India's largest private lender HDFC Bank on Tuesday said it will move out the payments module from its existing core banking platform to create an active payments architecture that will ensure minimal payments downtime, even if core banking is not available.

"This 15-month project will be followed by hollowing the customer master modules from its existing core systems and will ensure a single system of record for customers across various products," Sashidhar Jagdishan, managing director and chief executive officer of the lender, says in the bank's annual report for 2021-22.

HDFC Bank said it has partnered with a new-age start-up to set up new core banking modules.

The CEO's comments come almost a year after he apologised to the bank's customers for recurring tech outages. In December 2020, the Reserve Bank of India had barred HDFC Bank from launching new digital banking initiatives and issuing new credit cards due to multiple glitches in the bank's internet and mobile banking systems. The ban was lifted in August last year.

Jagdishan said the bank has set up a new centre in Bengaluru to overhaul its mobile and internet banking platforms. The entire project will be completed in a two-year time frame and will allow the bank to own a modern cloud enabled mobile banking platform. The bank also said it will roll out new features every three to four weeks, in line with digital fintech companies.

"Our entire technology and digital strategy adopts a 360-degree approach that ensures resilience and modernisation of existing legacy systems and enables new age consumer experiences by partnering with modern neotechs," Jagdishan says. "We have made rapid strides in creating the foundation and enabling new digital assets over the last one year. Needless to say, the pace will only pick up from here. Firmly committed to this transformation, the bank will continue to invest in modern technology and talent."

Today, 93% of the bank's transactions are processed digitally, adds Jagdishan.

India's largest private lender has over 6,000 branches across the country, and it plans to nearly double its network in the next three to five years by opening 1,500 to 2,000 branches every year.

"The branch will be digital from a customer on-boarding and transaction/servicing perspective. It will provide the emotional connect and relationship management necessary for offering financial solutions to our customers. These branches will be small in size and will be phygital relationship centres. This will enable us to go after the catchment more aggressively and build the required liability franchise that we are known for, and we are confident that we would execute well," the lender says.

core banking

HDFC Bank to move out payments from core banking to cut downtime