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Corporatisation of APIs has transformed the transaction banking space, Ajay Rajan – Country Head, Transaction Banking Group, YES Bank

The overall transaction banking space, encompassing payments, remittances, trade finance & supply chain is going through a paradigm shift. What was in fact becoming a commoditized business is now re-invented to become the digital solution provider for corporates / FIs / fintechs & even the Government, says Ajay Rajan - Country Head, Transaction Banking Group, YES Bank

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What is your strategy to digitise the financial supply chain of the corporates under the TBG umbrella?
Clients often look to their banks to co-create solutions that enable ‘operational & financial’ efficiencies around their supply chain and related working capital requirements.

From a YES BANK perspective, we have worked to create operational efficiencies by leveraging technology to digitize documents, use of digital modes of collecting & paying funds, automated reconciliation etc. New age technologies like Blockchain, Artificial Intelligence, Machine Learning & Robotics have further been used to augment the Bank’s ability to enable automation, analytics & processing at scale. Our pioneering foray into API Banking which curates real-time transaction processing with instant gratification for our clients is a testimony to the leadership we have built over the past few years in efficient supply chain management. To further this initiative, especially to help our Corporate & MSME customers, we are launching our ‘API Hub’ which will be a marketplace for ‘Banking & Beyond Banking’ products for our customers and position us as a ‘one-stop platform’ for them.

Equally critically on the other side, creating financial efficiencies through Supply chain finance has also been used to bridge these conflicting interests, providing a range of financing and risk mitigation solutions, designed to optimise working capital and liquidity in domestic and international supply chains. We have always believed that the financial supply chain, running parallel to the flow of goods and information, is common to all economic supply networks, and its integration with the physical supply chain is therefore a critical and ubiquitous aspect of supply chain integration. Globally as well, supply chain finance has now surpassed traditional trade finance as a preferred financing option and similar is the trend and approach for us. Thus, integrating into the bank ecosystem and offering a fully integrated and digitized solution to the value-chain partners is a key cog to our Corporate & MSME engagement. GSTN & E-way bill linkages, along-with digitized parameterized lending have further augmented our capabilities to ramp up the supply chain financing book.

To summarise and in the context of COVID-19, companies are looking to their banks for digital solutions that can make their supply chains more resilient to COVID-19-related disruptions. Interestingly, In 2019, 88% of a corporate survey (Greenwich) respondents ranked ‘competitive pricing’ as a key criterion for trade provider selection, while only 11% considered quality of e-banking and digital platform a relevant metric. However, in 2020, we observed a sharp shift toward digital solutions, with 60% of the respondents ranking digitization as a critical metric for banking service. Companies now are demanding more and more digitized solutions be it for payments or collections. What was once seen as a value add is now considered a necessity.

Banks are now dealing with their corporate banking customers beyond the scope of the conventional banking approach, e.g. solving their tax soln challenges, HR solution, etc ? What is YES Bank’s strategy ?
Traditionally, banking relationships have been strictly transactional. Business processes have generally not figured in discussions between banks and clients. This kind of a relationship has now seen a paradigm shift over the past few years. More and more clients are looking for ‘solutions’ to grow their business, instead of seeking ‘products’ to meet specific requirements.

At YES BANK, we have followed a ‘solution approach’ and curated ‘Banking & Beyond Banking’ propositions to help our customers, to not only digitize their banking needs but also cater to their varied business processes. Under the umbrella of our API marketplace, we are working to consolidate our digital banking channels along-with our partner solutions, to offer holistic solutions to solve for our customers real business needs. The technical burden of digitization, infrastructure management and associated costs are thus taken off the customer.

Our partnerships under our API Hub umbrella have solved for varied requirements, not restricted to accounting, invoicing, payroll, inventory solutions, payables & receivables management, payment gateway solutions, tax & compliance advisory, GST registration for new and small businesses. These partner solutions are tightly coupled with banking channels to give the customer a seamless, business focussed platform.

