Kotak Mahindra Bank Ltd. plans to hire around 400 engineers this year as it races to upgrade its technology systems after coming under the regulator’s scrutiny for lapses.
The lender, backed by Indian billionaire Uday Kotak, has already brought on board more than 500 engineers from scratch over the last two years, according to Milind Nagnur, the bank’s chief technology officer. It has pulled them from firms like Google and Amazon.com Inc. as well as from Paytm and PhonePe Pvt., Nagnur said in an interview.
With the hires this year, the bank will have achieved a “critical mass” in talent and additions would be gradual after that, he said. India’s fourth largest private lender boosted spending on technology by more than 30% to 17 billion rupees ($204 million) in the year ended March 31, making up about 10% of operating expenses, according to Kotak’s Chief Executive Officer Ashok Vaswani at a press briefing over the weekend.
The team will be seeking to overcome a ban imposed last month by the Reserve Bank of India on adding new customers through its digital channels and issuing fresh credit cards. Kotak’s governance and risk management in its technology systems are in the spotlight as the regulator had singled those out as among the reasons behind its action.
“We are going to just double up, put far more efforts, far more resources, far more money into moving this thing as fast as possible,” Vaswani said. The spending is expected to rise as the bank deepens its technology build-out, he said.
Nagnur was among Kotak’s most high-profile technology hires, alongside Bhavnish Lathia, its chief of customer experience, both of whom joined in 2022. Nagnur previously worked at the US-based fintech company Early Warning Services LLC, while Lathia spent nearly two decades at Amazon.
“We do worry about everything that you see and hear,” said Nagnur in comments before the RBI ban. “We have to worry about cyber risk, we have to worry about operational risk, human errors in sending payments to the wrong person, or geographic risk, credit and debit card frauds.”
The bank is using artificial intelligence in areas like fraud risk management, rewriting customer chat bots for better service and for sentiment analysis on the bank, leading to faster resolution of problems, said Nagnur, who recently expanded his role to also become chief operating officer.
About 98% of the transaction volume in Kotak’s savings accounts were by digital or non-branch methods, according to its most recent investor presentation for the third quarter. The bank sold 95% of new personal loans by volume and 99% of new credit cards digitally in the same period, highlighting the challenges of maintaining this growth pace with the RBI ban.
The regulator said it found deficiencies and non-compliance in Kotak’s various processes over two years — from a lack of data security and leak prevention strategies to vendor risk management. It said it had engaged with the bank but “the outcomes have been far from satisfactory.”
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“What really is changing is the backend where we are going deep into resiliency, uptime, cybersecurity,” said Nagnur. “While the digital transaction volumes are exponentially growing, you have to be substantially ready in the backend to handle these type of volumes.”
