Design Thinking for Business Innovation Mr. Rana Kapoor, MD & CEO, YES Bank and Chairman, YES Global Institute

BUILDING SERVICE AND TRUST FOR INDIA

“In todays new age, innovation centric ecosystem, it is imperative to build a company that is agile enough to change and adapt with the times” RANA KAPOOR, MD AND CEO CHAIRMAN

Setup just 13 years ago, YES BANK is now the 4th largest private sector bank in India and an inspiring entrepreneurial story of the nation, would you like to take us through your entrepreneurial journey?

My dream began in 1979, when I interned at Citibank in New York. I would constantly think about the work I was doing and how I could do it in my own venture. As I progressed in my career, starting as a corporate banker in Bank of America, then as an investment banker in ANZ Grindlays and later as an entrepreneur with Rabo India Finance, I strongly believed that I would eventually get to build a bank of my own. When the right opportunity presented itself in 2003, I evangelized this dream along with a group of like minded people, thus evolving a common platform for sharing a dream and making it a collective proposition -- and YES BANK was born.

In entrepreneurship, you have to believe in God, and then dream. Dreams, if converted to reality, become entrepreneurship. There is a step further: you have to visualize as a leader, strategize and then actualize. Thirdly, you have to have a very high EQ at your enterprise, whether it is a small, medium or even a large business. This will make you realize that you can transform and build fantastic organizations.

We opened our first branch in Mumbai in August 2004 and a year later hit the capital markets with an IPO that raised over Rs 300 Crores (approx. USD50 million). Today, YES BANK has a pan-India presence with over 1,000 branches across all 29 states and 7 Union Territories and a balance sheet of over Rs 2.15 lakh Crores (approx. USD35 billion). The ride has certainly not been smooth all the way; and came with a lot of speed bumps. But the key is to have a lot of perseverance and significant risk appetite, while continuously striving towards actualizing your dream.

In today’s world where disruption & exponential change is the new normal, what do you believe are the main ethos on which organizations of the future must be built?

In today’s new-age innovation centric dynamic ecosystem, it is imperative to build a company that is agile enough to change and adapt with the times. The objective should be to bring the future into the present. In the past, organizations were designed for efficiency and effectiveness; which led to creation of complicated silos. However, successful companies are always looking for new ways to compete in the marketplace. One approach which has taken the corporate world by storm is Design Thinking.

The Design Thinking we are talking about is not visualization of aesthetics, but Design Thinking for Business Innovation - how businesses should think, innovate, operate and devise effective means of gaining a competitive advantage in their industry.

I believe that Design Innovation Creativity-led Entrepreneurship (D.I.C.E) truly characterizes the rise of the ‘entrepreneurial economy’ in India, and has more to offer the modern organization as a means to cultivate creativity and innovation. The core principles of Design-led innovation, being ‘Human centered’ (putting people first, not technology), and ‘solution focused – not problem focused’ dramatically improve the success rate of innovation, once applied to the overall strategy. Further, for innovation to flourish, organizations must create an environment that fosters creativity, and elevate open-minded, passionate and adaptable leaders who are not averse to taking risks.

Modern organizations have a sharp focus on design management to encourage creativity and professional entrepreneurship. In fact many Fortune 500 companies and even Governments of more developed nations now have C-level leaders focused on design & innovation. I feel the day is not far when we will see large global corporations run by designers or even boardrooms full of designers.

Digital and Technological advancements are transcending impact in a gamut of sectors. How big do you think Digital can be a distinguishing factor and is India ready to leapfrog in this space?

The world today faces the most radical restructuring of global economy and businesses since the Industrial Revolution, and companies need to reorient or even disrupt themselves to survive. The plethora of technologydriven and innovation-led disruption is changing the pecking order in multiple industries, as businesses confront unsettling levels of turbulence and volatility.

I strongly believe that Digital advancement should be looked at as an opportunity to create new solutions and optimize current offerings.

I think this is the tipping point of creative disruption – because disruptions need to be explained in terms of being a very positive factor.

I personally feel that the three Ds for disruption (Demographics, Deregulation, and Digitization) are totally aligned in Indian scenario. India’s demographic dividend is ripe and ready to be leveraged, even as the pace of reforms and deregulation has picked up significantly over the past three years. Thirdly, the Government’s initiatives on Digitization have been unprecedented and have given rise to a thriving fintech ecosystem.

All these factors are optimally aligned for what I would like to believe is going to be a very entrepreneurial economy, a very enterprising economy which is almost around the corner.

One of the key distinguishing features of YES Bank is its strong focus on Innovation & Entrepreneurship. What is YES BANK doing with the Startup community, and how is it catapulting the entrepreneurial ecosystem in India?

At YES BANK, we pride ourselves on being is a contemporary and new age bank; and we are treating the startup community as an engine of growth.

What has changed very dramatically in India is segmentation and industry specialization. You have to be a specialist today. I personally believe that the future of Indian banking depends on the willingness and ability to foster new business and inventions, and in effect, become transformational agents of change.

To catapult the Indian Startup scenario, we have launched YES:HeadStartup; a full service banking proposition for tech or tech-enabled Startups, complemented by a first-of-its-kind privilege program.

