Jay Kotak, the 32-year-old son of billionaire banker Uday Kotak, made headlines this week, three years after joining the personal financial organisation his father founded as a non-bank lender more than 35 years ago. At an event, Uday Kotak publicly introduced his son to investors and analysts, signalling the start of a new era at the bank. Jay Kotak, 32, is the co-founder of Kotak811, a fintech neobank that Kotak has incubated. “I can see a lot of our business moving forward in the horse business.” Many of our businesses are transforming into automobile businesses. Some of them are rushing to the front. The horse business generates a significant amount of revenue. We need to take advantage of the speed. A customer feels much more at ease in a car. Talk to any client, and they’ll tell you that their transactions have shifted to the internet and mobile devices. It indicates that change is afoot,” Uday Kotak said during the event. Jay Kotak joined Kotak Bank as a government assistant to Shanti Ekambaram, the bank’s retail banking chief. He became Kotak811’s co-business head last year and currently oversees a 104-person workforce.
Jay Kotak, a Harvard Business School graduate with a bachelor’s degree in history from Columbia University, has previously worked for McKinsey & Co., an equity fund’s financing analysis, and a Goldman Sachs funding banking internship. Jay Kotak quoted his professor Clay Christensen on the need for large corporations to nurture autonomous models and moderately self-disrupt rather than be disrupted from the outside. According to him, Kotak811, which focuses on interaction and cross-selling, is an example of this principle.
“Inside Kotak, Kotak811 is a full-stack digital financial institution. Our prospects are valuable and long-term, similar to those of a department bank. On the core, we have know-how and knowledge. He told analysts and investors, “We have strong unit economics compounding at scale with 4.5 years of buyer breakeven in the works.”
According to analysts, the market will now be watching Kotak Bank’s succession planning.
“Jay Kotak comes across as a young zealot, but he still has a long way to go in terms of business acumen and democratic management skills. We’ll be paying close attention to the succession planning, which will likely include two government administrators (Okay.V.S. Manian/Shanti Ekambaram) vying for the managing director’s position, as well as the impact, if any, of potential RBI holdco norms,” according to a report released last week by Emkay Securities.
Despite this, few experts have been impressed with Kotak 811’s performance during the last five years. While it has been a key buyer acquisition engine, analysts believe that its increased financial savings account rate of 6% provided over these years was primarily responsible for the growth in the current and savings account (CASA) ratio to 61 percent from 44 percent in FY17 and the SA ratio to 40 percent from 26 percent.
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