Kotak Mahindra Bank Limited · NSE:KOTAKBANK
Kotak Mahindra Bank — Investor Presentation (2022)
74 slides from Kotak Mahindra Bank's investor presentation, 2022
Slide 1: Chapter 01: The 811 Story
kotak SH y/ Chapter 01 The 811 Story
Slide 2: India: A Growth Story
India A Growth Story
Slide 3: Smartphone, Aadhaar, UPI: digital adoption in India
Smartphone Aadhaar UPI Identity 5 billion 750 million for all monthly users transactions Digital Young Adoption 52% below Amplified by age 30 Demonetization & COVID-19
Slide 4: 811's Vision
811’s Vision Empower every Indian to access bespoke financial products, delivered digitally, with a world class service experience
Slide 5: Digital Acquisition Engine to Digital Bank
2021 Onwards 2017-2020 Digital Bank Digital Acquisition “Semi-Autonomous” Engine unit, focused on exponential growth
Slide 6: Kotak811 is in a unique position
Kotak811 is in a unique position
Slide 7: Trust, Brand, Banking Platform & Distribution
Trust, Brand, Agile, Nimble, Banking Platform & Digital First & Distribution Ambitious
Slide 8: Kotak Bank empowers 811
Empowers 811 with o Branch o Operations o Compliance o Audit & Finance o Human Resource o Risk Management o Financial Products
Slide 9: 811 Team functions
Team 811 o Core Product o Data Science o Technology o Cross Sell o Sales & Call Center o Process
Slide 10: Kotak811, India's next banking chapter
Kotak811, India’s next banking chapter
Slide 11: Clay Christensen quote on autonomous organization
“With a few exceptions, the only instances in which mainstream firms have successfully established a timely position in a disruptive technology were those in which the firms’ managers set up an autonomous organization charged with building a new and independent business around the disruptive technol
Slide 12: In 5 years since inception
In 5 years since inception
Slide 13: 12.3mn Full KYC Savings A/C, 5.3mn Paid Debit Card Users
In 5 years 12.3mn 5.3mn Full KYC Paid Debit Card Savings A/C* Users As of March’22 * Excluding closed Full KYC Savings A/C
Slide 14: Paid Debit Card Users 5.3mn
5.3mn Paid Debit Card Users
Slide 15: 1,000+ Cities & Towns
1,000+ Cities & Towns 10,000+ pin-codes & growing
Slide 16: Every 5 seconds, a new account is opened digitally
Every 5 seconds, a new Account is opened digitally. More than 50% of 811 Accounts are opened outside banking hours 9.0% 7.9% 8.0% 8.5% 6.4% 7.8% 7.3% 7.4% 5.7% 4.8% 5.9% 5.5% 4.2% 1.7% 1.4% 2.8% 2.8% 0.4% 0.3% 0.2% 0.8% 0.8% 0.2% 0.2% 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 am am am am
Slide 17: In Q4 FY'22
In Q4 FY’22
Slide 18: 811's contribution to Kotak Bank by volume
Full KYC Savings A/C 71% By Volume UPI 70% 811’s contribution to Credit Cards 60% Kotak Bank in Q4 FY’22 Physical Debit Cards 58% Trading A/C 57% Insurance Policies (Non-life) 52% Recurring Deposit 51% Personal Loan & Consumer Finance 48%
Slide 19: Kotak811 as a % of India's largest private bank
Full KYC Savings A/C 71% Kotak811 as a % of India’s largest By Volume private bank (Q4 FY’22) UPI 70% 811’s contribution to New Savings A/Cs Credit Cards 60% Kotak Bank in Q4 FY’22 52% Physical Debit Cards 58% New Credit Cards Trading A/C 57% 40% Insurance Policies (Non-life) 52% Recurring Deposit 5
Slide 20: 811's contribution to Kotak Bank by value
Incremental Savings Balances* 29% By Value (AMB) 811’s contribution to UPI 58% Kotak Bank in Q4 FY’22 Recurring Deposit 34% Personal Loan & Consumer Finance 32% Insurance Premium (Non-life) 32% Debit Card Spends 30% * Excluding Floating Rate Savings Balances
Slide 21: Kotak811 compared to largest listed fintech
29% Kotak811 compared to India’s Incremental Savings Balances* By Value largest listed fintech (Q4 FY’22) (AMB) 811’s contribution to UPI 58% Personal Loan Disbursed Kotak Bank in Q4 FY’22 71% Recurring Deposit 34% Personal Loan & Consumer Finance 32% Per Debit Card Spends Insurance Premium 32% 6x (
Slide 22: While in March'22
While in March’ 22
Slide 23: March'22 acquisition and cross-sell numbers
In March’22 571K 417K Acquisition Full KYC Savings A/C 116K 59K 56K Credit Insurance Policies Loans Cards & Trading A/C
Slide 24: Chapter 02: User Profile & Key Metrics
Chapter 02 User Profile & Key Metrics
Slide 25: Who is the 811 user?
