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The Digital Juggernaut rolls on

The top-notch bankers gave, at the second quarter earnings conference call of their respective banks, really very insightful updates on digital initiatives, undertaken by each of them:

The Digital Juggernaut rolls on

MD & CEO of Karur Vysya Bank, ICICI Bank and Axis Bank each as well as Chief Financial Officer of HDFC Bank and ICICI Bank each, provide interesting observations about their digital roadmap ahead.

Digital On-Boarding

Karur Vysya Bank (KVB) continues to improve its digital offering to customers for better customer satisfaction and onboarding. KVB has tied up with a couple of fintechs for customer on-boarding. Ramesh Babu, MD & CEO, Karur Vysya Bank, explains: “We have successfully implemented digital on-boarding of customers for opening of current accounts across the bank and are in the process of implementing the same for savings bank. We are working with 3 more fintechs for customer on-boarding, likely to be rolled out in this financial year.”

SmartHub Vyapar App, the one stop merchant solution of HDFC Bank, was formally launched in the second quarter to facilitate instant digital and paperless merchant on-boarding and allow merchants to accept intra operable payment across multiple payment modes including cards, tap and pay, UPI and QR code. The well-established distribution network of HDFC Bank, combined with its focus on digital offering and relationship management continue to fuel growth.

Srinivasan Vaidyanathan, Chief Financial Officer, HDFC Bank, updates: “The platform is adding more than 60,000 merchants every month. As of end September over 1.6 million small businesses are on the SmartHub platform. In Q2 we received a total of 261 million visits on our website averaging about 30 million unique customers per month with a y/y growth of around 12%.”

ICICI Bank has continued to operate within its strategic framework and strengthen its franchise, enhance its delivery and servicing capabilities and expand its technology and digital offerings. Sandeep Bakhshi, MD & CEO of ICICI Bank, informs: “By leveraging digital across our business, we continue to enhance our digital offerings and platforms to onboard new customers in a seamless manner and provide them end-to-end digital journeys and personalised solutions. These platforms also enable us to do cross sell and up sell.”

Digi Lending, Digi Channel

Karur Vysya Bank’s digital lending system is working well and enables it to scale up its operations, enhances efficiency besides quality on-boarding of customers. It’s co-lending business with 2 leading NBFCs is doing well. Business is sourced through channel partners, connectors and DSTs (Direct Sales Teams). With these changes, KVB has started achieving a double-digit growth, and during Q2, the bank has achieved an inclusive growth of 15% in the loan book.

Ramesh Babu elaborates: “We are in the process of rolling out co-lending service to 2 more NBFCs this quarter. We have recruited a senior executive who has vast experience in this line of activity. This team will source business through Direct Sales Channels, Aggregators and Partnership besides DSAs and DSTs, and scale up the business using bank’s digital lending platform.”

KVB is now in the process of creating emerging small business centres under small business group to exclusively focus on MSME business with less than Rs50 million exposure. It is planning to establish new centres in few potential locations during the current financial year. KVB has enabled payment of customs duty to ICEGATE portal, GST and income tax and other direct taxes through digital channel by interfacing with respective government authorities and the Reserve Bank of India.

In line with its Open philosophy, Axis Bank launched Account Aggregator based loans and credit cards in the second quarter. Axis Bank has now built the full stack for end-to-end digital lending and cards for both existing and new customers. Amitabh Chaudhry states: “Now any citizen of India, our customer or otherwise, can come to our digital channels and get instant digital paperless loans or credit cards. We were the first bank to go live on the Account Aggregator framework and we are the first to launch this capability. We are seeing good initial traction; our disbursal volumes have grown 30%+ month on month since launch.”

Cards’ Growth, Partnerships

During Q2, HDFC Bank de-activated 2.4 million cards, which have been inactive for a period of time in accordance with the RBI circular. Srinivasan Vaidyanathan updates: “We have issued 1.2 million cards during Q2 and the total card base is now 16.3 million.”

At ICICI Bank, the value of credit card spends Q2 grew by 4.4% sequentially and 43.1% y/y. The bank has issued over 3.5 million Amazon Pay credit cards since its launch. During the same period, the bank closed 817,000 inactive credit cards as per RBI’s recent guidelines. Anindya Banerjee, Group Chief Financial Officer at ICICI Bank, explains the rise: “We saw a healthy growth in retail credit card spends driven by increase in discretionary spending, higher activation rate through digital onboarding of customers, including Amazon Pay credit cards.”

