Karur Vysya Bank: Bridging the financial Inclusion gap with efficient loan processing
About Karur Vysya Bank
Headquartered in India and founded in 1916, Karur Vysya Bank provides retail, treasury, corporate and wholesale banking services to millions of customers. The bank aims to deliver value by blending technology with tradition, and has recently won the Best In Future Of Digital Infrastructure for its digitalization from application to disbursement at the IDC Future Enterprise Awards.
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About Blue Altair
Blue Altair is a technology consulting firm that specializes in data management, API management and integration, data science and AI, digital application development and client success.
With Apigee, Karur Vysya Bank has automated loan processes end-to-end with interfaces from at least 40 fintech providers, reducing approval times from days to minutes. At the same time, it opened up new opportunities in the buy now, pay later and small cash transaction segments.
Google Cloud results
- Increase loan value fourfold in five years, with the bank integrating its loan origination system with point solutions by external fintech partners
- Strengthen the bank’s competitiveness with an improvement in ROA from 0.25% to 1.53%
- Ensure the reliable collection of data from fintech partners 24 hours a day, seven days a week
- Digitalize almost 100% of the bank’s loan processes
- Enable the bank to seize new opportunities such as small payments and the buy now, pay later market
Reduced loan approval turnaround from 10 days to 5 minutes
Delivering 'mass banking' rather than 'class banking' is the mission of Karur Vysya Bank, a 100-plus year old institution headquartered in Karur, Tamil Nadu, India. The bank relies on technology to provide quality services to customers regardless of their status. In particular, it leverages a combination of on-premise infrastructure, private cloud, and public cloud to run its systems, unified by cloud middleware.
In 2016, its board inspected its use of technology to meet customer expectations, and how it is shaped by the immediacy that ecommerce, the internet and mobility offer. The board was particularly interested in loan sanction turnaround times. That’s because loan processing could take up to 10 days, which can cause uncertainty and unease among customers as they awaited the outcome of their application.
Reducing loan processing to five minutes with AI
To reduce these timeframes, Karur Vysya Bank engaged Boston Consulting Group (BCG) for advice. Sekar Shanmugasundaran, Deputy General Manager and Chief Technology Officer of Karur Vysya Bank, who is responsible for the bank’s technology strategy, deployment, maintenance and support, visited banks in Singapore and Malaysia to study their adoption of digital processes with his team and BCG consultants. Based on this research, Karur Vysya Bank opted for a fully digitized approach, which allows customers to self-serve or purchase assisted loan services digitally rather than in-branch. This enables the bank to reduce turnaround times and improve the customer experience.
The process entailed identifying inefficiencies in the bank’s processes. "For example, our loan processing officers decided whether or not to sanction loans based on their skills and knowledge, and the details included in customers’ loan applications," says Sekar. "This could lead to errors in cases where, for example, an officer did not fully understand the relevant loan model."
Through digitization and automation, the bank could cut loan processing times from up to 10 days to as little as five minutes. However, to automate various components of loan processing, such as Know Your Customer (KYC) standards, the bank needed to integrate its loan origination system with point solutions by external fintech partners. This meant deploying a scalable API management platform to support the exponential growth in partner base, while connecting 800 branches and a 6,000-strong field force to the bank’s loan origination system.
Selecting Apigee for scalability and cloud-native integration
After evaluating several solutions, Karur Vysya Bank identified Apigee API Management as the best option based on two factors. First, Apigee is cloud-based and could work seamlessly with the bank’s cloud loan origination system and other platforms, applications and services. Second, its Out of Box (OOB) performance and scalability could support any peaks and troughs in the bank’s growing business volumes. "We completed a proof of concept and determined that Apigee could support at least 10 times the volumes we were doing three or four years ago," says Sekar. "We then decided to deploy Apigee to interface with our partners and our loan origination system, and back to our core banking system. Our entire system is now dependent on the powerful Apigee engine at the core, and this is a success story for our business."
"We completed a proof of concept and determined that Apigee could support at least 10 times the volumes we were doing three or four years ago. We then decided to deploy Apigee to interface with our partners and our loan origination system, and back to our core banking system. Our entire system is now dependent on the very, very powerful Apigee engine, and this is a success story for us."
—Sekar Shanmugasundaran, Deputy General Manager and Chief Technology Officer, Karur Vysya BankKarur Vysya Bank turned to Google Cloud Apigee partner Blue Altair to complete the implementation, starting with housing loans to showcase what the model could deliver. "We found Blue Altair highly knowledgeable and extremely enthusiastic about showcasing their work with us, which makes this a very successful implementation," says Sekar. "They did a good job and we are continuing our Apigee journey with them."