At YES BANK, we believe that this phase of entrepreneurship in India can be furthered using the F.I.V.E. approach, which involves support at key life-stages of enterprises - Funding, Incubation, Vesting and Expansion. The ‘F.I.V.E.’ approach involves financial institutions at the fulcrum, delivering catalytic change by harnessing the power of entrepreneurship. The launch of YES:Head-STARTUP has reinforced our unstinted commitment to nurturing and promoting entrepreneurship and innovation in India.

In addition to providing comprehensive Banking services, we have also partnered with marquee service providers in the startup space including Indian Angel Network (IAN), T-Hub, Registrationwala, Awfis, ISDI and VC Circle, to provide bespoke privileges. In core traditional sectors, we may have been a follower (as a consequence of being a greenfield bank), but in sunrise sectors we are distinguishing ourselves as a leader, and as a differentiator by 2020 we are aiming to be the number one bank in the country on mind share.

What do you feel are the barriers to innovation in FinTech space in India and how can they be overcome? And what is YES FinTech accelerator contribution towards removing these shackles?

The financial sector is witnessing a wave of ‘new age innovators’ who are redefining the contours of business operations. They are bringing about a paradigm shift by introducing new innovation oriented models and also creating economic wealth and have emerged as the new engines of growth.

In India, the fintech market is estimated at ~USD 8 billion and expected to grow 1.7X by 2020. To emerge as one of the leading financial innovation hubs globally, we need to remove the barriers to innovation. I believe that one of the biggest barriers today is the lack of regulatory clarity and awareness. The financial industry needs a cohesive framework to overcome barriers to innovation.

The introduction of a ‘regulatory sandbox’ at the global level is being hailed as a step in the right direction to drive innovation for fintechs. Regulatory sandbox is a ‘safe space’ in which businesses can test innovative products, services, business and operational models without immediately facing all the normal regulatory consequences. In India, along the lines of regulatory sandbox there is an ardent need to create an enabling ecosystem to foster competition and innovation in financial services.

YES FINTECH, in collaboration with T-Hub, has been setup exactly to catalyze and scale innovation by overcoming the mentioned barriers. The accelerator takes forward YES BANK’s A.R.T model – Alliances, Relationships Technology to provide innovating banking solutions to our customers and provides start-ups a collaborative platform and framework for creating sustainable and market ready products. We are really excited about initiative and believe that the program will provide an ideal springboard for startups to graduate from innovative products to scalable businesses with access to YES BANK’s digital banking infrastructure as well as our robust customer network

India has transformed from one of the ‘Fragile Five’ among the BRIC economies in 2013 to ‘Global Macro Hot Spot’ currently. What do you believe have been the key policy initiative to achieve this milestone?

The Narendra Modi Govt. has entered its fourth year and has catapulted India on the path of becoming an entrepreneurial and enterprising economy, underscoring the spirit of cooperative federalism. Three years ago, India was staring at the risk of a sovereign ratings downgrade. However, today India has transformed into a ‘Global Macro Hot Spot’ through culmination of several decisive policy decisions taken by GoI over the last three years.

A facet of these policy initiatives has been the whole new ‘IDEA’ of India (International Collaboration, Domestic reforms with outcome orientation, Ease of doing business, Active consensus building). Through identifying and initiating key International Collaborations, the nation is leveraging diplomatic channels for enhancing trade and commercial linkages. Several domestic macro structural reforms such as GST (Goods and Services Tax), Make in India, Skill India would pave way for catalyzing India’s potential GDP growth by at least 2.5% in the medium term.

Further, a gamut of policy reforms like FDI liberalization and digitization have throttled India towards achieving objectives of ‘Ease of Doing Business’. Active Consensus Building on the above mentioned critical policies that have brought about substantial transformation of India’s positioning at Global level highlight the importance of political unison, and concept of ‘Team India’ in a meaningful manner.

With India now armed with the four tectonic changes in form of IDEA, the next phase of metamorphosis to a USD 20 trillion economy would take less than half the time.

Congratulations on being felicitated for commitment to the development of the State of Maharashtra by the Government of Maharashtra. What is your vision for Mumbai and its role in India’s overall development and do you see India emerging as a global innovation hub?

It is a great honour, and I feel humbled to have received this prestigious recognition by the Government of Maharashtra. Maharashtra has been my Karmabhoomi (Hindi for ‘the land where one works) for over three and a half decades, and this recognition encourages me to strive further and reinforces YES BANK’s commitment towards working for India’s socioeconomic transformation.

I strongly believe that Mumbai has the inherent versatility to imbibe global thinking and best practices to continue to contribute immensely towards India’s socio-economic development. I envision this incredible city as Smart Economic Capital Region (SECR), with a conglomeration of smart clusters including Mumbai, Thane, Kalyan-Dombivili, Navi-Mumbai, Pune, Nashik, Nagpur and Solapur teaming up with innovation districts to spur startup business growth.

An innovation district is a relatively contemporary spatial paradigm that essentially weaves educational institutions, business accelerators, and incubators to foster innovation, entrepreneurs and startups. These spatial development trends have been seen in Silicon Valley in US, and have now been adopted in various progressive cities worldwide. The Lower Parel Innovation District (LPID) is a step forward in this direction and has immense latent potential to bolster innovation and human resource development. The Indian School of Design and Innovation (ISDI) in LPID is truly championing this cause with effective and demonstrated outcomes.

Overall, I firmly believe that India - now riding on the pillars of positive policy impetus from the Government in the entrepreneurial space, energetic and young demography, state of the art technological facilities and a conducive ecosystem - certainly has the potential to emerge as a Global Innovation Hub.