Putting Digital First & the Branch Second: Mrityunjay Mahapatra, DMD & CIO, SBI

The current trends indicate that during the next ten years many of the banking customers in India are likely to be self-directed and highly adapted to the online world. State Bank of India (SBI), India’s largest bank with a network of over 13000 branches and five associate banks, has made a significant shift in thinking, one that puts digital first and the branch second. Mrityunjay Mahapatra, Deputy Managing Director & Chief Information Officer, SBI, spoke to Ankush Kumar, about SBI’s plans for digital transformation and his two and a half decade association with the bank

Some edited excerpts from the interview:

In an age when the rapid movement of employees is regarded as the new normal, especially in the attrition-prone IT sector, Mrutyunjay Mahapatra stands out as an archetype of stability. He has been serving SBI for more than 25 years. After completing the mandatory assignments of SBI like Branch Managership, Rural Postings, etc., and handling several crucial assignments in the areas of credit, investments, forex, private equity funds, leasing custodial services and much else, now Mahapatra is handling the Information Technology wing of SBI and its associate banks.

“In the past I have served as the Regional Head of SBI in UK and as the Head of the International Banking Group at SBI,” Mahapatra informs. He thinks that he is by nature inclined towards technology and so he finds his current assignment in SBI’s IT department very interesting as well challenging. “There is tremendous amount of innovation happening in the IT sector,” he says. “SBI is making significant efforts to modernize its systems and operations by bringing in new technologies.” He shares that SBI is currently the largest IT bank spender in the country.

The Age of Technology Led Transformation

“In terms of technology advancements and process reforms, SBI is undergoing significant transformation,” says Mahapatra. But technology is evolving at a brisk pace, how does the IT team at SBI ensure that the bank is not encumbered with technology systems that face the danger of being replaced by better systems in near future? Mahapatra accepts that it is a challenge to decide what kind of technology is most suited for the future growth of the organisation. “The challenges are surely there, but there is no doubt in my mind that Information Technology is now set to bring radical change into the traditional retail-banking business model,” he emphasizes.

“Due to the large IT spending at SBI, there are some activities that may not be adding enough value to the organisation,” he says. “I am planning to replace these activities with ones that can create more business value to the organisation.” He is of the view that such an exercise will be especially beneficial for the bank in the long run. “You see, SBI is dealing with all kinds of complicated processes in many of its departments,” he explains, “and if we are able to ensure that only the most effective technology gets deployed, then the IT department can have a positive impact across the entire organisation.” He believes that this kind of strategy will help the bank in streamlining its workflow and saving time and effort.

“Many leading companies have managed to minimise the cost of innovation and the associated risks, by outsourcing their innovation related needs,” says Mahapatra. But he accepts that this kind of strategy can only work when the company is in a position to figure out which one of the latest technologies are on the forefront of innovation and which of the technologies can actually be leveraged to derive maximum possible synergy within the organisation. He informs that currently SBI is having a technology team consisting of close to 1000 in-house technicians and around 1500 members from the side of various vendors.

The bank has also started the State Bank Institute of Information and Communication Management (SBIICM) for providing quality IT training to its employees. “The SBIICM collaborates with universities, industry and R&D establishments, for acquiring state-of-the-art technologies pertaining to training and software development,” informs Mahapatra.

Innovations for Better Banking

According to Mahapatra, the BFSI sector has been one of the largest beneficiaries of the innovations in the Information Technology and Communications space. “Look at the way things have transformed in the BFSI space?” he asserts. “Few years ago no one could have imagined that online banking would see such massive popularity, but today we find that many of our customers have already moved a step ahead of online banking. They are now warming up to the mobile banking systems.”

He says that in the entire banking industry, technology has led to the opening up of new markets, creation of new products, new services, and the development of more efficient delivery channels. “Digitisation and automation are leading to the movement from traditional banking towards online and mobile based systems that give the user the flexibility of conducting transactions from anywhere and at any time,” he says.

