Who pays off the Technical Debt for Fintech Startups ?

‘Technical Debt’ – Making sense of the Metaphor 

In 1992 Ward Cunningham – the man who created the first Wiki coined a metaphor called ‘Technical Debt’ . The term later went on to be called ‘Code Debt’ and sometimes ‘Design Debt’ . Extremely revered in software engineering circles , Cunningham was seen as a pioneer for design patterns and extreme programming. When he coined the word , he was writing financial software and tried to explain the misfeasance through the metaphor of debt to his boss . He went on to explain that attempting to write program without full knowledge to achieve short term results or perception is like taking a loan. Just as you pay interest when you take a loan , you have to regularly spend extra efforts for the correction of the temporary shortcut taken and likened this effort to interest. Malfeasance is when you do not repay interest just as you skip this refactoring of known fallacies in the system. You enjoy the short term benefits of what the loaned principal brings in without a long term plan to repay the interest.

Soon enough the term caught up with many developer communities and became a key programming concept used to define the extra development work that arises due to a temporary short term solution or quick fix applied in comparison to implementing the best overall design approach or architecture.

Inducing a Debt is most often Circumstantial than Intentional

The continuous race of Early-to-Market -Startups are often forced to induce technical debt due to business pressures . In businesses where problem solving and innovation sometimes supersede the technical relevance or skeletal architecture , the perils of scale and the magnitude of debt remain unmeasured but real.

Disruptive technology and the startups that ride on it live with the problem of rapidly evolving technology and standards around it – be it security , coding practices , communication frameworks , development and hosting platforms et all . Most of what is done is on a best-of-my-knowledge basis .

Do and See Approach – is the only way to implement since most often there are no guidelines to be followed. Code refactoring is inevitable is such situations. The blockchain startups are a good example of this – Early entrants had little or no formal documentation available and security standards were theoretical and no established test suite still exists. With time , concepts are understood better , frameworks come into being and and the risk of debt reduces.

Technical leadership and code ownership is important in FinTech. Sometimes lack of knowledge , documentation or collaboration among the team can be crippling as the codebase is bound to grow. Most great companies started out with an effective program by a great developer but to achieve scale or expand this very codebase has to be modular.When VCs look to invest , it is important to assess that the architecture is scalable and technical leadership is aware of what limitations exist and exactly when to refactor to scale.

So , Who really pays off a Technical debt ?

When a new CIO takes over or a new VC firm evaluates investment , it is important that technical debt footprint is assessed because really , it is they who land up repaying this debt.

Traditionally when banking was about in-house application building , the cost of technical debt was born by the bank. As we moved towards outsourced services , the service provider or service vendor bore the cost through piecemeal code refactoring . Then came along COTS (Commercial Off the Shelf) solutions and things got tricky. The risk of technical debt induced due to the urgency of one client was passed on to all other product clients as well. The value of debt began rising for the product company exponentially as it multiplied by the number of product installations. The CIO of the product company then becomes completely responsible for this. If there are VC’s or additional investment sought at such point it simply passes on the debt to the VC.

Software Asset or Liability ?

Most argue , that passing on debt is a good thing just like it is with rolling monetary debt , but how many VCs will agree? The objective is to accelerate growth for these firms and seek favorable exits . However , the investor must understand that sometimes strengthening the foundation at the cost of expansion can mean long term results.

With new tools for scanning and assessing software assets, quality of legacy footprint can now be gauged and they also help to determine what it will cost to eliminate this debt. Quantifying the technical debt in order to understand, contain, and mitigate the debt, as well as decide how to prioritise next steps can be done through tools.

Quantifying the Debt

Accumulated technical debt can lead to decreased efficiency, increased cost, and extended delays in the maintenance of existing system and the very first step starts with assessing the size of it. There are some tools to help assess as seen below –

CAST is a software that can hel to detect and correct errors in its core systems that could carry significant structural risk and thereby allows one to arrive at the monetary impact.

