HDFC Bank develops own AI platform, fraud monitoring system

, once hobbled by tech issues, has built its own AI platform and fraud-monitoring system that go beyond what fintech platforms offer. The latest platforms will help the lender overcome the challenges posed by proliferation of frauds in the banking system as a whole, Ramesh Lakshminarayanan, group head of information technology and chief information officer at HDFC Bank, told ET.

The country’s largest bank by value is increasingly positioning itself as a technology company, developing a growing share of its software in-house.

“Tomorrow’s banks are going to be technology companies,” Lakshminarayanan said. “If you do not have your own engineering talent and your own platforms, you will not be able to compete.”

The bank’s generative AI platform Neev, built to automate operational processes and certain services, was developed by a dedicated AI team at its Gurgaon engineering centre that has about 150-200 employees working exclusively on AI. “We are building our own SLMs – small language models,” Lakshminarayanan said.

He said the idea of proprietary AI platform emerged about 18 months ago when engineers recruited from companies including Amazon and fintech firms proposed building one. “It was audacious, but we said, let’s try. That’s how Neev was born.”

The lender has also built an in-house platform to detect fraud in real time. “We have built our own streaming platform in-house – we have not gone for any third-party products, unlike many other banks,” Lakshminarayanan said.

The platform analyses transactions as they occur and can identify money mule activity within microseconds. “If there is any deviation from the pattern, we immediately flag it and block the credit – these are instant, automated self-blocks,” he said, adding that the same engine is being used to curb UPI-related fraud.

To combat mule accounts, the bank has strengthened customer onboarding and verification processes, the CIO said.

“The first line of defence is tightening KYC,” he said. The bank has introduced bureau checks, Aadhaar validation and fingerprint verification for liability accounts, in addition to connecting with the Ministry of Home Affairs registry and the Indian Cyber Crime Coordination Centre (I4C) database to identify known fraudsters.