811 user ?
Slide 26: Slide 26
Slide 27: Young, Diverse, Value Seeker
Young 56% below age 30 Diverse 38% Salaried, 31% Self-Employed, 20% Students, 11% Others Value Seeker 15x spending lift on Debit Cards during festival offers
Slide 28: Credit Hungry, Transaction Heavy, Sachet Products
Credit Hungry ~50% have an unsecured asset Transaction Heavy 41 monthly transactions per active user Sachet Products 47% Recurring Deposit below ₹ 500
Slide 29: Small Ticket, Large Volume
Small Large Ticket Volume
Slide 30: Mobile App engagement
6.2 mn Mobile App Engagement MAU by 811 users Average Monthly Logins 17 App Stickiness (DAU/MAU) 23% Median App stickiness for banking apps = 17% For March’22. App Stickiness % is basis Appsflyer as of 28th March 2022
Slide 31: How is the customer behaving?
How is the customer behaving?
Slide 32: Customer Cohort acquired in FY'18
Customer Cohort Acquired in FY’18 43% 1.8mn (0.8 mn) Full KYC Active Full KYC Saving A/C Saving A/C
Slide 33: Per Active Full KYC Savings A/C (acquired in FY'18)
Per Active Full KYC Savings A/C (acquired in FY’18) as of March’22 ₹19,500 ₹1.6 mn Average Balance Annualized Throughput 2.4 Product Holding
Slide 34: Kotak811 in numbers
Kotak811 in numbers
Slide 35: Onboarding Metrics (monthly avg.)
Onboarding Metrics (monthly avg.) 609K Acquisition Full KYC Savings A/C Vision Set for 604K “Semi-Autonomous” 513K Digital Bank 384K 367K 367K 342K 416K 354K 243K 203K 216K 212K 136K 191K 168K Q1 Q2 Q3 Q4 FY’18 FY’19 FY’20 FY’21 FY’22
Slide 36: Engagement Metrics (monthly avg.)
Engagement Metrics (monthly avg.) 430K 424K First Funded A/Cs Paid Debit Card Units 338K 227K 199K 178K 231K 215K 132K 179K 98K 114K 87K 77K 59K 42K Q1 Q2 Q3 Q4 FY’18 FY’19 FY’20 FY’21 FY’22
Slide 37: Cross Sell Units (monthly avg.)