Figure 1 : Source CAST

Some companies offer plugins to your existing code. One such example is the Sonar plugin which can uses a proprietary formula to give an approximate a dollar figure to assess the value of debt

Figure 2 : Source SONAR

There are also consulting companies such as Cutter Consortium who do an unbiased Debt Valuation and Assessment exercise.

Deloitte is conducting an extensive study on technical debt reversal and predicts this to be one of the top digital trends in the recent years. Back in 2012 , the firm had predicted that $3.61 is the technical debt incurred for every line of code written within a typical application whereas globally it estimates the cost of debugging software is around a whopping 312 million USD.


FinTech Startups will protect precious seed capital and take shortcuts to build software and to play the catch up game or focus on innovation . Venture Capitalist firms will inherit technical debt in the entire lifecycle . It is important however , to understand the depth of the damage as well as the cost of reversal to truly measure the strength of the company and establish valuation.

Mobile payment platform Chillr to launch UPI

India’s first multi-bank mobile payment platform Chillr is all set to launch its Unified
Payments Interface (UPI) facility by March-end, which  will enable customers of nearly
45 banks to make payments on a single platform.Sony Joy, CEO and Co-Founder, Chillr, estimates around 1.50 crore customers to be on-board this platform by the end of 2017-18. “Our annual run-rate (transaction) is also expected to go up from $1 billion (around Rs. 6,600 crore) now to $12 billion (nearly Rs. 80,000 crore) per annum.” said Joy

For more details read on 


Driving Financial Inclusion through India Post

Any institution that works to establish financial inclusion takes on the role of becoming an emissary of trust – trust in the economy . To establish the first level of trust for the unbanked  is one of the biggest challenges across third world economies. Postal networks have often been the most effective tools of establishing inclusion and yet remain the least accredited  and overlooked.

A Global Need for Financial Inclusion

The Global Findex mentions that out of bank regulators in 143 jurisdictions,  67 percent have a mandate to promote financial inclusion. 4 International organizations, including the G-20 and the World Bank, have either formulated strategies or are in the process of doing so to promote financial inclusion. In recent years more than 50 countries have set formal targets and ambitious goals for inclusion. A study by the Universal Postal Union (UPU) states that 1.4 million postmen go door-to-door daily establishing a daily 2 million odd contact points across the world. Postal networks therefore become the strongest channels of inclusion globally and India has one of the most ambitious projects at hand.

India’s Financial Inclusion Agenda

On the 15th Of August 2014 , Prime Minister Narendra Modi announced a large scheme for inclusion under the Pradhan Mantri Jan Dhan Yojna . The number of accounts opened under the scheme reached 255 million (including 57 million zero balance accounts) by November 2016 and 15 million more accounts were opened post the Demonetization announcment. The amount of deposits rose to about 665 billion Indian Rupees (10 billion USD) and over 19 lakh householders availed the overdraft facility of 2.56 billion (US$38 million) by May 2016.

Banking with the Post Office

Globally , 50 percent of adults have an account at either at a financial institution , post office or both institutions, 12 percent have an account at the post office as well as a bank, and 3 percent (6 percent of all account holders) have an account at the post office only.

Roughly 28% of the world’s adults use postal services for payments (for example, invoice payments and social benefits) and remittances. According to UPU research 1.5 billion people worldwide currently go to post offices for these types of transactions, but only 1 billion have accounts. One strategy, adopted by posts in a number of countries, is to use cash-based services as an introductory product to account-based services and savings. Following that model, people who use posts to access certain financial services without an account could potentially move from informal to formal savings.

In the mobile financial services ecosystem, we can identify three groups of actors: users (individuals, businesses, governments), providers (banks, post offices, MNOs, MFIs, etc.), and support services for providers (FinTech, agent networks, switch, etc.).41 Postal operators across the world have been playing a role both as direct providers of mobile financial services and as support services for other providers .