Axis Bank is the fastest growing card acquisition franchise. It issued over 1 million cards in Q2, up 88% y/y. it’s Known to Bank (KTB) strategy continues to progress well with 31% of cards sourced through partnerships. Amitabh Chaudhry updates: “In credit cards, we continue to be ranked 4th largest with over 13% incremental spends market share in the last 9 months, against 11.4% period ending market share for cards in force. We have launched a co-branded credit card, in partnership with Samsung India, that will help us to further increase card penetration in tier 2 & 3 cities.”

TRXNS On Platforms, STACKS

The value of financial transactions (TRXNS) on InstaBIZ at ICICI Bank grew by about 22.8% y/y in the second quarter. The business banking and SME franchise continues to grow on the back of digital offerings and platforms like InstaBIZ along with the bank’s extensive branch network. The value of financial transactions on InstaBIZ grew by 23% y/y in Q2. There have been about 195,000 registrations from non-ICICI Bank account holders on InstaBIZ till September 30, 2022. Trade Online and Trade Emerge platforms of the bank allow customers to perform most of their trade finance and foreign exchange transactions digitally. Anindya Banerjee informs: “We have created over 20 industry specific STACKs, providing bespoke, purpose-based digital solutions to corporate clients and their ecosystems. About 70% of trade transactions were done digitally in Q2. The value of transactions done through these platforms increased by 70.1% y/y in Q2. The value of the bank’s merchant acquiring transactions through UPI grew by 26% q/q in the current FY.”

Axis Bank has 85+ digital partnerships across platforms and ecosystems. It has 6.9 mn customers on WhatsApp banking. Its 75+ corporate APIs are now live as part of ‘Project Neo’, which is all about building a world class digital corporate bank. Amitabh Chaudhry proudly claims: “We have modernized the core and strengthened technological capabilities significantly in last few years to undertake transformational digital banking projects. Leadership on APIs is a cornerstone to win new clients, new transaction banking business from existing clients. We are witnessing a strong momentum in customer adoption, partnering with our customers to offer the optimum solution based on their digital maturity.”

Activations on App

In December 2020, ICICI Bank had expanded its mobile banking app, iMobile, to iMobile Pay, which offers payment and banking services to customers of any bank. The ICICI Bank is the market leader in electronic toll collections through FASTag. Anindya Banerjee quantifies: “There have been 8 million activations of iMobile Pay from non-ICICI Bank account holders as of second quarter. We have a market share of 31% by value in electronic toll collections through FASTag in Q2, with a 20% y/y growth in collections.”

Axis Bank’s Axis Mobile app rating on the play store has gone up from 4.6 to 4.8 now. The app has over 10 million monthly active users, close to 52% SA and 43% CA customer registrations, and 4+ million loan account registrations. The app now handles over 64% of all service requests by volumes and doubles up as its largest branch. Axis Mobile & Axis Pay have 6.2 mn non-Axis Bank customers. Axis Bank has 18% in UPI P2M acquiring (by throughput).

Amitabh Chaudhry adds: “We are now rated as the world’s highest rated mobile banking app on the play store, with over 1.5 million reviews, which is the highest across 59 global banks, 8 global neobanks and 50 Indian fintech apps. On the payments side, we continue to have strong positioning with 16% market share in UPI and 15% in mobile banking.”

CX By Digi Enterprise Factory

On the technology front, HDFC Bank has continued its momentum on the technology and digital transformation to provide etter customer experience (CX) through a digital and enterprise factory. The bank launched PayZapp 2.0 to its closed user group for performance optimization and improved payment experiences, and it expects to broad base the role out shortly. ‘HDFC Bank One’ customer experience hub was launched and the bank migrated phone banking, virtual relationship banking, and tele sales from this platform in the recent quarter.

Srinivasan Vaidyanathan points out: “It enhances our customer relationship management process using AML and conversations bot enabling round-the-clock self- service capabilities to human interaction. Phone banking voice support role out is underway across the country adding more cities along with multilingual support. This is a significant step in our journey to create an engaging customer experience, bringing in productivity improvement to call centre operations.”

Digi For NRI, Foreign Studies

Recently, the ICICI Bank launched Campus Power. The bank also launched ‘Smart Wire’, a SWIFT based inward remittance system, which allows NRIs and resident customers to undertake inward remittance transactions in an online and paperless manner. Anindya Banerjee describes: “Campus Power, a platform, provides various banking solutions such as loans, bank accounts, foreign exchange remittances and value-added services to the student ecosystem for higher education in India and abroad. The beneficiaries can also use the service to submit online declaration / documents, block the exchange rates in advance and track the status of the transaction.”


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