of the upstart NBFCs which posed a threat. KVB also needed a solution to reach more customers quickly, as time was running out. A larger, more engaged customer base, KVB concluded, would help them stave off the competition and stay ahead of the curve.

Market Simplified’s solution
Any front-end solution we develop is meant to be simple to use and easy to understand, thanks to our carefully thought-out UI and UX approach. Our mobile app for KVB is based on an assisted model, which means it is not for the use of end customers, but for bank staff. The mobile app can be used for vehicle/retail/home/personal loan applications. The web app is for SME loans for small and medium scale industries. It is a self-service application.
Ultimately, we created the following modules for KVB and helped them go paperless:
Home loan
Loan against property
Personal loan
Vehicle loan
SME loan
Term loan

Results
Our solution reduced turnaround time by >50% for SME loans and ~33% for retail loans. The customer experience improved, owing to paperless processes, and without the need to run around filling forms. Time to market dropped significantly, and overall loan processing time also reduced. The improved strategy and its effective implementation, helped by our solutions, made it possible for KVB to win the Best Retail Bank of The Year award at the India Banking Summit in 2019.

About The Author: Khushboo Lahoti is currently working as a Business Development Executive in Market Simplified India Ltd. She is a humble renaissance person. Inventive and creative ideas are her thrust.

Gone are the days when banks moved from paper to computers and considered that the cutting edge of technology. First came the data, then the analytic tools. We are now in the epoch of using that data.

Today, banking is all about providing financial services, but we all know that in this smart world, banking somehow still lags behind on one crucial thing – Intelligence. Banking is an age-old industry sitting on a mountain of customer data. If we analyse the data with AI, we should be able to develop a completely different experience for customers.

Behavioural banking is a system where the good behaviour of the customer is rewarded. A new form of banking which is still in its infancy, it was first implemented by Discovery Bank in South Africa in March 2019. This combined healthy behaviour with banking and financial services.

Why is physical health important to a bank?

At a macro level, a healthier person is more likely to keep the economy moving for a long time than a sickly person. At a micro level, the healthier person is also more likely than a sickly one to be financially prudent. In other words, a bank that incentivises its customers to stay healthy can ensure that they become/stay wealthy.

Is this incentivization beneficial? Will it really work?

Research from Discovery Bank says, when individuals are rewarded for behaviour, they do change. In simple terms, it’s like if you asked your child to do well in exams and promised to buy him a new toy or a bicycle as a reward; chances are he will outperform himself.

Likewise, this bank will reward your good health, your family’s good health, and your healthy behaviour with vitality points. That means good health will help generate wealth. The bank can enable this by offering dynamic interest rates, vitality points for visiting the gym, getting flu shots, or buying healthy groceries and so on. This makes use of the 5-3-80 model of financial health. Five controllable behaviours of spending less than we earn, saving regularly, having insurance in place for serious events, paying off property, and investing for the long term can alleviate three key risks of unaffordable debt, exposure to unexpected expenses, and insufficient income in retirement. These risks result in 80% of events where individuals fail to meet their financial obligations. According to Discovery, the extent to which someone engages in the five behaviours correlates with their risk of struggling with debt they cannot afford, being hit with expenses they did not anticipate or retiring without enough money. Focus on these behaviours, and the financial obligations are certain to be met.

The big question is… Do we actually need this?

Early adopters and trendsetters are millennials. If we want a change or any disruptive technology to work, then the generation we should focus on is this one. Behavioural banking is very important for millennials. The reason for this is that their generation as a whole lacks the ability to save smartly, spend wisely, and meet financial needs promptly. At the same time, their erratic and fast-paced lifestyle is causing deterioration in their health as well. So by fixing their health, banks can go from being seen as money-shilling faceless corporations to being trustworthy advisors and financial partners. That’s where the future lies, and it’s up to banks to move towards it.

About Market Simplified: Market Simplified is a thought leader in revolutionising and digitising products for financial institutions by continuously innovating and simplifying finance. We empower our customers with a cutting-edge digital experience that is highly personalised and enhanced for the end users with our ‘Experience Engineering’ platform driven by Analytics, AI, Machine Learning, and Blockchain technologies. Our clientele includes industry leaders like OptionsXpress (Charles Schwab), Currenex (State Street), MB Trading, Maybank Kim Eng, Kotak Mahindra Bank, National Stock Exchange of India, and many others across the globe.

About the author: Pranay is currently an intern at Market Simplified India Ltd. He is pursuing MBA from Great Lakes Institute of Management, Chennai. He loves cooking, travelling and watching movies.