Below is an adaptation from a comprehensive SWOT Analysis done by the Universal Postal Union as part of the Global Panorama on Postal Financial Inclusion 2016 to assess the role of Postal networks in digital financial services –


A Mammoth Challenge for the World’s Largest Postal Service

Established in 1854 ,India Post today has about 150,000 post offices in the country today ,  almost growing to seven times its size since the Indian Independence in 1947.India Post has been battling a number of challenges to establish its inclusion programs – shortage of trained staff , cost of implementation and a credit hungry rural India. With no lending programs as part of its roadmap , the post office has fallen behind in its customer acquisition to a number of rural regional banks who grew in the light of the PMJDY .

India Post has undergone multiple makeovers since its formation. Apart from mail delivery , India Post has been servicing India as a business logistics service provider and a trusted financial advisor . Its  services range from basic financial services such as provision of savings bank accounts , recurring and time deposit schemes as well as saving schemes for senior citizens. There are short and long term investment options through the NSC schemes . It plays a key role for the thousands of migrant workers who send home money through a tie up with Western Union for its International Money Transfer Scheme and also with MoneyGram for payments from the US into India. Money Orders , Instant Money Orders help money to be wired across the country. India Post takes on the support role for small businesses and infrastructure service providers in the form on a collection agent and its logistics arm.Yes ,  India Post enables payment collection from the remotest of areas through its many-to-one solution which allows collection of money (telephone bills, electricity bills, examination fee, taxes, university fee, school fee etc.) on behalf of the subscribing biller . The collection is consolidated electronically using India Post’s web based e-Payments solution and the payout is made centrally through cheque from a specified Post Office of the biller’s choice. Since demonetization, India Post has helped hundreds of thousands deposit up to Rs. 32621 crore ($4.75 billion) in the two weeks since 500 and 1000 rupee notes were withdrawn.

A  Gameplan to Scale

A 4,909 crore (US$730 million) project for computerization and networking of 1.55 lakh post offices across the country is being currently implemented by the Indian government which is aimed at providing better tracking , more relief to staff and digitization of operations. It also involves core banking and insurance  solution implementation and upgrades . Project Arrow aimed at upgrading technology and service was initiated in 2008 and since then garnered lot of appreciation and investment from the government. Further investments have poured in ever since .

The current government has plans to use the digitization exercise for data registration services via its postal network to enhance digital reach and establish phase 2 of financial inclusion. Prime Minister Narendra Modi has set up a Task Force to leverage the postal network in India to enhance the role of India Post in financial inclusion, among other services and is expected to submit its report by year-end.

India Post Payments Bank (IPPB)  has rolled out its pilot services in the end of January 2017 in Ranchi and Raipur. The bank targets to have 300,000 postmen trained to take on the additional  role of payment bank correspondents .By September 2017, 650 bank branches will sprout across the country and 1000 existing ATMs of India Post will be transferred to IPPB . The paid up equity of the new bank is Rs 800 crore, of which the government has already infused Rs 275 crore.

The stereotypical image of a postman riding down a dusty lane on a rickety old bicycle carrying letters delayed by weeks if not months has changed . Over the last 15 years of India’s economic uprising , the red post boxes across the country which eventually turned into spitoons and disappeared mark the end of traditional post. India Post has held on strong through the years of transition continuing to make  a deep impact in India’s financial inclusion journey and is now ready with an army of digital-savvy banking and mail correspondents who are poised to take it to the next level .

Blockchain Economy – Embracing the Algorithm

As we struggle to fathom how a decentralized uncontrolled currency may be part of tomorrow’s real world economy there is a paradigm shift in how we perceive money with the onset of blockchain and the bitcoin in banking today. What’s baffling is that the entire control and intelligence lies embedded in an algorithm created by someone who remains unknown , unquestionable and now somewhat invincible.

