India's largest private sector bank, HDFC Bank has partnered with several fintech companies and startups to revamp its core banking architecture as well as several other digital processes.
This is in line with the bank's plan to launch its revamped mobile and internet banking platforms as well as the enhanced version of its payments application, PayZapp.
These launches are expected to speed up the bank's digital advancement initiatives, with the payments app aimed at competing with other third-party application providers in India's Unified Payments Interface (UPI) space.
Currently, Alphabet's Google Pay and Walmart's PhonePe are the top two mobile payment services in India.
HDFC Bank’s CIO Ramesh Lakshminarayanan told the Bharat Fintech Summit 2023 that the bank is working closely with fintech partners and new-age database experts from startups in Mumbai and Bengaluru to address fundamental flaws in it current banking architecture that tends to hit a single database for all transactions.
“HDFC’s entire wealth management mobile app experiences are undergoing a change. We're working to completely digitise our small and medium-sized enterprises (SME) experience,” he added.
The tech teams at the bank are looking at digital transformation as an opportunity for fresh technology investments, Lakshminarayanan said.
The bank has ramped up its IT-related spending over the past three years by investing in startups to become more agile in delivering better customer experience.
It’s high time to remember banks can’t run a monolithic database or Java Virtual Machine (JVM) structure and hope that it will scale up, Lakshminarayanan said.
“The biggest financial institutions are still running on stored procedure-based platforms. This is the change that every bank has to do today,” he added.
Lakshminarayanan said the bank will focus around 60-65 percent of digital initiatives on customers in rural and semi-urban areas.
For instance, an agriculture and fintech collaboration has helped the bank launch a loan platform, that could “amazingly” disperse cattle finance in “exactly five minutes”, a process which usually took up to 15 days, he said
The bank also runs a digital distribution platform along with a startup, that aims at providing an “honest assisted journey” to rural customers who tap computer service centres or digital support providers externally.
This holistic platform is said to cater to a lot of services like balance inquiries and bank account statements.
“We call it the bank outside a bank kind of a platform, that can perform acquisition, all kinds of equity from current account, savings account to selling a tractor finance loan or dairy finance through one particular app,” he explained.
This new platform has reportedly been “phenomenal” for the bank’s rural digitalisation efforts.
He added that HDFC is collaborating on a program with six other banks to digitally authenticate land records and similar rural-based collaterals.
HDFC has also set up a digital factory and an enterprise factory to roll out new digital products and services, pivoted on APIs, data and cloud.
The digital factory, backed by fintechs has the ability build new businesses and solutions on new tech stacks for HDFC.
The enterprise factory supports the bank in upgrading legacy infrastructure, decoupling existing systems and enhancing other capabilities.
In a notable use case, the bank along with a US-based startup, working on voice technology, has deployed bots in its call centres that could easily flip between Hindi and English language.
The same bot also reads the Twitter feed and then responds back through an automated or manual system. It also powers HDFC’s services through WhatsApp, he added.
HDFC is also currently pushing for a new mobile app with multi-language capabilities.
Moreover, with the help of the digital factory, HDFC has “successfully” revamped its trade platform into cloud-native architecture in 16 months, Lakshminarayanan said.
“We are running about 18 to 20 programs like these somewhere across the board and are open to opportunities and collaboration,” he concluded.