RETAIL BANKING | Staff Reporter, India

How a ‘business first innovation' model boosted HDFC Bank's digital transformation

The bank worked closely with its business units and sister organisations to streamline innovation metrics.

As HDFC Bank’s senior vice president and head of digital transformation, social business & new media and mobility banking, Rajnish Khare is responsible for the essential implementation of innovation in the bank, as well as its digital, social, and mobility strategy. Asian Banking & Finance caught up with Khare to talk about the lessons they learned during the bank’s digital transformation and what’s next after digitalisation.

What are the most important factors for the success of HDFC’s digital transformation?
Our focus at HDFC Bank has been on agility and outcomes. We are very clear about the fact that our innovations are successful only when ideas become actions. Here are the key factors that I hold responsible for the successful digital transformation of HDFC Bank:

Rigorous process and approach to innovation: We have successfully made the innovation process repeatable and scalable. The effectiveness of the process is further improved through productivity gains delivered by digital collaboration tools.

Business First Innovation selection model: We work extremely close with our business units and sister organisations to ensure that all innovations are closely tied to business and customer metrics. Therefore, everyone is involved in making the solutions a success, and is of direct benefit to our customers, employees, and shareholders.

Ecosystem approach to include 360 stakeholders: We have not stopped at organisation and customer only. As mentioned above, we have extended this culture of innovation excellence to partners across government sector, regulators, startups, and academic institutions as well.

Clear understanding of the emerging digital customer: We are not only relying on past understanding of our customers but have evolved a new segmentation approach that focusses on the digital evolution of our customers.

Building internal, digital capability via the Centre of Digital Excellence (CODE): We are completely committed to making HDFC Bank the most digitally mature organisation in the banking domain. To ensure this, we have created CODE to deliver knowledge around areas like digital product development, customer journey, user experience, digital marketing, data science, and many emerging areas. This will allow us to empathise with customers better and deliver true value.

What challenges did you encounter along the way and what are some of the lessons you learned?
Having worked for almost twenty years in the digital and innovation space, here are some of the practises that I was able to institute at HDFC Bank that prevented many key issues from surfacing:

Having a clear strategy and methodology: One of the biggest challenges whilst working in an abstract field is to go in without a watertight approach. Strategy and methodology helps to galvanise the team, rally support across the organisation, and remain focussed, especially during the incubation phase.

Hiring a diverse team: Having just one or two people for innovation is doing lip service to innovation that is doomed to fail. Our success has been in our ability to identify and attract a diverse, young team that has a bias for action. This includes people from inside as well as outside of banking, product development shops, startups, andpremier consulting organisations. Their collective energy, when available to rest of the organisation, leads to alchemy.

Move from push to pull innovation: Key pillar of our innovation approach is Business First approach, our work is aligned very closely to business. It is kept front and centre. This increases ownership across the organisation.

Focus on results and right KPI: Since we are part of the Information Revolution, all our actions and outcomes are measured. We have been able to identify certain KPIs captured across the innovation lifecycle that allow us to intervene, learn, and improve. This way you can never fail, you only learn. If these are not in place, the innovation practise will surely fail.

Business impact approved by CFO’s office: Another important step that we were able to secure is to ensure that all innovations budgets have a rigorous financial approval process. This keeps us in the startup mode constantly, and often pushes us to ask the tough questions that ensure that only the strongest ideas make it through.

I must add though, that without the complete backing of our senior management, I would not have been able to put these learnings into action.

What is next in HDFC Bank’s digital transformation journey?
Our focus is on the transition to our new Evolutionary Innovation Model. Here, the focus will be greater decentralisation of innovation across the organisation. Initiatives like CODE, Internal Collaboration, and Digital Innovation Summit are all poised to make spontaneous innovation to happen across various businesses.

We are also betting big on moving from an organisation only approach to an ecosystem approach. We believe that the more players that we can galvanise, the better the outcomes. Part of this approach will see us collaborating with some of the largest tech companies in the world for conversational banking, home banking, and a fully paperless organisation.

Finally, as we move out of the innovation incubation stage, our next area of focus will be to scale up our experiments to ensure that the last mile customer and feet on street employee come under the fold of each innovation. 

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