Kotak Mahindra Bank’s New Chief Ashok Vaswani Pledges Digital Transformation Amid RBI Tech Ban

Facing an RBI ban on tech-related issues, Kotak Mahindra Bank’s new chief, Ashok Vaswani, emphasized the importance of technology in his first annual letter to shareholders. Vaswani said that the bank needs to improve its use of technology to meet changing customer expectations, rapid business growth, and new risks.

Commitment to Enhancement

“It is clear that we have more to do. Changing customer expectations, the fast pace of business growth, and new risks mean we need to move faster,” Vaswani stated. “We are committed to enhancing our technology resources. I am confident that our team will use this opportunity to leap ahead. Technology will be central to our transformation and growth.”

RBI Restrictions

In April, the RBI stopped Kotak Mahindra Bank from onboarding new customers through its online and mobile channels and banned it from issuing new credit cards. The RBI took this action because the bank had frequent outages in its core banking and online systems, causing inconvenience to customers.

Auditors’ Observations

Auditors Price Waterhouse LLP and KKC & Associates LLP highlighted issues with the bank’s IT systems, noting that the bank handles a large volume of transactions and relies heavily on these systems for financial reporting. The auditors mentioned that the complexity and automation of the bank’s IT environment impact the financial reporting process.

Kotak811 Digital Arm

From 2021, Kotak811, the bank’s digital arm, has operated as a semi-autonomous entity focused on service, user experience, engagement, and cross-selling. As of March 2024, Kotak811 had over 23 million customers in more than 1,000 cities and towns across India. In FY 2023-24, the customer base grew by about 35%, deposits increased by 38%, and overall transactions grew by 52%.

Growth Statistics

In FY 2023-24, 72% of new savings accounts, and over 50% of credit cards, unsecured loans, insurance policies, and recurring deposits were sold to Kotak811 customers.