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How SBI is reinventing itself to be a digital bank


In its bid to become one of the world’s top 10 global digital banks, State Bank of India has undertaken a slew of digital initiatives

Today every bank is functioning like a technology company and the whole business is seen through the lens of digital technologies. What are your observations about the banking industry?
The digital technologies have transformed every industry. There is no public or private sector – it is impacting every segment. Everybody has to embrace digital and the digital maturity level will distinguish men from boys. There are various maturity levels – firms who have started their computerization journey only based on automating the manual system as a productivity thing will now have to re-invent their own experience — both internal as well as external.

For a large organization like State Bank of India, which has 300,000 employees, 25,000 branches, 60,000 ATMs, 100,000 banking correspondents, and 500,000 POS machines, our technology ecosystem will be different. But technological maturity in the digital age is different from the quantity of technology you have. If you look at the components of digital, there are 4-5 things defining digital. These include Social Media, Mobility, Cloud, Analytics, and Internet of Things (IoT).

For example, if account opening was done in a bank in the manual manner, it has been re-imagined now. In the digital era, the customer is working in a ‘self-service’ mode. He wants to do banking in a way, place, and at the time of his choice.

Another important aspect of digitization is called ‘platformization’, where you may not be a bank but you still can provide banking services. You can look at Uber or Ola, where you create a partner ecosystem that will have to be managed by technology where many-to-many transactions will take place. While many people will be providing the service, many will consume it. The bank only gives a platform. This is where digital is going. And of course, new technologies like cloud mean that firms don’t have to buy a complete appliance. You just buy off-the-shelf products and the rest can be downloaded from the cloud. These are the things that are defining banking today.

SBI is aiming to become one of the world’s top 10 global digital banks. What are the initiatives taken by the bank to achieve this feat?
Digitization has to happen at both an internal as well as at the customer facing front. Every bank has 3 pillars – people, processes, and technology. We have to redefine all these 3 pillars. At SBI, we are doing one large project, called ‘Digital Bank’. Here, we have created 3 streams – online marketplace, financial superstore, and end-to-end digitization. For these three areas, we have defined 300-odd journeys like customer account opening, address, transferring money, buying a house, etc. Here, we are completely re-orchestrating the process, so that the customer will have an omni-channel and self-service kind of mode.

Another significant project is called ‘Office 365’, which is the world’s largest deployment in terms of number of people using it. So far, it has been deployed for 150,000 people. This will be a complete web-based and cloud-based solution. And we are the first bank to adopt ‘public cloud’. We are doing another project, called ‘Branch Virtualization’. Earlier, every branch had to have one server serving the network of 40-50 people working in a particular branch. Now, we are removing the server and putting our application on the cloud so that the banks will only have the terminal.

Besides, we are rolling out ‘Customer Relationship Management’ software that will be end-to-end and have 365 degree view, campaign management, lead management, complaint management, and customer wallet share management. Internally, we are using integrated risk management as well. These are some of the projects that we have undertaken and each one of these projects is a multi-hundred crore project.

What’s the progress on all these projects? Are they already up and running?
Some of these projects have started running. All these are being deployed in the agile fashion. Here, we don’t aim for perfection but for a minimum viable product, something which a customer can use, then we can keep on coming back, and re-define, re-imagine, enhance, and release it again after 3 months. There will be various editions unlike earlier, where we used to do once a year revision of Internet banking. Now, we will do monthly revisions.

In your journey of digital transformation, how are you tackling the roadblock in terms of changing the traditional mindset of internal as well as external stakeholders?
This is a very pertinent question. Unlike the Western countries that are at the forefront of digital adoption, we do not have homogenity in our population. For example, people in Tamil Nadu will have a different culture in comparison to that of Chandigarh. Digitally speaking, we have 4 buckets of customers – digitally native, digital migrant, digital fence-sitters, and digitally averse. The digitally native people would like to do everything on their mobile phones, social media, or with peer-level pressure. Digitally migrant (people in the age of 35-50) accept digital technologies but accept it in slow doses. It should stay in hybrid mode.

