RBL Bank’s journey from a legacy to a new age bank

In the last six years, RBL Bank has come a long way from being a legacy bank with a rural presence in a restricted geography and disconnected branch network to a new-age, pan-India multi-service and innovation-driven bank. Abhishek Raval speaks to Sanjay Sharma, Head – Technology, Innovation & Customer Fulfilments, RBL Bank.

RBL Bank, a private sector bank operating in the scheduled commercial banking category, started off with rudimentary and disconnected IT systems. The Bank’s branches were operating with independent systems isolated from one another, resulting in issues in the centralised management structure and the absence of a uniform standard among customers and the management team.

Thus, there was an immediate need for a Core Banking Solution (CBS) to help centralise the RBL’s activities. Finacle, one of the leading CBS products from Infosys, was shortlisted after a thorough evaluation of other similar systems in the market. This was coupled with a complete overhaul of supportive structures, including networking and infrastructure, to ensure seamless flow of data to and from the CBS. Security was given the necessary priority, and access controls, data security and policies were established. Branches across geographies were connected to CBS over a robust network. This was the first phase of RBL’s technology upgradation spanning over 10 months.

So, what did it achieve? The customers of a specific branch became customers of all the branches of the Bank. They could bank with any RBL branch anytime, anywhere. This made it easier and convenient for RBL to offer multiple products and services to its customers. Thus, the new CBS helped to set up the process centralisation for the bank. This constituted RBL Bank 1.0 Phase — ‘Building a robust modern centralised infrastructure in place’.

As the Bank grew and witnessed a huge growth in transactions across multiple channels, there was a need for more modern ecosystems around the core system. RBL Bank 2.0 was about having enterprise architecture around the CBS, which would further enhance the Bank’s capability to expand its services arsenal. It covered processes and systems such as HR, cash management and wealth management systems, and offering products in the rural, retail and corporate banking space among other areas. The objective was to grow and at the same time compete effectively with other banks through end-to-end IT enablement.

Once the core infrastructure was in place, work on future ready enterprise architecture started in earnest. After detailed deliberation and technology stack benchmarking, RBL deployed IBM’s Enterprise Service Bus (ESB), a leading middleware product. “We selected the IBM stack and deployed it as a standard stack for our data centre and then added Business Process Management capabilities for a seamless, centralised workflow,” informs Sanjay Sharma, Head – Technology, Innovation & Customer Fulfilment, RBL Bank. The Bank used the ESB to simplify and standardise intercommunication between the ever-increasing services, processes and applications. It also prevented various applications from interacting one-to-one, thereby limiting the complexity of the interconnections. The ESB provided a seamless routing architecture, where every communication between a process, application and service was routed through a single ESB.

This IT upgradation also helped to easily manage a significant business acquisition. When RBL Bank bought Royal Bank of Scotland’s (RBS) credit card and business banking portfolio, the associated data was effortlessly migrated to the Bank’s systems. It also allowed account managers to cross-sell smoothly.

Even as the IT team standardised the architecture through ESB, the banking sector was increasingly adopting mobile technology. With a long-term view on mobility, RBL purchased IBM MobileFirst, a leading mobile application platform, to speed up the development of mobile apps and efficient data systems. This also led to the launch of the mobile banking app — RBL MoBANK — a one-stop app for all banking needs. In the last 18 months, the Bank has been assiduously working towards developing mobile applications across businesses. These include RBL Pay, a UPI app, and MY Card, a credit card for standalone credit card customers.

After mobile and internet banking, credit card and ATM, RBL shifted its focus to API banking, which has witnessed a huge interest in the last two-three years. “We introduced our APIs on a portal so that developers could use them unhindered through a subscription-based model. We were the first Bank to do so,” Sharma says.

The API platform helped RBL to embrace the concept of ‘Open Banking’ and offer ‘Banking as a service’ (BaaS) wherein any partner (FinTech, payment provider, payment company, payments bank etc.) can seamlessly use the Bank’s API infrastructure to provide any banking service or offer innovative products.

In RBL’s entire IT journey, one of Sharma’s most important decisions was to host the data centre on a private cloud instead of on a captive data centre. The Bank hosts its data centre with Netmagic, a leading infrastructure management company. Since RBL was a new-age private sector bank and had to scale up fast, it was felt necessary to first experiment on a private cloud and work on an Opex model. “We were probably the first bank to experiment with a private cloud,” Sharma says.

With remittances forming a large part of its business, RBL on-boarded multiple partners on its portal to facilitate remittances across the country, making it one of the largest banks in remittances in terms of volumes.

