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Kotak Mahindra Bank’s Deepak Sharma on new payment services, security and convenience, and mobile banking

Kotak Mahindra Bank last month launched KayPay, a payment solution which uses Facebook credentials, to transfer money to people without needing to know their bank account details. Deepak Sharma, executive vice-president and head of digital initiatives spoke to Medianama about how banks innovate with social media, launching a new email-based payments service and how customers prefer security over convenience during transactions.

On launching KayPay and learnings got from transactions using social media

Deepak Sharma: KayPay was an innovation where we wanted to see how payments can be made in a more frictionless manner and be combined with social media to see what kind of ease and adoption it brings in. But there was also the intent to learn about customer sense and behaviour and see how a product like this can continue to grow and form in a manner customers would find it easy and acceptable. I think we had some great learning in the last four weeks leading to now, post our launch.

In terms of learning, we had three things in the last four weeks. One is people are looking at something which is easy and frictionless for payments. And the kind of feedback we got suggest that. Because we haven’t gone out and marketed this product or over communicated. Since we launched it with social media, for the first four weeks we allow the product to come more from an experience of a customer  rather than over communicating. And that’s how we create a product or any innovation. We w
ere not designing for volume in the first four weeks  and we still had more than 10,000 people who came to the site and they have logged in and registered themselves to initiate payments.

Barring the coverage we got in the press and media, we’ve had no other promotion and I think that’s an encouraging number to get.

Of course there were some concerns on security. The communication in the media was bad and we could do a lot better.  We need to say that it’s as safe as any bank transfer and we are doing a lot in that regard but I think there are still some questions on people’s minds.

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Third is since we launched this product on Facebook, I think people expect that this will work for those who are not on Facebook . Of course people still need that comfort that this is as safe as any payment transfer using a bank account.


Frequently asked questions on KayPay by users

Deepak Sharma: I think the questions people have been coming back to us have been what the media have been asking on how safe it is. People aren’t saying that it’s not safe, but want an assurance that it is a two-factor authentication and would follow all the process one would follow for any bank-to-bank transfer. Once this is communicated well, people are not averse to the service. And as I said, we haven’t started any kind of major marketing and promotion at this stage. The idea was to listen to early customers and adopters. And as we learn, we are also ensuring that the content and some of the videos and demos are attuned to educate the customer on how to use the service and the safety aspect of it.

On marketing new products

Deepak Sharma: So social media has this viral factor. So one of the interesting things is that there are people who are using KayPay and that they like a product and hey share it with their friends. Those who receive money will register for the service. So our premise is not that we don’t want to market  the product. It’s a great product but we want to listen to the early adopters and customers about the whole experience. Because once you start going and marketing a product and the real learning gets diluted and that’s not what you want to do at this point.

Transaction costs associated with KayPay

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Deepak Sharma: The KayPay service uses the IMPS network. For us the cost is how much it takes to complete an IMPS transaction. This service is only available through 28 banks which have the IMPS facility and the IMPS transaction works out to be Rs 3. As of now, we don’t charge the customer for the transaction and the whole cost of managing the whole thing which is obviously beyond the IMPS cost is managed by the bank . So we absorb that cost right now. The total cost of the KayPay transaction is a mix of a fixed and variable cost and frankly we haven’t gotten into that detail right now. This is a product we have launched recently and we are using it as a learning  and we keep this as a part of our innovation budget. So we do not account for profit and loss for such projects for at least the first three months of the launch.

On Mail Money, an email-based funds transfer service

Deepak Sharma: We also launched something known as Mail Money. Mail money is a product that we launched for existing Kotak customers who can by keying an email to beneficiary can initiate a fund transfer through our secure net banking environment. That service was very recent. You will see our communication on that service soon. But right now it is difficult for me to give those numbers upfront because we are making that service available in our mobile device in the next few weeks. We just launched it on our internet banking but it will also be available on our mobile banking and we are also going to release some promotions around it. So maybe in about four weeks I will be in a better position to speak about it.

On balancing security and convenience 

Deepak Sharma: I would say both are interlinked. While the ease helps in e-commerce site, buying groceries and booking a cab helps when we talked to our customers when we launched Mail Money that they wanted security. The product like that was launched with a two step authentication. The first thing we did was understand from our customers, whether this was a cumbersome process with different types of authentication that we have even after a net banking login. So that makes it a three tier authentication. I was surprised when we heard the feedback  and a majority of our customer s said that they did not find it cumbersome . They find it more safe and secure. If they have to send another password over the phone to the beneficiary they know that the transaction is true. Because when it  concerns money, people always look for something which is secure and convenient and not convenience at the expense of security.

We keep doing these surveys with focus groups in different customer segments. Because any product, either existing or new, we always look to bring the right balance between risk and convenience that should be married. As a part of this journey we obviously showed demos and shared these ideas a focus group of customers. In the case of Mail Money, when you make a transfer using net banking, you get two passwords.  One passwords comes to the sender and one the beneficiary gets. And both the passwords have to be entered in order for the beneficiary to have that amount credited to his bank account.

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When we launched mail money we looked at whether we were making it a bit too tedious by having two different passwords which is generated and sent to the beneficiary. One password is auto-generated by the bank and the second is what the sender has to communicate. So we obviously spoke to the people who were using it and checked with them what their the experience was. We also went to those who were aware but had not used the service and the third set of people who were not aware at all and had not used it. About close to 80% of the people we spoke were pretty fine with the two passwords, because it is secure and they don’t mind communicating this password to the beneficiary, because they know a genuine transaction has happened and they are able to communicate the password.

This is not one off thing, and we continue to do it regularly with every product to see what is the user acceptance and the feedback is.

Other payment services based on social media

Deepak Sharma: I can only speak about Kotak Bank’s product. But frankly, we’re not looking at it as competition. We’re looking at customers and at the opportunity we have and what is the problem we are solving. If you ask in the context of KayPay, it is the first bank agnostic payment transfer payment platform. But each of our product, be it Jiffy bank account we launched or the Mail Money we continue to monitor closely what is there on the social platform. So I would say any of our products is not a reaction to what others are doing in the market, but it’s more about what customers are looking at and how we can delight them.

Developments in mobile banking

Deepak Sharma: I think we have a complete product suite. I think we a complete set of native apps. Today our mobile banking platform is designed for multiple platforms, not just using iOS and Android. We also launched our app for Windows customers a few months back. We also had an old existing app for BlackBerry customers. The numbers for them obviously have not been good but I think between the Windows, iOS and Android we offer all the platforms . And we also have an app which is designed for the tablet which has a larger surface. In terms of overall products, again, we keep listening to the customers experience and keep bringing in the new versions. So every three-four months we keep adding functionality to make it more richer. Last time we realized that customers were not just looking at banks for payments but also wanted to know more what they can do with their bank account, so we integrated travelling and booking tickets with our core banking software. So one can book a flight ticket and very soon a hotel room with a one click payment through our banking app. We also brought in device registration and were one of the first few banks to have device finger printing so that itself made the application far more secure and it can be accessed only from three registered devices at any given point in time.

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