It is early days within the $40 billion merger between HDFC Ltd and HDFC financial institution. The 2 monetary entities are nonetheless to do a proper audit of the IT programs in place. Nonetheless, HDFC Financial institution’s chief know-how officer Ramesh Lakshminarayan maintains it won’t be a fancy merger. Talking to Mint’s Gopika Gopakumar and Varun Sood, Lakshminarayan mentioned that the financial institution’s key focus might be on making certain front-end synergies and changing the prevailing legacy programs with new cloud platforms over the following 3 years. Edited excerpts.
What can be your technique by way of know-how integration of HDFC with HDFC financial institution?
Ramesh Lakshminarayanan: There are a number of points we have to deal with. It’s a single monolithic product sort of integration. The financial institution by no means did mortgage loans whereas the financial institution did private loans, enterprise loans. We service these loans by way of disintermediation platforms. So, now we have private loans sitting on a system, microfinance mortgage sitting on a unique system, and core banking has some loans at this time. The purpose is that now we have to do a easy integration of the mortgage programs on the again finish. All the overall ledgers will go into one single massive system. Nonetheless, that doesn’t give any worth. What’s the underlying good thing about the merger? That we must always be capable to cross promote to each the set of shoppers. That’s the place we essentially have a look at for the middleware of the 2 entities. Whether or not a buyer logs in for brand spanking new product acquisition or servicing of a product, the financial institution ought to be capable to present a centralised expertise. Somewhat than focussing on a migration technique, right here the technique might be to construct a center layer to have the ability to deliver seamless journeys collectively. Assuming a financial institution buyer needs a mortgage mortgage, you construct it into the acquisition journey on day zero with all the information factors and programs the place it’s a easy journey. Equally, if a mortgage buyer on the opposite aspect needs a checking account then you definately can provide a easy entrance finish the place you’ll be able to cross promote the financial institution merchandise. All of this must be digitally enabled.
After the merger, is the purpose to have one unified app which helps a buyer to get a house mortgage, checking account and different companies?
Lakshminarayanan: That’s proper. The entrance finish is the large focus. You’ll have one ubiquitous platform to amass and repair prospects. In any other case, you’ll not get the ability of the merger. The worth will come if you’ll be able to deliver the shopper expertise. It’s right here that we wish to deliver within the synergies whether or not it’s cellular banking or internet banking. So, there are two sorts of channels- one is acquisition channel and different is servicing channel. In each the channels we should be built-in.
Will a lot of the IT merger be accomplished by the inner IT staff of HDFC and HDFC financial institution or will you interact with a system integrator or begin up that will help you?
Lakshminarayanan: Within the financial institution, we don’t ebook all loans on core banking. Lot of retail loans are booked as standalone programs. Now we have programs from firms like Nucleaus, Oracle and so forth. There are mortgage administration programs. These are disparate product processes. Core banking doesn’t get impacted. That’s the most important benefit of merger. If two banks had merged, you’d have needed to migrate the core banking knowledge. Right here that drawback just isn’t there. One builds an API interface and connects to the house mortgage system. All the present processing can proceed within the residence mortgage system and you are able to do a backend to the financials, whether or not it’s credit score or private loans. That’s why the technological integration right here just isn’t going to be as advanced as two financial institution mergers.
Would HDFC financial institution have entry to all the information of HDFC prospects? Or will it’s important to look forward to the regulatory clearance earlier than knowledge sharing can occur?
Lakshminarayanan: We can’t share the information until the merger is full. We might be capable to have a look at the construction of information, warehousing. You are able to do a variety of design work, play with dummy knowledge, knowledge design. Once you merge you’ll be able to shortly merge the information. In any other case there is no such thing as a means you’ll be able to share. That won’t be as per buyer privateness norms. You want buyer consent for that.
HDFC financial institution had seen few outages final 12 months due to which the regulator got here down closely on the financial institution. Do you assume this merger will complicate the digital transformation course of that’s at present going down?
Lakshminarayanan: We had a brief time period, mid-term and long run technique. Within the quick time period, we moved our knowledge centres and strengthened our monitoring. Within the mid-term, we began constructing resilience, scorching DR, fast switching of DR, enhancing our capability, and altering our structure. In the long run, the plan is to exchange the legacy structure by new age cloud pushed micro-services led structure. This plan goes as much as 3-3.5 years really. It is a large transformation. The purpose of this 12 months and subsequent 12 months, each 3-4 months can be to exchange our legacy programs. We’re rewriting the cost hub. We’re rewriting industrial lending platforms and funds apps. In 4 months, we’ll launch new funds apps. We’re additionally altering our IVR platforms, our buyer grasp on core banking. There are a number of plethora of initiatives. The financial institution has 60-70 important functions. The identical ideas will apply to HDFC additionally. Modernisation of utility is on prime of our thoughts. It’s not simply making the entrance finish look good. We’re rewriting the again finish. How database work, utility layer work and so forth. We’re investing fairly closely on IT. So, we’re not taking a look at IT as price at this level of time however as funding.
Supply: Live Mint