How Digital Helped Yes Bank to Reduce Cost To Income Ratio

The cost to income ratio of Yes Bank in the recently announced Q3 results for FY2026 was 66.1 percent as compared to 71.1 percent in Q3FY25 – a 5 percent Y-o-Y reduction in the cost-to-income ratio. The bank, which has now successfully recorded a consistent decline in its cost to income ratio in the last four quarters, attributes this to a slew of digital transformation programmes at the bank, among other initiatives.

The cost-to-income ratio shows how much paise a bank spends to earn one rupee of income. If the ratio continues to decline in successive quarters, it is a sign the bank’s various efficiency programmes are coming to fruition. It is now beginning to earn more money but with lower incremental expenses. The digital infrastructure is enabling the bank to acquire more customers and  transact faster without any additional costs.

Mahesh Ramamoorthy, CIO, Yes Bank, said, “Over the last three years, we've invested a lot in technology to create efficiencies. The outcome of which is that we can open more accounts, give more credit cards, loans, while reducing the cost base..” 

This essentially drives the bank’s ability to drive more business, which means, “as the denominator (income) starts to increase, the costs either remain flat or reduce,” said Ramamoorthy.   

Yes Bank: Digital Enables Scale Up

The bank, over the past 3-4  years, has been on an aggressive journey of digital enablement or digitizing a number of product capabilities enabling it to drive volumes with faster turnaround times. 

“The current accounts that we opened used to take one or two days to open a current account. Today over 90 percent of the current accounts are opened in about four hours. Savings accounts are opened in approximately four minutes, which earlier used to take between 12 hours to a day. A significant amount of digital capabilities have been enabled around the entire asset onboarding journey, which means step in the journey of onboarding/decisioning has an API integration,” informed Ramamoorthy.

Ramamoorthy also stressed the importance of leveraging India Stack / APIs from Reserve Bank Innovation Hub (RBIH) for servicing the customers. 

“India has PAN, Aadhaar, GST, credit bureaus, and many digital infrastructure that can be used to fast track customer journeys,” he said.

Challenges Faced

In the past few years following the digital transformation roadmap, the challenge before Ramamoorthy wasn’t on the technology front. 

“The challenge is not technology rather the need to clearly envisage how the capabilities that technology can enable is put to the best use. The outcomes need to enhance experience or increase efficiency or drive better risk management supported by strong programme governance through the change cycle. So in that sense, focus on change management is critical to drive sustainable outcomes. Reimagining the processes with the use of modern technology is key to drive efficiency rather than incremental changes to an existing process being wrapped around with technology capabilities,” said Ramamoorthy.

Solving The Challenge

According to Ramamoorthy, ‘iteration’ is the way forward rather than copy from what the peer banks are doing. 

“You come with an open book. My peer bank has done X, another bank has done Y. That's not going to help you much. You can learn, but design the way you like it to give you the desired outcomes. As a CIO, it is about reimagining the ability of working collaboratively with my partners in either business, product, operations / vendors to stitch up end-to-end processes clearly. This would need to be iterative on the board using deep thinking processes,” said Ramamoorthy.  

Sharing an example, Ramamoorthy says while designing the asset journey, it's very easy to identify the five life cycle stages that precedes a typical personal loan disbursement which is what everyone follows. 

“However, what is important for a bank is to accommodate aspects like how the bank's risk framework overlays on top of it? How is the sourcing going to happen for the bank? Is it going to be organic or through Business Correspondents (BCs) or through partner models? How are you going to automate the entire credit decisioning part of the story? How are you going to automate the servicing part of this journey through a mobile app? Now when you look at all these components, there is going to be differentiation between what a peer bank or competition does versus what we do because those are based on which kind of segments you would want to address, what kind of numbers, what kind of policies, what kind of operational processes the bank has,” he said.

“We are one of the best banks in digital APIs being extended to Fintechs. What sets us apart is how we enable straight-through processing (STP) on those APIs and build a resilient process to comply with the regulatory expectations, and still align to give a better experience to the customer while collaborating with the partners. The bank needs to ensure the processes, verifications, and the entire validation are all in place. We learn over a period of time, and tweak as per requirements,” he added.