Banking Central | As Uday Kotak’s successor, Ashok Vaswani has big shoes to fill

Kotak Mahindra Bank picks Ashok Vaswani as its next MD and CEO

The Street was taken by a surprise when Kotak Mahindra Bank picked Ashok Vaswani as managing director and chief executive officer. The chatter in the industry was that Kotak will nominate one of the insiders for the post keeping in mind the continuity of the bank’s working culture. But, finally,  it chose an outsider for the corner office.

The Reserve Bank of India (RBI) too has always pitched for an arm’s length between the promoters and the management of private banks. Over the years, the banking regulator has been pushing promoters of private lenders to cut promoter stake and stay away from leading executive positions beyond a certain period to ensure good governance and avoid conflict of interest.

But, for the bigger ambitions of the bank, Vaswani’s appointment is a step in the right direction. Vaswani coming on board will enable the lender to progress on its digital journey and prepare for its global ambitions. The banker is known to build digital banking businesses in MNC companies and is thoroughly familiar with the latest innovations in digital banking and artificial intelligence.

The international banker is seasoned for over three decades in the industry,

initially at Citigroup and, more recently as the chief executive of Barclays Bank, UK, and subsequently the CEO of their global consumer, private, corporate and payments businesses. Vaswani is now the president of Pagaya Technologies Ltd, a US-Israeli AI Fintech. He is also on the Board of the London Stock Exchange Group, the SP Jain Institute of Global Management, UK, and supports various philanthropic organisations, including Pratham, and Lend-A-Hand.

Yet, as always is the case in big organisations, there are immediate challenges as well.

The first and foremost will be gaining the confidence of Kotak veterans and other senior-level executives who have been with the bank for decades and were part of the organisation building process. Big leadership changes typically follow talent exodus at the senior levels. Vaswani needs to act quick and address the likely trust-deficit that may emerge within the ranks of Kotak.

Second, Vaswani also needs to deal with the Kotak factor within the bank that will remain even after Uday Kotak’s exit in order to shape up the strategy to grow the bank beyond this point. The Kotak family remains a powerful factor being a significant shareholder, enjoying around 26 percent of the pie, and due to the presence of Uday Kotak on the Board, though in a non-executive role. Kotak will remain an influential voice on the Board of the lender.

Third, Kotak had his share of friction with the RBI in the past. The regulator, understandably, is keeping a close watch on governance in big banks and involvement of the promoters in business decisions. Finding the right balance with the regulator will be key for the new chief.

Except these three areas, Vaswani has everything else set for a smooth run. The bank is a well-oiled machine that has strong vertical leaders and impressive financial parameters. The new leader won’t have difficulties as far as performance is concerned in the immediate term.

The business of banking works largely on trust and remains highly sensitive as a banking institution deals with public money. And, there are endless challenges at every stage. All this requires tremendous grit and perseverance. That’s where Uday Kotak stood out without his impeccable track record as a trouble shooter and visionary leader.

Kotak’s successor has big shoes to fill.

Banking Central is a weekly column that keeps a close watch and connects the dots about the sector's most important events for readers.