Relying on algorithmic decisioning of how much currency should exist  in the economy

The algorithm releases rewards for maintenance of the general distributed ledger. Every time one uncovers a new block , bitcoins come into being. The rate of block creation is adjusted every 2016 blocks to aim for a constant two week adjustment period (equivalent to 6 per hour.) For every 210,000 blocks mined the rewards get halved. In other words , the number of bitcoins generated per block is set to decrease geometrically, with a 50% reduction every 210,000 blocks, or approximately four years. If the four- year reward halving continues, the value reaches zero for rewards once 21 million .The decreasing supply algorithm was chosen because it approximates the rate at which gold is mined.  There is also the theory that the total mined Satoshis (Smallest unit of a Bitcoin or  0.00000001 BTC) will reach the maximum length of a 64 bit floating point number and hence the limit,

These miner rewards are an amazing way to ensure the chain goes on. “Why would anyone sit and solve complex problems on the chain” , asked a friend  long ago even before the bitcoin prices soared ? If I told you, all the produce on the farm is yours if you water the farm , you would weigh the value of the produce vs your time , effort and resources involved and make a profitable decision. Miners across the world today , are doing just that !

Controlled supply of currency with complete transparency and decentralization in the economy

These finite 21 million bitcoins may not be in circulation at the same time or be spendable units . There may exist a case where we lose bitcoins on the blockchain due to a loss of private key getting corrupted on a device or one losing the private key address altogether. So just like you risk losing physical currency from a wallet today , losing a node could very much mean that we have lost money and it went out of circulation for good.

In the real world someone may find the lost wallet and the money may still be in circulation and in no way can an individual be powerful enough to take money out of the economy. He can of course hoard and keep undeclared amounts of it in his Swiss account. Where money lies, is always transparent on the blockchain .

Also, some bitcoins in circulation can be used to hold programmable assets that are not of the nature of a currency of exchange i.e., it could hold a unit of energy not money or any other. Being able to differentiate within the public distributed ledger, the actual amount of embedded money in these bitcoins may be difficult to monitor unless someone already has a solution that. The currency that comes into circulation is entirely agnostic to the hands that exchange value or the turn of trade – demand and supply.

Dilution of Power Equations through Logarithmic Equations

The  block chain , in a way also dilutes roles of power. Imagine , a kingdom of yore long before the printing press , where gold coins were the only medium of exchange. Some of the gold , they decide to use as ornaments or to worship the gods and this holds value but cannot be traded and some they use for trade. The king’s treasury takes a consensus how it wants to spend each unit – for warfare or welfare. In this case will gold behavior be inflationary or deflationary?

People say Satoshi conceptualized the Bitcoin as a deflationary currency to control the problem of consensual spend or beat insipid taxation. No money when being conceptualized would be designed to be deflationary. And , there is a huge debate on whether it is actually is. However , I am no authority to comment on that entire chain of thought , yet. Satoshi , probably never conceptualized the blockchain or bitcoin as money. This was probably the first use case to be adopted that leveraged the unending possibilities of crypto transmission.

The possibilities on the blockchain are endless. Its how you perceive and implement. It’s a bit like religion , you know. You try to incarnate it into its most tangible existence or you adopt it in principle as a way of doing things that we will all eventually align to.

A Primer on Electronic Bill Payment and Presentment 

Since its inception around 1984 ,the Electronic Bill Presentment and Payments (EBPP)  business has seen a continuous evolution in terms of business models , technology components and services offered by bank . Governments have taken key initiatives to ensure that clearing houses and regulatory bodies support the growth of homegrown EBPP Models. It has emerged as a key change-driver in the way corporates  manage the end to end billing and collection cycle and paved  way for a new wave of consumer-centric digital  payments and product innovation .

EBPP Models

Biller Direct Model – The biller presents his bill data on his website and the consumer logs in and pays .In this model , the biller assumes primary responsibility of presentment of an interactive bill on his website .He may create variations such as email based bill summary notifications with embedded hyperlinks. It becomes the onus of the biller to ensure timely bill presentment and meeting the challenges around the same in terms of formatting , translating , user experience .The biller also has to integrate with a bank gateway or alternative e-commerce channel facilitate payments .This model although most effective is an expensive proposition and sees huge scope of improvisation around cost control and shared services.

Biller Direct,EBPP
Biller Direct

Consolidator Model – A single website where the consumer can go to a single place to pay his bill across multiple billers and view statements across his accounts. The biller sends the bill summary to the consolidator and almost outsources the collection cycle to the consolidator .The consolidator conducts follow ups and maintains aggregated statements for the consumer.