Cross Sell Units (monthly avg.) 283K Total Cross Sell Units Asset Units 232K 172K 164K 134K 133K 93K 67K 61K 46K 37K 19K 21K 22K 20K Q1 Q2 Q3 Q4 11K FY’18 FY’19 FY’20 FY’21 FY’22 FY’18 number is average of Q4 FY’18 only
Slide 38: Saving Balances & Throughput
Saving Balances & Throughput
Slide 39: Savings A/C Book Value – AMB
Savings A/C Book Value – AMB (March nos. in ₹ Billion) 75.28 47.97 57% Y-o-Y 31.79 Growth in FY’22 20.06 8.24 March’22 AMB per savings A/C = ₹6,100 MAR’18 MAR’19 MAR’20 MAR’21 MAR’22 From FY23 high-value managed customers will be transferred to respective programs
Slide 40: Overall Throughput (Credit + Debit)
Overall Throughput (Credit + Debit) 520.35 (March nos. in ₹ Billion) 42K 255.19 104% 22K 105.51 133.82 Y-o-Y Growth in FY’22 33.95 MAR’18 MAR’19 MAR’20 MAR’21 MAR’22
Slide 41: Increased engagement in FY'22
Increased engagement in FY’22 57% 104% Y-o-Y Y-o-Y Growth in Growth in Throughput Savings Balances (Debit + Credit)
Slide 42: Key focus areas
Key focus areas
Slide 43: Focused acquisition & fulfillment, mobilising engagement & cross-sell
Upto From 2020 2021 Focused acquisition Mobilising & fulfillment engagement & cross-sell
Slide 44: Credit Cards
Credit Cards FY’18 69K FY’19 223K FY’20 204K Y-o-Y Growth: 4.6x FY’21 159K FY’22 736K
Slide 45: Credit Cards Portfolio – Q4 FY'22
Credit Cards Portfolio – Q4 FY’22 30d Purchase Annualised E-com Active Spends % 51% 82K 59% 50% 161K *54% Revolve % Net NPA % 27% 0.99% 25% 0.78% Leading listed cards player *Full year number for FY’22
Slide 46: Asset – Personal Loan & Consumer Finance
Asset – Personal Loan & Consumer Finance FY’18 1K FY’19 26K FY’20 50K Y-o-Y Growth: 6.2x FY’21 69K FY’22 426k FY’18 number is sum of Q4 FY’18 only
Slide 47: Asset Growth
Asset Growth Multiple cohorts identified to drive asset cross sell in last 12 months Mar’21 Mar’22 Full KYC Savings A/C 8.3mn 1.5x 12.3mn Pre-Approved Offers 1.1mn 4x 4.3mn Asset Cross-Sell Units (CC / PL / CF) 0.23mn 5x 1.16mn Cross-Sell units are full year numbers
Slide 48: Asset Opportunity
Asset Opportunity 1.2mn Asset Cross Sell in FY’22 (CC, PL, CF) Credit Universe Within 811, 6mn customer with asset product ~400mn Customer
Slide 49: Insurance Policies & Trading Accounts
Insurance Policies & Trading Accounts FY’18 9K FY’19 73K FY’20 170K Y-o-Y Growth: 1.6x FY’21 354K FY’22 551K FY’18 number is sum of Q4 FY’18 only
Slide 50: Unit Economics
Unit Economics
Slide 51: Breakeven per Full KYC Savings A/C improving despite scale up
Breakeven per Full KYC Savings A/C has been improving despite rapid scale up 9.4 yrs 7.3 yrs 6.1 yrs 5.2 yrs 4.5 yrs Q4’22 FY’18 FY’19 FY’20 FY’21 FY’22 Note: Revised distribution income considered for Credit Cards & Personal Loans to reflect fair transfer pricing. Distribution income from cross-sel
Slide 52: Q4'22 Unit Economics per Full KYC Savings A/C
Q4’22 Unit Economics Q4’22 Per Full KYC Savings A/C 4.5 yrs Fully costed breakeven Total One-time Cost ~ ₹860 Cost is all inclusive – Physical, Operating Income 46% YoY ~ ₹190 Digital, Marketing, Technology Net of operating costs & others On cross sell, 811 gets distribution fee. Manufacturing reven
Slide 53: Q4'22 Unit Economics vs branch banking breakeven
Q4’22 Unit Economics Q4’22 Per Full KYC Savings A/C 4.5 yrs Fully costed breakeven Total One-time Cost ~ ₹860 Branch Banking customer Operating Income 46% YoY ~ ₹190 breakeven ~5 years Net of operating costs In rising interest rate scenario breakeven periods come down Note: Revised distribution inco
Slide 54: Chapter 03: Engines for Kotak811
Chapter 03 Engines for Kotak811
Slide 55: Engines for Kotak811
Engines for Kotak811 Agile Technology Data Science Customer Obsession
Slide 56: Customer Focus is great. Customer Obsession is even better.
