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Digital 2.0: Building digital stack, in-house capabilities; modernising the core

We highlight in this report how digital focus and technology-driven transformation for Axis Bank (Axis) remain key pillars of its GPS (Growth, Profitability and Sustainability) strategy. The key philosophy and strategy under its ‘silent digital revolution’ to deliver sustainable and granular growth: 1) ‘OPEN’ philosophy underpins every digital initiative; 2) follows twin-engine approach to build digital stack and modernise the core; 3) building in-house capabilities in the longer-term perspective; 4) Subzero design platform for unified user experience. Interesting initiatives and facts: i) 74%, 60%, 42% of credit card issuance, personal loans and business loans respectively were sourced digitally in Q1FY22; cost of acquisition is 70-85% lower; ii) Jarvis (its inhouse developed, cloud native, API-oriented lending platform) supports BNPL; iii) working on >30 initiatives across customer segments and customer lifecycles; iv) cobranded Flipkart Axis Bank credit card, which constitutes 15% of overall CIF with activity levels and spends being 35% and 65% higher; v) commands Payer PSP market share of >15%; vi) 4mn non-Axis customers using Axis Mobile and Axis Pay apps for convenience. Maintain BUY.

* Twin-engine approach to build digital stack and modernise the core: Axis is running a twin-engine approach to upgrade, re-platform and hallow out legacy IT stack to make it digital-ready. It has built a best-in-class in-house end-to-end digital stack. It has developed new-age digital platforms that are cloud-first, micro services enabled and decoupled (engagement layer and logic layer). While upgrading the tech-stack, Axis is focused on modernising the core, resiliency, sustainability, risk and governance, and transforming the architecture, core systems and infrastructure. The challenge for Axis has been: absence of suitable off-the-shelf loan management system to meet the flexible structure required for lending products like a small-ticket digital loans or BNPL. Now Jarvis (its in-house developed, cloud native, API-oriented lending platform) supports that LMS and has helped the bank launch cutting-edge, compliant, digital lending products. During FY21, Axis made 16 initiatives live taking the overall digital offerings to 28 across lending and other product offerings.

* OPEN philosophy underpins every digital initiative at Axis:

* 0-based redesign: Customer-centric, design-led and 0-operations.

* Proprietary capabilities: Building in-house capabilities on different elements such as design, experience centre, agile and AI centres-of-excellence among others.

* Ecosystems capable: Dedicated partnerships team and market-beating API strategy to deliver the open ecosystems proposition.

*  Numbers, numbers, numbers: Organisation-wide thrust on identification and tracking of outcomes as well as input metrics to drive the impact.

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