Mahapatra agrees that IT plays an indispensable role in enabling the banks to meet the customer-service related requirements of its new breed of customers who are tech savvy and prefer to conduct their banking related tasks from their home or office. “When customers are demanding instant, anytime, anywhere banking facilities, banks have no alternative except to deploy a significant amount of IT,” he says. He is of the view that pace of change in the banking sector will continue to be swift.

“Till few years ago, we used to be satisfied with ATMs, Electronic Fund Transfers, credit cards, etc., but now banking is becoming more and more mobile based,” he explains. “You can now use your smartphone for securely conducting all kinds of banking related tasks.”

According to Mahapatra, the large banks are now deploying technologies like Big Data and Analytics to gain a better understanding of customer behavior and refine their decision making. He informs that at SBI, initiatives have already been taken to bring trained professionals for implementing analytics. “We are using analytics to generate better models for a host of banking related activities,” he informs. He says that SBI would soon be deploying Hadoop open-source software framework for analysing different kinds of data and develop targeted solutions to meet the banking related needs of the customers.

Mahapatra informs that, another way of creating value through digital is by enabling straight-through processing—that is, automating and digitising a number of repetitive, low-value, and low-risk processes. “Data churning helps us to assess and design our offering to target specific customer, keeping in mind specific products for our not so tech-savvy customers. In this regards, we have dedicated teams looking after our self hosted private cloud which is getting scaled every now and then. This also helps us in enabling to provide IaaS (Infrastructure as a Service) to other internal departments.”

“If banks are to continue engaging with their customers and deliver a 21st century banking experience, it has become necessary that they make efforts to leverage the current offerings of emerging technologies like IoT (Internet of Things) which is an advanced adaptation of cloud computing,” he added.

“Periodic review of all the IT implementations that are happening,” says Mahapatra, “is important to ensure that the innovation does not lead to cliched products.” He informs that at SBI all the hardware and software resources are reviewed from time to time. The focus is always on ensuring that quality systems, aligned with the standards and best practices, are in place. In case there is a failure, despite the best efforts, then the focus has to be on correcting the process that led to the failure. “We don’t believe in installing short-term fixes for tackling problems,” asserts Mahapatra.

Rural Connect & Mobile Banking

The efforts to encourage banks to extend their rural networks and to advance credit to the agricultural sector mostly failed in the past because the cost of developing traditional banking infrastructure in rural areas was too high as compared to the expected returns. Mahapatra is of the view that Information Technology has revolutionized the concept of rural banking. He mentions SBI Youth for India, which is an Indian rural fellowship programme, funded and managed by SBI. “Youth for India is a 13 month long programme that enables India’s brightest young minds to work on rural development projects with experienced NGOs,” he says.

Cutting edge information technology has made it possible for banks to provide all kinds of services in rural areas without having to open large brick & mortar bank branches. He informs that SBI has set up thousands of Business Correspondents (BC) across the country to improve the scope and the reach of banking services. “The BC arrangement essentially entails enrolling customers and enabling the transactions of the customers at the Customer Service Points (CSPs). The BCs also source various deposit and loan products for the Bank as a Business Facilitator,” explains Mahapatra. He emphasises that without new technology and good connectivity the BC model could not work.”Technology has a key role to play in this,” he says.

Mahapatra is confident of the mobile banking space. He says that SBI is giving thrust to the mobile banking channel and the bank will soon emerge as the top player in the segment. “We are currently engaged in completely revamping our mobile banking channel,” he says. He also talks about the SBI Buddy, which is a mobile wallet that the SBI has recently launched. “With State Bank Buddy, you can simply send or ask money from any of your contacts even if they do not have an SBI account,” he informs. The service is available to existing SBI customers as well as to non-SBI customers.

“To be eligible for downloading the SBI Buddy app, you need to be an Indian national, have a valid mobile number and above the age of 10 years. You can register to the app, via Facebook or sign up for the app via your mobile number, PIN or password,” concludes Mahapatra.

If you like the above feature ? Feel free to share your opinion or idea in the comment section below or [email protected]. The article first appeared in print edition of the January 2016 issue of The Express Computer Magazine.