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Kotak Bank has made a surprising move by appointing Ashok Vaswani, a global banker, as its new managing director and CEO. Before exiting, Uday Kotak had initiated a new strategy and put together a team to guide the bank’s transformation into a tech-savvy institution by focusing on building customer excellence similar to that of Amazon. Vaswani will now have to work under the watchful eyes of the bank’s founder, Uday Kotak, who is now a director on the private bank’s board. Let’s look at the task at hand for Vaswani.
A new team is in place
Over the past 18 months, the bank has hired top-tier global talent in technology, customer experience, marketing, branding, and data and risk analytics. Milind Nagnur, a professional with extensive experience at JP Morgan, Citibank, and Wells Fargo, has assumed the role of Chief Technology Officer. Bhavnish Lathia, who previously worked at Amazon in Seattle, has joined as the Chief of Customer Experience and Head of Technology. Rohit Bhasin, a seasoned expert from FMCG giant Unilever, is the Head of Retail Liabilities Product and Chief Marketing Officer. Bhaskar Kumar, with a background spanning GE Capital, HSBC, and Bajaj Finserv, has taken on the position of Chief Risk Officer. These professionals have already hired hundreds of senior professionals from global giants like Amazon, X (Twitter), OLA, Microsoft, and more. Vaswani has to nurture this new team with global experience and also take the old guard along with him.
Key pillars of the new strategy
The new strategy is built upon three core pillars. The first pillar aims to deliver an experience akin to that of Amazon. The second pillar focuses on improving the employee experience by equipping them with the right tools and systems. The third pillar places a strong emphasis on increasing productivity.
Two-in-a-Box Model of Delivery
Traditionally, banks have been structured around product verticals, encompassing consumer goods, credit cards, mortgages, savings, and investments. However, customers interact with the bank in a more horizontal manner. Under the new team, this necessitates a fundamental shift in the bank’s approach, evolving from a traditional institution that relies on IT as a support function to one that places technology and customer-centricity at the forefront. There is a partnership model in play where tech-savvy professionals collaborate very closely with banking experts. The domain expertise and product knowledge remain in the hands of existing staff.
Shifting from a Centralised Headquarters Approach
The epicentre of activity and innovation no longer resides within the Mumbai headquarters. Instead, the hubs of IT talent in Bangalore, Hyderabad, and Gurgaon have emerged as the new focal points. The entire mobile banking team, including the lead engineer, is now based in Hyderabad, while the analytics team, encompassing risk analytics, is headquartered in Bangalore. Vaswani has to make sure significant investments continue to be directed towards IT architecture, infrastructure, security, data analytics, and talent.
Rising unsecured loans
Unsecured loans, especially credit cards, personal loans, and small business loans, have seen a significant increase at Kotak, rising from 3 percent pre-Covid to a peak of 10 percent. The bank expects it to climb into the mid-teens. Similarly, the bank has established a new segment known as the mid-corporate segment. The mid-market segment presents a substantial opportunity, not only in lending but also in cash management and other fee-based products. Vaswani will have his task cut out to build these new verticals with a focus on risk management, as the probability of default is also very high in these segments.
Building a Strong Relationship with the Founder
Vaswani will need to establish a strong working relationship with the founder as well as the existing senior management team. Take for instance, Infosys saw a conflict between its founders and CEO Vishal Sikka, which ultimately led to Sikka’s departure from the IT giant. Similarly, there was tension between Ratan Tata and the late Cyrus Mistry within the Tata Group.
Copyright©2023 Living Media India Limited. For reprint rights: Syndications Today
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