ICICI Bank’s Balakrishnan: “Going digital doesn’t mean giving away money”

• The key to getting customers to go digital is getting them started, not giving away money
• Targeted solutions can also reduce branch traffic and help shift customers from cash to digital solutions
• Branches still play a role, even if it’s far different than in the past

Long known as one of the most digital banks anywhere, ICICI Bank is undertaking a slew of initiatives to maintain its lead and, very importantly, continue to enhance customer experience.

The biggest impacts of digital

The area where digital has had the most impact is in ICICI mobile transactions. Five million out of 90 million customers are regularly using mobile for account-to-account transfers and bill payments. A related area driving mobile usage is the unified payments interface (UPI), which Balakrishnan called a “super hit”.

Madhivanan Balakrishnan, chief technology and digital officer, ICICI Bank

The key to success, he said, is getting customers started. Once a customer does two or three transactions on mobile, it’s smoother and they’re more likely to continue using. “This is big. We didn’t give away money to get people on mobile,” said Madhivanan Balakrishnan, chief technology and digital officer, ICICI Bank.

While consumers do have concerns about mobile, it is actually more secure than many other types of transactions, especially because the phone is identified. According to Balakrishnan, the bigger issue is when customers are swindled using social engineering.

While mobile works for many people, different segments still do have different preferences. “Youngsters are coming more and more” to mobile, he said. For them, mobile is huge. Consumers over 45, on the other hand, prefer the internet. “Overcoming their fears is easier for internet banking. Senior guys, they’ll praise our internet banking,” Balakrishnan noted. What the bank does, then, is to create multiple solutions for specific customer segments.

Another area where digital has had a big impact is on underwriting loans. By using digital solutions, the bank can make small loans much more cost-effective. “Digital underwriting is continuously evolving”, he said, and is moving towards augmented intelligence for scoring.

The key success factor for going digital is making use cases so simple that the bank doesn’t need to advertise them. “It has to work every time. It is very specific by use case. That’s broadly the story in what works.”

Using robotic process automation

ICICI has also been actively using robotic process automation (RPA) to automate hundreds of processes. Rather than driving robotics from a central location, though, Balakrishnan said “we let users say what they want to automate.” When they come up with ideas, the bank assigns partners to help with redesigning the process and with the implementation part. Whereas more than 40 people used to answer email, for instance, 60% is now processed using RPA. “The consumer doesn’t even know there is artificial intelligence (AI) in the back end.”

While many of the RPA implementations are for customer-related processes, a significant number have been for internal support. As one example, the bank’s 80,000 staff used to call regularly for IT support. The bank already automated 40% to 50% of those queries.

The next stage will be moving from using RPA for routine processes to using it for unstructured and automating decision-making. There will be a big impact from using natural language processing (NLP) for chats, for instance, as much of the call centre load can be taken away, leading to reductions ininquiries and staff.

The bank is moving away from business intelligence that uses straightforward regression models to produce standard reports towards using machine learning for highly complex analysis in areas such as operations, human resources, marketing, or risk alerts for large exposures. It is also looking how to move standard MIS, which uses structured low-complexity data, into machine learning. “We have had great success in structured machine learning for unstructured data,” he said.

The bank is using enhanced analytics in a multitude of processes, from creating dynamic credit scorecards and making more-relevant next best offers to identifying steps to enhance employee productivity based on their performance. The analytics uses both quality structured data and highly-complex highly-unstructured data.

Branches have a role – and are also going digital

Nonetheless, customers still come to branches, though it is often clerks rather than the account owners who come in for cash deposits. The bank is working to automate services using technology such as cash handling machines to reduce manual processing.

The bank has also converted half a million active automated teller machine (ATM) users, out of twenty million, to doing more on ATMs, including loans. “The ATM role has been changed from an access device to selling products,” Balakrishnan said.

Another example for reducing branch traffic, Balakrishnan said, is giving delivery drivers on motorcycles a small credit line on their mobile phones, based on their cash collections and deposits. The drivers then start using UPI on the phone to get the money they need, increasing usage of mobile payments for their deliveries and reducing branch usage as mobile payments replace cash. “Productivity goes up double,” he said. With “this kind of initiative, you remove cash from the system.”

Balakrishnan believes that cash that flows into branches will go away. “Either you start levying fees (for cash handling) or you integrate them up the digital path.” Once branches cut out cash, “the branches become like European ones, with advisory services for the top of the pyramid,” he added.

Leveraging the insights

While ICICI has a wide range of ongoing digital initiatives, a clear theme running through is a focus on customers’ needs. Continuing to leverage newly-emerging technology and tailoring solutions for each customer can continue to drive growth at ICICI as well as other banks that seek to learn from its success.