Thick Consolidator Model  is where the bill payment is facilitated within the same website.

EBPP,Thick Consolidator
Thick consolidator

Thin Consolidator Model is where the consumer is redirected to the biller’s website to pay.Often billers who are active participants in the biller direct model do not want to refrain from giving the consumer the benefit of the consolidator model .This is where the think consolidator model seeks adoption.

EBPP,Thin Consolidator
Thin Consolidator

Internet Post Office ModelWhere a single hub becomes the one stop shop for all consolidation and payments. This is where the biller , consumer and the financial institution log on to present ,pay and aggregate. This is a model that is emerging and gaining fast adoption.

Internet Post Office Model

EBPP Technology Components

If we look at key technology components that facilitate the Biller driven EBPP cycle of raising debits, they can be broadly classified into the following

EBPP Portal – Billers can upload and view outstanding receivables , check statements , communicate with customers .This is coupled with the back office EBPP systems that sit within the bank.The portal could be a bank ,biller of IPO style website.

EBPP Connector – A robust 24×7 connectivity software between the bank and the corporate that ensures secure bi-directional communication and allows the corporate to send across billing data in a convenient format.

Pre-Processing Hub – Once the data is transmitted, the files are parsed , data extracted , validated and sent to downstream systems .

Mandate Management Software – Holds written or electronic authorization for billers to debit consumer accounts with appropriate restrictions of date , frequency and amounts

ACH Processor – Holds mandate authorizations and can connect with the  regional or national clearing house seamlessly and send out debit requests , refunds and cancellation instructions

Lockbox – Retail or Wholesale lockboxes that may be physical or electronic in nature.  Acts as a collection centre for the bank.


The Value Proposition

Significant cost reduction for billers as it allows companies a chance to move towards paperless billing. Eliminating paper automatically reduces the risk and cost of handling , dispatch and archiving. Manual processes that cause significant delay in the bill collection cycle are also automatically minimized.With scale the benefits of cost become more    evident and over time it has emerged that high volume billers such as utility and insurance companies tend to benefit most from EBPP.

Customer experience and loyalty is also a key factor why most companies invest in web technology or integrating with the most in-demand consolidation models or schemes.

With the consumer now being able to self service himself by viewing and paying bills at a time and method convenient for him , it increases the overall customer satisfaction . With embedded tools to view , compare , analyze , drill down and forecast billing , usage and saving the consumer gets value added services and a far more advanced experience from the paper based billing. Moreover, standardization of the experience and multilingual interaction ensures that success model in one country is rapidly replicated in another transcending global barriers , technology hurdles and sometimes can also be extended to meet customer support challenges through a centralized model. It also opens up a world for communication that is leveraged for targeted customer segment based marketing.The consumer is far more empowered today as he can pay, inquire ,view and compare bills on the go with EBPP now finding its way into digital payment methods and devices.

There are statistics that state 75% billers experienced savings by converting to EBPP and 17% consumers vouched for overall satisfaction scores for their billers went up.

Increasingly ,central banks have shifted focus to create fraeworks for bill presentment and payment to come under a nation centralized authority that ensures standardization , interoperability and access to billers and cosumers. After Saudi Arabia’s success  , India is the next to launch its Bharat Bill Payments System. More about it in another post.

The Curious Case of the Camouflaged Rule Engines

Banks are under tremendous pressure to create tangible digital transformation use cases that aim to have an overnight impact on its brand perception or customer experience. There is also a fair bit of smart camouflage happening to the bank’s existing systems to ensure investment protection while adopting disruptive technology and staying in the game . The Rules Engine is the current muse of many an architect giving a smart makeover to the digital landscape of the bank. In its new avatar , it powers intent classification , interprets signals from smart channels and even acts as a reasoning engine while doing its classical role of decisioning , computation and comparison.

