Changing customer expectations, the dramatic pace of business growth and the emerging risk landscape have meant that Kotak Mahindra Bank has to move at a much faster pace, according to MD & CEO Ashok Vaswani.

“At this stage, it is appropriate to address the recent RBI order. Over the last few years, we had completely embraced the notion that leveraging technology is fundamental to growing the business.

“Towards this, we had significantly stepped up resources and investments in technology. However, it is evident that we have more to do,” said Vaswani in a communication to shareholders. He took charge as MD & CEO of India’s fourth largest private sector bank with effect from January 1, 2024.

The RBI, in its April 24 order, had directed the private sector bank to cease and desist, with immediate effect, from onboarding new customers through its online and mobile banking channels and issuing fresh credit cards.

In its order, RBI said its actions were necessitated based on significant concerns arising out of its IT Examination of the bank for the years 2022 and 2023 and the continued failure on part of the bank to address these concerns in a comprehensive and timely manner.

Vaswani, in his communication to shareholders, underscored that technology is going to be at the centre of the Bank’s efforts to transform and hence, scale.

Scale for relevance

“We are absolutely committed to further enhancing our resources and commitments in this area, and I am very confident that collectively, as a team – we will deliver and use this as an opportunity to leapfrog.”

“Equally important while transforming for scale would be to Scale for Relevance and not for the sake of size,” he said.

In the Bank’s last earnings call, Vaswani said: “We take every communication from our regulator very seriously and have complied with the directions with immediate effect.

“...there is absolutely no impact on our existing customers across all channels. We have been seeking guidance from our regulators on building resiliency of our technology platforms and on enhancing the experience for our customers.”

In view of the Order, the Bank has stopped digital onboarding of new customers and fresh issuance of credit cards. This has primarily affected the Bank’s acquisitions in 811 and credit card business.

Vaswani noted that the Bank has developed a plan to mitigate the impact on the aforementioned businesses. The plan focuses on protecting its existing customer base and deepening relationships with them.

Further, the Bank is accelerating the execution of its technology strategy to achieve resilience, appropriate capacity and to meet regulatory data cybersecurity standards.

“We have been on this journey for the last two - three years. We have made a number of very senior hires, significantly augmented the internal tech team and invested heavily in improving our risk and reliance.

“However, our efforts have fallen short of the expectations of the regulator. This, in our view, is on account of #1, that tech changes take time to play out, and #2 demand is growing at an ever increasing pace,” the Kotak Bank Chief said, adding the Bank has stepped up its efforts on both fronts.

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