Prime minister Narendra Modi’s vision of a “digital India” has spurred on the banking industry’s digital transformation in the country. Joy Macknight speaks to chief information officer Anup Purohit about how Yes Bank is futureproofing its business.

Anup Purohit

Yes Bank, India’s fifth largest private sector bank, began its digital journey in September 2015 when it created a digital council, initially to discuss the use of application programming interfaces (APIs). Since then, chief information officer Anup Purohit and his team have worked with every business line to define the customer’s digital journey, which is then presented to the digital council. “We ensure that each business is thinking digitally, and then provide solutions to ensure that their digital journey is realised,” he says.

Yes Bank was an early adopter of APIs. “Our technology architecture must be loosely coupled and flexible to move to a truly digital environment,” says Mr Purohit. The bank focused first on a simple transaction banking API, which integrated the core banking funds transfer services API into the corporate business application, and has continued to build APIs into its products.

Microservices – which are applications broken into smaller, independent components – will play as big a role as APIs in digital transformation, according to Mr Purohit. “The recipe to achieving nirvana – that is, the point when the whole world is digital – is composed of APIs and microservices. This moves us away from point-to-point integration, which doesn’t provide the agility needed for today’s business,” he says.

Fintech engagement

The bank’s core philosophy is ART: 'alliances and relationships driven by technology'. “ART is our mantra,” says Mr Purohit. “We build alliances with the right partners and through these relationships we will co-create the banking technology solutions that address banking domain challenges and provide a better user experience.”

Fittingly, working with the burgeoning fintech community is an important pillar in Yes Bank’s digital strategy. Earlier in 2017 the bank launched its accelerator, Yes Fintech, which ran its first cohort in March and is currently hosting the second cohort. In the first cohort, the bank received 750 applications from 18 countries, from which 10 were selected for proof of concepts. The second cohort saw 500 start-ups across 30 countries apply to the 15-week programme.

The Yes Fintech team works with the business units to identify and define problem statements for the fintechs to work on. “The fintechs can create a quick and agile solution to a specific problem, which we implement and make more scalable, robust and secure,” says Mr Purohit.

Yes Bank also signed a co-operation agreement with Abu Dhabi Global Markets in October, extending its network of fintech hubs, which also includes the Innovation Centre of Denmark and MaGIC (the Malaysian Global Innovation and Creativity Centre). Mr Purohit says: “Start-ups from other countries can participate in our accelerator and we believe that Indian fintechs should have the opportunity to present in other countries. We are an Indian bank but we think globally in terms of a single platform for fintech.”

Blockchain testing

Yes Bank’s objective is to weave future technologies into the bank’s technology stack today. For example, it is working with IBM Hyperledger and Ripple on distributed ledger technology (DLT) use cases. “We have taken a multi-track approach because we don’t know which DLT will be more global, secure and flexible,” says Mr Purohit.

Using IBM Hyperledger, the bank ran a successful supply chain pilot with Bajaj Electrical, an Indian corporate with thousands of vendors. The automated and straight-through process significantly reduces the payment period for vendors because Yes Bank offers invoice discounting. “We have integrated the blockchain with APIs, so we can credit the vendor’s account as soon as it raises an invoice and agrees to the discount,” he says.

Another use is cross-border remittances using RippleNet. Mr Purohit adds: “We are working with a United Arab Emirates bank to allow customers to remit money instantly. The money lands in the recipient’s account before the remitter leaves the counter.” The solution is now ready to go live with other banks.

Banking on the future

A group within Yes Bank meets for a few hours every other day to brainstorm on the future of banking. As Mr Purohit says: “We are doing this to ensure that we don’t suffer a Kodak or Nokia moment but are futureproofing ourselves by ensuring that we are digitally ready.”

In three years’ time, India will be the world’s youngest country in terms of age demographics. Hence, the bank is preparing for the day when most customers will not want to visit the branch, or even the bank website or mobile app. Instead customers will want banking to be integrated into their apps, such as Instagram, WeChat, Amazon, Flipkart or Makemytrip.

In this, Mr Purohit says banks face a dilemma: should they integrate their products into these platforms or create their own platform that lets users move easily from the banking platform to a platform of their choice?

“Do we want the customer to come to Yes Bank or do we want Yes Bank to go to the customer? In my opinion it will be both,” he says. “Therefore, I must ensure that the technology we build today can be seamlessly integrated with the customer’s preferred platforms.”

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