Most ‘smart’ banks aiming to ride the digital transformation wave are incing towards their 100 day goals of AI Adoption .Deliberations while evaluating strategic vs tactical goals and trade-offs between cost and time-to-market of AI enabled systems zero in on the rule-engine as a powerhouse of pre-built logic. If only the rule engine scales up to become cognitive adaptive , a number of interfacing systems may be able to draw from its intelligence. However , here is a look at how the rule engine and the smart systems are sharing space in the evolving digital space.

Intent Identification for the Workflow Bot

While the user interacts through his channels of choice, an integrator service such as the one embedded in the Microsoft Bot Framework, accepts the message and routes it towards the bank’s bot . The Bot then registers the request , passes on the request to its Chat Interpreter or the NLP engine eg LUIS. The NLP Engine can perform a preliminary intent identification based on heuristics .The Rule Engine accepts this as an input and traverses through predefined interaction patterns and zeroes in on the most accurate intent by applying an additional set of rules routing it to the most appropriate workflow or point of entry(state) in the identified workflow.

Decisioning for the Robo Advisor

Going by a similar interaction model as mentioned above, advisory services use the rule engine’s decisioning abilities to generate responses which include the following

· Calculation based on parameters (such as eligibility checks)

· Comparison across generated inputs (recommend credit cards or local offers)

· Response Selection (to advise , insist or warn — selection of tone , selection of products , selection of actions)

Interpretation for the ChatBot

Not always but sometimes the interpretation can be powered by a rule engine as well. If wit.ai helps train your bot with stories that are of the nature ‘If A says this .. then B says this ‘ it can be abstracted to create if-else rules of the nature ‘If A .. then B ..’ .The rule engine cannot take on the task of training the bot but can ease decisioning or accelerate basis the nature or complexity of statement.

The rule engine’s forward and backward chaining capabilities help it to act like an inference engine as well helping build responses based on past interactions

Message Transformation for the Smart Peripherals

The future of Fintech and IoT is interlinked. From paper to computer to phone to watch — the instruction to the bank is now probably going to be at the tap of a coffee mug. With different devices and no solid standardization rules yet , the rule engine steps in leveraging its embedded library of transformation rules to enable any to any conversion messages.

It will be interesting to see how the rule engine evolves over time . Will it be merely camouflaged to power smart systems or will it emerge as the cerebrum of the AI ecosystem that helps reuse interaction patterns , evolves and self learns to leverage across product processors , smart devices and bots. In other words , will the adaptive cognitive rule engine be a contender for future investments in the AI strategic roadmap . Lets , wait and watch !

The Year of the Banker Bots

With digital banking taking new age dimensions and moving beyond the standard automation and user experience , there is a notable shift in the rise of investments in intelligent systems across the globe . 2017 is predicted to be the real game-changer where the bots are going to greet , guide and operate the bank.

Geared up for Botsification

With 11,000 bots live on Facebook messenger alone and 23,000 developers having signed up for building bots this year , get ready to chat with your service providers.As per Gartner 38% of consumers have already used a virtual assistant for services on their mobile phone in 2016  . The bots in fintech are typically either goal-based dialog agents or chatbots. This is the year of finbots

Over the last 2 years the Bot builders have reached a certain state of momentum if not maturity and therefore today ‘botsification’ of processes is no longer sounding far-fetched or experimental. Google , Facebook , Microsoft , Apple and every company that matters has invested heavily in bots and now have bot building frameworks ready for mainstream adoption.

Is Banking Ready for ‘Botsification’?

Banking as an industry is not a leader in the adoption of chatbots but there is a conscious decisioning if not adoption process underway in most banks with a careful and definitive digital strategy.  Healthcare in the US , has seen the maximum advancement in mainstream operations , with bots playing a major role in the transcription process. Most of these conversational interactions with a bot are now HIPAA compliant with mainstream service providers stepping up on the compliance front. Banking is yet to enforce Regtech in to the ‘botsification’ arena and is toying with dialog agents and customer service chatbots as its step one into the world of adoption of AI .  However , the use cases or area of engagement in most banks is clear and evolving.