Following its success, the bank and its partners continued to add fintech partners to the rest of the loan journey. After completing its retail banking digitization project, the bank turned to commercial loans and fully automated this portfolio by 2020.
The automation and digitalization strategy of Karur Vysya Bank specially paid off during the pandemic, when face-to-face customer interactions and on-premise working was limited by lockdowns along with other restrictions on movement. "Our strategy enabled the bank to maintain business momentum while we strengthened our digital processes over that period," explains Sekar.
Growing loan disbursement by four times
The Apigee-powered digitalization has helped the bank increase its loan business from 10,000 crore INR in 2017 to 2018 to 40,000 crore INR today, while opening only 10 to 12 branches and keeping headcount growth well below loan growth. Between March and July 2023, loan business grew by 30 percent, which was possible "only because of this technology" according to Sekar. "Without Apigee, the loan processing system would not be able to obtain any data from our fintech partners 24 hours a day, seven days a week."
The bank’s strategy also enhanced its profitability as measured by return on assets (ROA). When the bank first deployed Apigee, its ROA stood at 0.25 percent, with this rising to 1.53 percent.
"Our increasing strength means our customers are happier," says Sekar. "We are growing our repeat business and can confidently reach out to new customers. Furthermore, our net non-performing assets have fallen from 5 percent to 2.56 percent, which means the loans sanctioned through our digital systems are performing well and delivering proper returns."
"Our increasing strength means our customers are happier," says Sekar. "We are growing our repeat business and can confidently reach out to new customers. Furthermore, our net non-performing assets have fallen from 5 percent to 2.56 percent, which means the loans sanctioned through our digital systems are performing well and delivering proper returns."
The performance, scalability and stability of Apigee has also prompted Sekar to extend the product to its internal systems. This would replace solutions used for internal application-to-application and API connectivity.
Other benefits the bank expects to see include lower costs through replacing its traditional enterprise service bus, reduced maintenance, and improved manageability. "Apigee will meet our full middleware gateway requirements," says Sekar. "It takes care of all of these headaches. Scalability and manageability is very easy to achieve, and skills and partners are more accessible than ever."
"Apigee will meet our full middleware gateway requirements. It takes care of all of these headaches. Scalability and manageability is very easy, and skills and partners are more accessible than ever."
—Sekar Shanmugasundaran, Deputy General Manager and Chief Technology Officer, Karur Vysya BankSeizing the buy now, pay later market
With Apigee in place, the bank is targeting the buy now, pay later market on an ecommerce provider. "If someone wishes to make a purchase online, the loan application comes to us immediately. This means we can complete the ‘know your customer’ processes in 40 seconds and return to the ecommerce platform with the result," says Sekar. "Within the next 30 seconds, we would process and go back to the retailer with a decision about whether to sanction the loan."
Apigee has also enabled Karur Vysya Bank to identify opportunities presented by small cash payments through a service based on the Reserve Bank of India’s Unified Payment Interface (UPI). This enables users to send money and make payments from smartphones using virtual payment address details only, rather than detailed bank information. This makes each transfer faster and more secure, removing friction from economic activity in India and beyond.
Sekar describes the overall experience with Apigee as a continued success. "The support we’ve received from Google Cloud and its partners has been very helpful," he says. "Apigee is scalable, robust and available on cloud, which eases deployment, while our fintech partners are embracing the opportunities it provides. I look forward to continuing to scale the product and broaden its use to our internal business environments."
"Apigee is scalable, robust and available on cloud, which eases deployment, while our fintech partners are embracing the opportunities it provides. I look forward to continuing to scale the product and broaden its use to our internal business environments."
—Sekar Shanmugasundaran, Deputy General Manager and Chief Technology Officer, Karur Vysya BankTell us your challenge. We're here to help.
Contact us
About Karur Vysya Bank
Headquartered in India and founded in 1916, Karur Vysya Bank provides retail, treasury, corporate and wholesale banking services to millions of customers. The bank aims to deliver value by blending technology with tradition, and has recently won the Best In Future Of Digital Infrastructure for its digitalization from application to disbursement at the IDC Future Enterprise Awards.
About Blue Altair
Blue Altair is a technology consulting firm that specializes in data management, API management and integration, data science and AI, digital application development and client success.