Kotak Mahindra Bank has been undergoing a digital transformation over the past two years, encompassing its various businesses, including commercial, wholesale, and retail banking. This journey was accelerated by the Reserve Bank of India’s (RBI) restrictions imposed in April 2024 due to issues with the bank’s digital platforms. The restrictions were lifted in February after Kotak rectified its IT infrastructure deficiencies. The bank spent over ₹1,700 crore on technology in the year ended March 31, a 30% increase from the previous year, accounting for around 10% of its operating expenses.
According to Nilesh Chaudhari, Head of Technology at Kotak, the RBI’s restrictions provided an opportunity for the bank to clear its legacy tech debt. The bank has been focusing on raising its standards, and its technology investment is in line with industry benchmarks. Chaudhari noted that tech debt will always exist due to trade-offs between speed, cost, and time-to-market, but the key is to keep it under control. To achieve this, the bank has instituted the IT Risk and Information Security Committee (IRISE) and an Architecture Board to ensure that new solutions are scalable and sustainable.
A crucial part of Kotak’s transformation is its proprietary AI platform, Kotak AI. The platform uses 12 large language models (LLMs) from multiple providers and allows for the creation of specialized AI “skills” that can be orchestrated by agents to complete end-to-end tasks. Kotak AI is already being used for credit analysis, customer-facing staff, and coding assistance. The platform has been largely built in-house, allowing the bank to iterate and experiment rapidly while controlling costs.
Kotak’s technology team consists of over 2,000 full-time employees, supported by another 2,000 through partners. The team has been expanding across locations, including Gurgaon, Bengaluru, and Hyderabad, with the bank setting up hubs in these cities to tap into engineering talent. The bank has invested heavily in hiring core engineering talent, focusing on building in-house capabilities that provide long-term differentiation. Kotak’s broader strategy is to build reusable building blocks for faster innovation, covering areas like identity and access management, customer payment instruction systems, and its cloud-based Data Exchange (DEX) platform.