The digital fence-seaters (people who have a lot of money and achieved everything in life) try to decide. While they will be okay with ATM, they are not comfortable with mobile banking. They may be okay with computerised money transfer but not with wallets. And then there are people like digitally averse who want everything in the ‘assisted mode’ like pensioners who would like to visit the branch, talk to branch managers, and avail pension. They believe that banking is an experience that can be experienced only in a branch.

Given the fact that we have such a wide variety of customers (SBI has customers aged between 18 and 108), we need to have 3-4 variations of the same technology. Even our employees are aged between 20 to 60. The pace with which technology is changing, it is sometimes mind-boggling and very numbing. Hence, change management and pace of roll out is a big challenge. The user interface has to be very simple and intuitive like WhatsApp. Our efforts are in making the applications very simple so that even a layman can use it with ease.

Which are the key technologies that you are closely looking at and that you think will disrupt the industry?
We are looking at open source rather than proprietary technologies. Some of our database, engineering and architecting has been done on robust proprietary technologies like Oracle databases, Microsoft technologies in terms of programming, or Java. But today, since open source is a community developed technology, it has become so popular and developers are coming up in a big way and learning new areas, we are also thinking of creating a few centers of excellence.

For example, we recently did an open hackathon and we are building a middle layer called service oriented architecture, because for SBI, ‘Core Banking’ is such a massive project where we do application design to handle 15,000 transactions every second. In this case, you cannot be loading the CBS more and more. So, we are calling the application program interfaces (APIs) and we are building these APIs and co-innovating with a lot of companies, Fintechs, and start-ups. As part of the open hackathon, around 1000 teams participated, and around 3,800 people built code for the bank.

This is first time ever anywhere in the world, that such a big experiment has been done wherein we exposed our own APIs and very innovative experiences were brought out by the participants like chatbots, artificial intelligence, and face as a factor of authentication among others. I believe open source, IoT, data lake technology are some of the technologies that will completely disrupt the market.

What’s the update on Project Ganga?
We have now expanded the Project Ganga. Earlier, it started with identifying those areas where our capital is blocked where sufficient data is not available and we have to provide additional capital. But today, it is debugging and cleansing of data and we are doing on a day-to-day basis. We have increased the team and have put machine learning for validation of data so that this project goes through a process of automation. Given the sheer size and number of transactions, it is a journey where we have to continue cleaning such a huge database.

How do you see the new-age Fintech companies who are poised to disrupt the market?
The market is undergoing a churn. While a lot of Fintech companies are in the valuation game, we are in the ‘Value Creation’ game. We will have to be very careful in whatever we are doing, as we have built a trust over the years. People ask me about the market disruptors and I just say that we have the great ability to disrupt the disruptors. The superiority of data, technology, and comprehensiveness of the experience that a bank like SBI can offer, gives us tremendous ability to checkmate these disruptors.

However, it is good for the ecosystem to have these startups having a fair play in the market as well. It is bringing innovation, speed, and new thought process to the market which is good in consumer interest. Ultimately, it has to be a win-win situation for all the parties. While the new age companies will keep on operating on the fringes as they don’t have that kind of money, we will continue developing the platforms and robust systems along with security.

Will it be correct to say that in the digital disruption age, the role of a CIO has transitioned to that of a Chief Digital Officer (CDO)?   
The role of a CIO has already transformed into a CDO. There is a common saying that large IT centric organizations will not need a CIO because the CEO will act as a CIO. For instance, the CEO of any bank today talks either about digital technology or MPS. Hence, the technology and CIOs role has become one of the topmost headlines of any enterprise today. Now, many CIOs like me will sit on the board of the organization and all CDOs are reporting to me. But the business side of digital is likely to converge and the digital-only would be like a separate vertical and business unit going forward. It is very important that we get prepared for simultaneous organizational changes.

In the coming years, IT is going to be the focus area for any enterprise. In SBI, CIOs always come from the business. As rightly pointed out in the beginning, today banks are the IT companies with a banking license. In such a scenario, CIO will play a very important role that will be difficult and challenging.

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