In the second part of the interview with Nitin Chugh, HDFC Bank’s head of digital banking, he talks to us about the bank’s plan to become an end-to-end digital bank which is also looking to provide loans on mobile devices and reducing loan approvals to five minutes and disbursal in 30 minutes. Answers to the questions have been edited for brevity:
Read part one of the interview here: “IMPS transactions doubling almost every six-eight months” – HDFC Bank’s Nitin Chugh
MediaNama: Aditya Puri’s email which was sent to customers had mentioned food delivery too? What is the bank’s plan in this space? You also have a large merchant presence in restaurants. How will you look at leveraging that?
Nitin Chugh: He did not mean food delivery as a business, but he meant through apps like Chillr or through your wallet, you would be able to pay your home delivery guy. It’s a use case he mentioned but we won’t be getting into food delivery. He hasn’t specified Chillr or the wallet but he was basically saying that we will make something even as home delivery convenient through an app.
There are two-three ways of doing that. Let’s say when we introduce peer-to-merchants payments on Chillr; the merchant has a Chillr account and you as a customer has a Chillr account and I have come to deliver your order. The only thing you have to do in this case is to authorize payment to a merchant at the time of placing the order. Or maybe you pay him after he delivers and check the order. These are the simple use cases. You could also do it in a wallet if he’s enabled it.
MediaNama: How do you see the e-commerce space evolving with respect to banks and offers? Flipkart said that they will be moving to an app-only model? What are your thoughts on the same?
Nitin Chugh: We do have a portal for all the e-commerce deals the bank has and now have an app for that too. That said, we are not into e-commerce in any sense so even when you login you will see those disclaimers. We are only aggregating those offers from our merchants who are willing to display those offers for our customers at a discount by using our payment methods like our cards.
The cash-back offers are on a one-on-one basis and you could go and tie up on a time defined basis for a day or two depending on what the promotion is about. The logic behind this is to find what is more value-adding for our customers. We would not want to tie up with a merchant which has a very limited use case for our customers. So if we have good visibility and I know for a fact that our customers like to shop during the next long weekend that is coming up, I would talk to similar like-minded merchants and do a joint promotion. And usually the merchants are the large ones. In any case, we will also have those one-on-one offers which are on the offer locator, which are the restaurant tie-ups, fuel offers etc.
There are not enough branches for a population of 130 crore, so the more we have in terms of extending payments reach, the better it is.
MediaNama: How do you see payments banks playing out? Your thoughts on the same?
Nitin Chugh: Aditya Puri himself said that we view ourselves as a payments bank (laughs). But my personal thoughts on the same: it will expand the market and people are going to benefit from it. Look at the ratios, that’s what I tell anybody who asks me this question. Finally, there are not enough branches for a population of 130 crore, so the more we have in terms of extending payments reach, the better it is. How it plays out will have to be seen. But like Mr. Puri has also mentioned we’re already a very large payments bank.
MediaNama: How do you see mobile banking evolving? Do you see USSD as medium as increasing reach?
Nitin Chugh: See mobile banking has multiple formats. What you hear the most is on mobile apps because that’s where you can see it and say that it’s a good app. But even SMS is the most traditional form of mobile banking and we were the first ones to introduce it in India. USSD is another channel the RBI, government together are pushing. You also have mobile site-based mobile banking and we also introduced missed call banking about a year-and-half ago which took off really well. So our own belief is that, because there are so many customer segments, you can’t have one solution for all of them. Somebody will need an app. Somebody will need the app but maybe in Hindi or other regional languages. Someone will need an app with hundred functions and someone will need an app with just 10 functions so you need to allow them to customize it.
But it’s still the early days for payments over USSD. But look at its acceptability. Finally it is addressing a very large market. But as of now, the adoption has been slow, there’s no doubt about it.
So when all these platforms are talking to various customer segments, people either stay in those platforms or they keep moving from one to the other. So if I start with a basic level feature phone, I can start using USSD and SMS based banking. And as I upgrade to an Android entry-level smartphone, I can immediately download the app.
But it’s still the early days for payments over USSD. But look at its acceptability. Finally it is addressing a very large market. So the adoption here too will have to reach a tipping point before the scale up can happen. But as of now, the adoption has been slow, there’s no doubt about it. But it requires a push from the ecosystem. So the good thing is that everyone has come together on one platform to push it. As and when the efforts are amplified you will see quicker adoption.
MediaNama: Aditya Puri’s email also mentioned about loan disbursal on mobiles? How is that going to work?
Nitin Chugh: A lot of our work which is not visible, and probably cannot be visible, happens at the back end. For example, we’ve introduced a straight-through processing of loans in a few branches and we’ll be rolling it out soon. We have the ability to approve a loan in five minutes and disburse the loan in 30 minutes with all the checks done thorough our digital platforms. If I have a pre-approved credit card for you and if you happen to be in my branch and I am attending to you I can actually get you to apply for that by showing you that offer through internet banking in five minutes and deliver the card to you in five days time without any paperwork. If I do not have a pre-approved offer for you, I will sit through an application form on my system and I’ll ask you a few questions and come up with an offer with some calculations and tell you that this is what the bank can offer you at a certain rate. If the offer appeals to the customer, there’s a short application which goes straight into my back-end processes and comes up with the approval in five minutes and I take your documents and verify them and send it to the back-end by scanning them and the loan is disbursed. And this is the experience we’re trying to give in our branches and we’re trying to extend it to mobile. I could come and meet you outside the branch and I could be using a tablet or a mobile device and get you to apply on the same platform and give you the same experience. Now that requires a lot of work at the back end. And these are things that are fundamentally changing the way we interact with our customers offering products in a fast, convenient and digitised manner.