'AI will kill digital': Axis Bank head Sameer Shetty calls ‘Zero-Ops’ north star

Axis Bank has lined up 19 launches for the upcoming Global Fintech Fest. Sameer Shetty, group head – digital business and transformation and strategic platforms at Axis Bank, speaks about how technology is reducing human intervention, improving customer experience and enhancing safety. Shetty, a former partner at McKinsey, has worked with financial institutions across India, Southeast Asia and the Middle East.What was the thinking behind using the bank-within-a-bank concept for digital?We made digital a self-contained business because it requires different skills from branch banking. Branch banking depends on physical distribution; digital depends on technology, design and simple customer journeys. Bringing technology, product, design, marketing and risk together lets us build and take products to market faster. We have a 50-member design team, many from outside banking, and nearly 300 engineers who build in-house.But this is not a separate bank. What we build is also used across the bank. A personal-loan customer can apply through the app, branch, salesperson or DSA, using essentially the same underlying technology. The aim is to give digital banking the capabilities to operate end-to-end while making those capabilities available to the wider bank.Do you use it to provide differentiated digital-only products?It is not just an alternative channel; it is built to design and incubate truly digital-first and digital-only products, like one-click pre-approved personal loans, created specifically with native digital journeys in mind. We operate under a strict definition where "digital business" refers exclusively to end-to-end, straight-through journeys where both customer acquisition and processing happen with zero human intervention. This is fundamentally distinct from assisted journeys, where a salesperson or branch initiates the lead even if the back end is automated, or traditional physical, paper-based processes. Because only pure, unassisted D2C transactions flow into our digital unit's dedicated balance sheet and P&L, and our direct digital marketing costs are self-contained, we can cleanly measure our distinct cost structures, unit economics, loan volumes, and product-level fee and interest yields without blurring them into the wider branch network.How does digital help in customer acquisition?Acquiring new-to-bank customers has not scaled to the extent we would like it to. It accounts for under 5% of fresh savings-account acquisitions. Its real strength is deepening existing relationships. Around 25% of personal loans are sourced end-to-end through the app, rising to 55% for fixed deposits and nearly 70% for mutual funds.Digital is also the primary engine for select lifecycle products, with over 85% of credit-card EMI conversions happening on the app. So while new-to-bank acquisition remains distribution-led, digital drives large-scale, self-service adoption among existing customers.How do you work with Freecharge?We house our entire in-house engineering team, nearly 300 strong, within Freecharge to take advantage of its native fintech DNA. Traditionally, banking technology teams relied heavily on external vendors rather than building software themselves, which made it challenging to attract specialised engineering talent with standard banking organisational structures. Freecharge gives us a tech-first environment, modern organisational design and technical career growth paths that attract top developers and product builders who might never consider working directly inside a traditional bank.Operationally, the engagement functions much like a vendor relationship: we commission specific projects and pay Freecharge accordingly. However, by regulation and design, Freecharge is a 100% captive sister company dedicated entirely to Axis Bank. They do not build or service products for anyone else, ensuring complete alignment with our roadmap as they develop our proprietary digital architectures, journeys and native products in-house.Where all are you using AI in the bank?We are using AI across customer service, operations, risk and technology, with “zero-ops” as our north star. Conversational AI handles about 10% of inbound calls and is scaling into outbound collections.In current-account re-KYC, AI validates complex documents at branches, cutting NFTR (not first time right) from over 70% to around 25% and review hops from an average of 3–4 to roughly 1.5. We are extending this to lending/MSME onboarding, where AI reads unstructured and handwritten documents, extracts data and pre-fills applications, replacing 20-minute forms with targeted questions. AI also streamlines risk/compliance checks, audits, Change Management Committee/Project Management Committee notes and CCTV monitoring. AI is not restricted to one part. One of the things AI will do is ‘kill digital’.In technology, AI supports application builds, vibe coding, and the use of team transcripts and emails to build business requirement documents. Our Thrive portal was built in just two weeks using AI; meeting transcripts/emails generate first-draft BRDs, leaving teams to handle only the incremental 30%. While AI-led testing and InfoSec remain throughput challenges, our goal is an end-to-end AI-driven IT lifecycle. We are also exploring customer-facing AI, but cautiously until we reach 100% comfort and safety.What is the progress on the unified lending interface and credit on UPI?We were one of the first banks to go live on ULI and still have one of the highest market shares, processing four-digit crore amounts every month through its APIs. ULI, built by the RBI Innovation Hub, aggregates multiple lending-related data sources through APIs, including PAN and land records, which we use for SME lending. It is a bit like what the Account Aggregator does.We had also launched credit line on UPI two years ago but subsequently withdrew it. The biggest challenge is that, unlike a credit card, a loan cannot offer an interest-free period. RBI rules require interest to apply from Day 0. Without the 30-day-or-so interest-free period that makes credit cards attractive, customers have little reason to choose credit on UPI over a card.What is the bank doing to prevent digital fraud?Over the past 18 months, we have tightened digital security by replacing internet-banking OTPs with in-app mobile PINs, sharply reducing fraud, and adding Aadhaar Face Auth across 6–7 journeys, including personal-loan disbursals. Lock FD prevents online FD closure and requires Face Auth to unlock.Our Safety Center lets customers switch off internet banking/UPI, block fund transfers and set controls such as a 10 PM–6 AM transaction block. SMS Shield verifies bank messages, while high-risk transactions, such as significant transfers by senior citizens to first-time recipients, can trigger alerts and confirmation.The bigger challenge is scams such as digital arrest and investment fraud, where customers themselves authorise payments. We can flag and verify such transactions, but ultimately customers must recognise when they are being manipulated.How is the bank using the Account Aggregator platform, where you can access details of other accounts?We are using Account Aggregator for both lending and personal finance management (PFM). About 2 million customers use our PFM feature out of our 16–17 million monthly active users. Customers can link external bank, mutual fund and broking accounts for a consolidated view of their finances.Currently, we provide detailed categorisation of our own debit-card, credit-card and UPI spends over six months to a year, and plan to extend this to external savings accounts. Credit-card data is not yet available through the aggregator. As a Financial Information User, we securely store retrieved data, giving us the capability to build features such as cross-bank transaction search, though customers currently have to view each bank separately. We strictly follow purpose-bound consent. If data is accessed for PFM, we cannot use that same data for lending decisions.Get the latest Business News and Live updates. Download the TOI app.