Banks that have Invested Already

Santander UK introduced the Santander Smart Bank app where customers could speak to their mobile phone and ask queries related to their accounts . Future versions promised to have voice enabled payments and reporting of lost or stolen cards. Very ambitious! However, I have my reservations on bot enabled payments because artificial intelligence as a technology relies greatly on historic data and pattern recognition. Unless there is security to match up this may be a step to premature.

In April last year , Swedbank adopted Nuance’s Nina as its intelligent virtual assistant based on NLU technology. Nina offers a conversational experience to Swedbank’s mobile customers . Nina offers its chatbot primarily as a healthcare transcription engine . We are yet to measure the nature of success Nina can offer Swedbank .

Erica , Bank of America’s chatbot due for launch in 2017 is a shift away from the conversational bots where the conversation is initiated by the consumer . Instead , Erica can drive conversations . BoA promises ‘Questions , Answers, Insights’. Insights is what is intriguing the community. Erica is going to be able to guide a user on spending habits and also track credit score. Experts such as Chris Gledhill think Erica might be the ‘coolest’ entrant if industry rumors are to be believed.

Closer to home , HDFC launched it OnChat platform through Niki.ai’s  chatbot integration last week. Niki is a great platform to start building your services but its NLU capabilities cannot yet be commented on.Measurable goals for such initiatives in terms of business and engagement are yet to be ascertained as experimental or mainstream.

The DBS Digibank’s Mykai powered by Kasisto is perhaps one of the most conversationally mature bots to have entered the arena this year. Not surprising as Kasisto is a spin-off from SRI International that powers Apple’s SIRI.  Mykai is currently available on app stores in the US.

Bank / FI BOT Tech  Vendor Phase
Santander UK SmartBank Nuance and built in assistane with Santander Universities Live
Swedbank NINA Nuance Live
Bank of America Erica Homegrown To go live in 2017
HDFC OnChat Niki.AI Live
DBS , Digibank MyKai/Kai Kasisito spun off SRI International(makers of Apple’s SIRI) Live
RBS Luvo IBM watson Was to launch in December with 10% of Scotland customers
Axis Bank Not known Active Intelligence PTE


Announced its award of contract to the tech vendor
ABSA Not known Not known Announced intent
Bank of Tokyo Mitsubishi Nao. This  is not a chatbot. It is a  pint sized interactive robot Aldebaran Robotic (Softbank Robotics) Early 2015


Mizuho Pepper. Aldebaran Robotic (Softbank Robotics)
Yes Bank Payjo To Launch in 2017
RBL Payjo To Launch in 2017

The Bots will Grow Up Over Time

It is going to be interesting to see how the bots grow up over time. The investment in these bots is also with the intent that artificial intelligence is a continuously learning technology. The more you talk to your bot, the more intelligent it gets . Well , the historic embarrassment that TAY caused Microsoft merely 16 hours post its twitter launch will ensure banks invest in technology to monitor and control bot activity . While budgeting for the investment in bots , it is equally important to invest in companies who are working on technology that empowers and secures the bot.

Generative , Hybrid or Heuristic ?

While the tech providers today are using primarily the ‘Retrieval Based Model’ , it is foreseen the Chatbots build on the ‘Generative Models’ will survive the test of time.

A Generative Model takes as input the user message and the previous message to generate responses. It urges you to talk more to it and divulge more information , before it responds.

On the other hand  , the Retrieval Based Model relies primarily on a database of responses – it assimiliate context , user message and retrieves the closes pre-defined response through syntactical algorithms .Context may include a position in the dialog tree. In case it does not use context , it will respond only basis the last message ensuring stateless retrieval.

Alternately , there is also the Pattern Based Heuristic Model which engineering responses . The chatbot traverses through multiple patterns prior to responding.

Finally , a hybrid model that uses a combination of generative for intent classification and retrieval based for entity categorization , pass them through a heuristic model (or rule engine ) for response

Usability drives Adoption

The ultimate test which is goes beyond the Turing Test is that of a user’s acceptance of the offered conversational experience. Will it be dismissed as an annoying addition to the mobile phone or a trusted personal assistant , only time and technology will tell.