Rana Kapoor reveals how innovation became YES BANK's major growth engine

The bank pioneered the use of technology initiatives such as AI and blockchain in India’s banking space.

Rana Kapoor is YES BANK’s founder, managing director, and CEO. Under his leadership, the bank has evolved into one of the largest private sector banks in India and obtained numerous accolades up its sleeve. Asian Banking & Finance caught up with Kapoor to discuss the bank’s growth, the innovations it is adopting, and its major differentiator vis-à-vis other banks in India.

What was the journey like for Yes Bank as it goes through its 3rd phase of growth? What were the challenges you faced and how did you overcome them?
It has been a truly remarkable journey for the bank. In our lifecycle evolution, we have grown manifold from being the largest small private sector bank in 2010 to being the largest medium-sized private sector bank in 2015.

Digital and technology-driven innovation, knowledge banking, responsible banking, and a focus on future-ready human capital have been the major growth engines driving our consistent growth rate in the last few years. We had realised early on that the future of banking lies in thriving in a disruptively innovative world. As such, we leveraged technology and innovation as mission-critical pillars much ahead of our peers—pioneering implementation of several technology initiatives in corporate and retail banking services such as blockchain, banking from ERP, and AI/ML backed solutions amongst others.

The most critical challenge that the banking sector faces is the obsolescence risk of technological architecture, and business models, as well as skillsets of human capital. Recognising this, the bank’s strategy was recalibrated.

With technology fast-changing the competitive landscape, the need to grow out of legacy systems was imminent. Also, recognising the need to scale up and be a differentiator, we invested significantly in our digital transformation—digitising our products and processes through Aadhar-based authentication, Chatbots, SIMsePAY, API banking, and UPI. With a 50% market share in UPI, we have leapfrogged ahead of the banking sector on a level-playing field.

How does the bank continue to innovate and how are you leveraging these efforts to offer your customers topnotch products and services?
YES BANK, being an early adopter of technology, has established itself as a pioneer in new digital ecosystems such as payments (market leader in UPI merchant payments), API, AEPS, and blockchain technologies. Together with its ART (Alliance-Relationships-Technology) philosophy and successful investments in people, infrastructure, and technology, YES BANK is poised to be the cutting-edge digital bank in India.

Over the last few years, in addition to corporate banking, YES BANK has been expanding in the retail banking space across all products and has set-up a central data
science team to drive its decision-making culture. The bank uses advanced analytics and data science techniques to understand customers’ behaviour throughout their life cycle—from acquisition, cross-sell, and portfolio management, to retention and delinquency management. This ensures that the customer remains at the centre of our strategy wherein we create products/services based on their stated, unstated, and constantly evolving needs.

The bank also leverages on our sectoral “knowledge banking” approach across eight segmented relationship groups, which allows us to build expertise across key growth sectors of the Indian economy, thereby, helping create customised banking solutions.

Another innovation that has been a huge success for the bank is the YES FINTECH and YES SCALE (multi-sector accelerator) programmes, which have leveraged the ART philosophy and strengthened innovation culture of the bank by developing an ecosystem to co-create and interact with more than 2,000 startups and fintechs in the country.

What is your major differentiator vis-à-vis local banks?
At YES BANK, we pride ourselves on being a contemporary and new age bank. We are treating the startup community as an engine of growth. What has changed dramatically in India is segmentation and industry specialisation. You have to be a specialist today.

I personally believe that the future of Indian banking depends on the willingness and ability to foster new business and inventions, and in effect, become agents of change. To catapult the Indian Startup scenario, we have launched YES:Head-Startup—a full service banking proposition for tech or tech-enabled startups, complemented by a first-of-its-kind privilege programme.

YES BANK was also the first Greenfield Bank to be established in India 14 years ago. As a young organisation being run by professional entrepreneurs, the bank focusses on: (1) new age knowledge sectors such as renewable energy, media & entertainment, social infrastructure, and affordable housing etc.; (2) being nimble- ooted to adapt to changing scenarios; (3) unwavering focus on technology and innovation; and (4) commitment towards responsible and sustainable banking.

All of the above has resulted in enabling YES BANK to navigate exogenous and endogenous challenges successfully whilst delivering consistent profitability and best- n-class asset quality. YES BANK is the only bank in India to be selected in all major global sustainability benchmarking indices in 2017 including DJSI, MSCI ACWI ESG Leaders & SRI Indexes, and FTSE4Good Emerging Index. The bank is also a pioneer in digital banking by establishing a leadership position in new age payments lion’s share of market in UPI, IMPS, and AePS.