Customer Focus is great. Customer Obsession is even better.
Slide 57: Seamless On-boarding
Seamless On-boarding Get instant account 3 mins KYC via video call 5 mins
Slide 58: Account Set Instantly; UPI, Credit Card, Vernacular
Account Set Instantly Instant set-up On the fly UPI Credit Card Self help via Service via branches, WhatsApp call centre etc. Vernacular Personal Touch
Slide 59: 811 looks at banking with a software engineering lens
811 looks at banking with a software engineering lens
Slide 60: From vendor managed and monoliths to cloud native
FROM . . . . . . TO Vendor Managed Cloud Native Solutions On-prem solutions Monoliths Modular Tightly coupled applications Longer Cycles Devops Deploy Linear build, test, release
Slide 61: Without big data analytics, companies are blind and deaf
Without big data analytics, companies are blind and deaf
Slide 62: Customer Insight Stack: Customer Layer
Customer Customer Layer Insight Stack Product Holding Demographics Bureau Insights A/C Transactions
Slide 63: Customer Insight Stack: Service Layer
Customer Insight Stack Service Layer Service Request Call Center Customer Complaints
Slide 64: Customer Insight Stack: Platform Layer
Customer Insight Stack Platform Layer Pre-login Behaviour Mobile App Bot Interaction Campaign Response
Slide 65: Customer Data Platform for 360° view
Customer Data Platform for 360° view Real-time AI / ML Based Personalised Transaction Risk Profiling Offerings Analysis
Slide 66: Chapter 04: Team
kotak SH y/ Chapter 04 Team
Slide 67: Young, Agile & Ambitious
Young, Agile & Ambitious ~50% 32.8 Yrs Of today’s 811 team are in Average age of the team of engineering, data science, 104 product & design Excluding Call Center & Sales executives
Slide 68: Leadership team (1)
Aditya, 36 Amlan, 42 Siddharth, 34 Raghuveer, 31 Product & Portfolio Engineering Strategy & Finance Data Science Kushal, 37 Ashita, 38 Ranjit, 43 Ritesh, 36 Investment & Insurance Assets Technology Product Design
Slide 69: Leadership team (2)
Susmita, 38 Moumita, 43 Srikrishna, 42 Dushyant, 41 HR Service, Process & Risk Digital Acquisition Channel Tarun, 39 Shraddha, 44 Jay, 32 Manish, 47 Contact Center Marketing (Consultant) Co-Head Business Head
Slide 70: In summary
In summary
Slide 71: In summary: full stack digital bank within Kotak
Full Stack Digital Bank Valuable & Sticky within Kotak Customers • 12.3 million users, ~50% Y-o-Y growth • 4 year old customer cohort shows better average metrics than overall base • Agility and youth matched with experience and expertise Technology & Data Strong Unit Economics at our Core Compoundi
Slide 72: Michael Jordan quote
“I’ve missed more than 9,000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game winning shot and missed. I've failed over and over and over again in my life, and that is why I succeed” Michael Jordan
Slide 73: Kotak811, digital banking for a billion Indians
Kotak811, digital banking for a billion Indians Thank you!
Slide 74: References
References Media update for 5 billion UPI transaction and 750 million smartphone users https://economictimes.indiatimes.com/tech/tech-bytes/in-a-first-upi-transactions-hit-five-billion-a-month-in-march/articleshow/90557520.cms https://www.financialexpress.com/industry/technology/5g-set-to-propel-dem