Our predisposition to technology has fostered a very diverse clientele including established top corporates, new age startups/fintechs etc and SME/MSMEs who are at the cusp of digitization and where the ecosystem is undergoing a massive shift in how services are being rendered and consumed.

Payments, remittances, trade finance, supply chain, etc are some of the areas that you cover. Where do you see most of the action happening ?
The COVID-19 induced new normal and digital transformation are now synonymous – it’s literally like ‘Digitize or Sanitize’. The choice is quite obvious – the world, including us, has chosen to digitize.

The overall transaction banking space, encompassing payments, remittances, trade finance & supply chain is going through a paradigm shift. What was in fact becoming a commoditized business is now re-invented to become the digital solution provider for corporates / FIs / fintechs & even the Government. The secret is building faster and more flexible ‘concept to market’ technology driven capabilities.

I would say corporatisation of APIs has in a way been a big catalyst for heralding this change. Instant gratification, reconciliation & customer experience which has been the buzz word in the retail space gradually seeped into the corporate culture and treasurers & CFOs who were used to such products & experience in their personal lives (with the Amazons, Uber and Swiggy of the world) now expected the same UI/UX from the Banks in their corporate needs.

This forced transaction bankers to reinvent themselves and drive innovation & solutions through the use of technology by keeping customers at the heart of their development, we like to call it ‘Sachetised Banking’.

Even trade which has traditionally been paper based globally was not left untouched and through a hybrid push of regulatory/government initiatives complimented by technology driven banking products, we saw huge innovation with paperless & Blockchain based x-border remittances, API driven real-time digital supply chain financing and most importantly ‘data driven analytics’ becoming the new normal.

As far as supporting the TBG, which are the pillars of your digital edifice that supports the front and backend?
At YES BANK, at the core of our digital strategy is the ability to be able to move nimbly with the times so as to be ahead of the curve in terms of both customer facing innovation as well as back end automation.

Platform approach – The Bank has been progressively working on consolidating its legacy and customer facing systems to suit the myriad personalised requirements of its customer. There is now a need to diversify the customer experience to partners best suited to cater to the specific requirements of a genre or persona of customers. The platform must be able to accept instructions from various partners to streamline the overall customer experience.

Banking as a Service – We have realised over the past couple of years that the customer interface is increasingly moving from an asset based model to an access based model. This requires disintermediation of basic banking functions, breaking it down as fundamental units and making it available for the customer to fuse with their existing operating systems. We feel, in future, configurable banking accessible to the customer at the device and application of his choice will be the new paradigm of digital banking.

At YES BANK, we strongly believe in our ‘Future Now’ focus to bring in, re-imagined products & services and technology to embrace tomorrow, today. For instance, by using simple business rules and Machine Learning based algorithms, we are able to dive into the numerous customer interactions and capture data for each transaction and the massive digital footprint left behind. This helps us understand so much more about our customers, their needs and enables us to curate solutions.

As part of the workflow transformation at YES BANK, we have leveraged Robotic Process Automation (RPA) to automate operational processes and measure its value to the business. Our investments in state of the art auto-scalable micro-services environment is helping provide insights into banking services and performance. Such data-driven decisions have helped our businesses to streamline processes and bring seamless banking service making our technology ride the business objectives contributing to our bank’s growth.

To summarize our digital strategy,

  • Strategy should be SMART (specific, measurable, actionable, realistic, time bound)
  • Digitization should add value (cut the fat, don’t add to it)
  • Open Source & Flexibility is the way forward so that it does not become monolithic
  • Big bang vs. Modular approach – While digitization of all products is the way to go, banks need to split their strategy into hygiene, transformational and good to have
  • Data analytics both on micro scale (customer) and macro scale (industry trends)

This is in line with our strategy to become a transformed ‘Digital Bank’. This includes a target of achieving 80% of our revenues through digital products and services in 3 years. As sub-targets we also intend to digitise 80% of our offerings in the same time period.

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