RBL Bank launches RBL Bank iLabs

It has become imperative for banks to view FinTechs as strategic partners and work with them on a long-term basis. RBL Bank, along with industry leaders such as IBM, PwC, Microsoft and NPCI, launched its maiden Hackathon — a forum for startups to showcase their innovative products and services. The Bank exposed its API to the participants and was able to garner more than 200 interesting ideas. These included AI-based smart assistant, biometric authenticator, wealth management solution, plug-and-play solutions for SMEs and financial inclusion solutions.

A notable innovation was a payment ring, experimented only by giants such as VISA earlier. It has a chip embedded on it and is similar to an NFC phone/card. The customer can tap the ring and the payment is processed instantly. Another startup came up with an Artificial Intelligence (AI) based reader that can use SMS and WhatsApp messages, and other relevant platforms to send an ‘payment due’ alert to a customer. It’s a simple, interactive and effective tool for multiple services.

Other interesting ideas included a Blockchain-based solution for loan processing, wherein the loan proposal is sent to the bank consortium to check for pending payments and loan history. This can be a useful tool for maintaining high asset quality. The Bank is already a part of a few Blockchain consortiums in India. FinTech companies in the financial inclusion space also showcased technology innovations including one on micro transactions. It was a useful exercise for the Bank employees who learnt how to think differently.

RBL Bank’s innovation and development centre in Bengaluru

RBL Bank has decided to set up a specialised centre in Bengaluru to drive innovation in collaboration with partners and FinTechs. It will be a hub for startups and institutions such as iSPIRT, which is particularly working on solutions around IndiaStack, DigiLocker, eSign, Aadhaar and eKYC. The Bank is actively looking at simplifying small account on-boarding, creating use cases for financial inclusion because eKYC, eSign, Aadhaar through the centre. This is precisely the reason why a dedicated pool was created at the Innovation and Development Centre. In fact, IITians have been recruited fulltime to work on specific IndiaStack-based use cases. Innovation is at the core of RBL Bank 3.0 as it enables the Bank to compete with other banks due to its technology innovation and unique services.

Risk Management

Since its rebranding, RBL Bank has been able to rein in NPAs through effective risk management practices. “We have a robust risk management framework with effective controls and early warning signals, auto alerts etc. We are currently working with SAS for enhancing operational risk and fraud management systems. A few initiatives in credit and market risks are underway,” Sharma says.

Cyber Security

RBL Bank, which has an unwavering focus on security, works with Palo Alto Networks for their firewalls and other devices. This enables the Bank to detect security threats at an early stage and deal them with effectively. There was no impact during the recent WannaCry ransomware attack because all systems were properly configured and controlled. RBL Bank has also established internal discipline along with its systems to safeguard assets. Most companies struggled on that front but “For us, there are clearly defined policies. Laptops can be used only by legitimate users. Internet, USB drive, VPN access policies etc. are clearly defined for internal and outsourced employees. Thus, active vigilance on both the governance technology side, be it endpoint, firewall, IDS or IPS, helped the Bank to successfully thwart WannaCry and make it resilient enough to similar cyber security threats in future. Ethical hacking, 24×7 website monitoring and tie-ups with partners for scanning the dark web are included to ensure a sound security framework,” Sharma states.

Third-party partners can also become a source of security threat. They are asked to work only on thin dumb clients. This minimises the possibility of data theft or tampering.

Going Forward

Financial inclusion will remain a big focus for RBL Bank which has already developed multiple innovative solutions for the same. The Bank launched micro ATMs that are a combination of a tab for instant account opening. It has Aadhaar-based authentication and a card slot for reading the customer details. It not only helps to on-board the customer quickly but also helps in speedy collections. These devices have been provided to business correspondents, apart from the Bank’s employees who source the financial inclusion business. These initiatives have helped the Bank to acquire a lakh of accounts per month.

On the digital side, particularly in retail banking, the Bank launched an online paperless account opening process. The focus is on maximising the use of digital channels for acquiring customers through non-traditional sources. “We are also acquiring customers through the payment providers. Customers download the app through the Bank’s platform though we also offer them our products directly. The payment providers use our platform to on-board their customers. Since we have the customer data, we are also in a position to offer products to them,” Sharma adds.

RBL Bank plans to become a ‘Digital First Bank’ by 2020. The thrust now is on implementing Robotic Process Automation (RPA) and replacing humans with robots for repetitive manual processes, thus freeing up resources for more value-added functions and initiatives. This is possible with Straight Through Processing (STP) at the back-end and automating processes. This saves tremendous manpower resources, especially on weekdays and during the month-end. It also helps to lower the turnaround time (TAT), leaving customers satisfied with the Bank’s service. In the next six to nine months, all of the Bank’s major processes will be RPA-enabled.

In the coming years, RBL Bank will continue on its transformational journey — as it seeks to further revolutionise its banking operations through technology and innovation, and offer vastly superior products and services to customers.