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Technology to lead Yes Banks’ pivot to retail and SME banking

Yes Bank has laid out a technology driven strategy to grow its retail and small-medium-enterprise lending business over the coming two years. The bank was traditionally a big corporate lender a few years ago, but things have changed over the last year after the Reserve Bank of India (RBI) appointed a new board and replaced the management of the bank.

Yes Bank aims to grow its digital sourcing by 10% through payments platforms and partnerships with large aggregators, intermediaries and neo-banks, it said in its financial results. The bank posted a net loss of Rs 3,788 crore in Q4 FY21.

“Our medium term objective is to have 60% retail and SME loan book and 40% corporate book. While corporate book has declined marginally, we are looking to grow it selectively,” said Prashant Kumar, Managing Director and Chief Executive Officer, Yes Bank.

“During the last 12 months the bank has strengthened its data and technology infrastructure. We have strengthened our data centre. We process over 1 million Unified Payments Interface (UPI) transactions every month, And now 80% of Current-Savings Accounts are opened digitally,” he said during a media call on Friday.

Tech strategy over next 12-24 months

To increase its share in the retail and SME lending market, the bank said that it will:

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  • Expand partnerships and investments in fintech eco-system
  • Leverage Artificial Intelligence and Machine Learning
  • Create fully scalable digital infrastructure
  • Leverage UPI base to acquire deposit customers and retail assets
  • Set up digital lending platform to automate SME loan sanctions
  • Loan in Seconds platform for four loan products: personal loans, business loans, auto loans and loans against securities

“Retail will grow on the back of digital channels and our own internal channels will continue to contribute significantly. That part really paid off during the last year,” said Rajan Pental, Senior Group President and Global Head of Retail Banking, Yes Bank. “On the SME side, the growth looks muted because there was a reduction in the first quarter of this year and because of the moratorium, their activity got paralysed. But post that there has been a good 10-12% growth in the SME business,” he said Pental.

Pental added that from on-boarding to servicing customers everything takes place on a digital platform. “Unlike the market practice of sourcing the SME business through direct-sales-agents or chartered accountant, a large part of acquisition happens from the branch network. From distribution as well as platform perspective, we see a significant movement in SME assets in line with retail assets,” he said.

Digital Banking Highlights

The bank will . As a result of increased technology adoption, the banks’ entire cost-to-income reduced by 500 basis points over the last year to at 89.7% as of March 2021. The banks’ management said that they have brought in technology across many aspects of its business, which has brought in efficiencies across the entire cost structure.

  • 45% market share in UPI payments in Q4 FY21 vs 33% in Q4 FY20
  • Mobile Banking: 1.85 million users transacting more than Rs 26,672 crore
  • Internet Banking: 2.1 million users transacting Rs 94,957 crore
  • 11.3% of cards were sourced digitally in Q4 Fy21 vs 2.5% in Q4 FY20
  • Over 75% of accounts opened in Q4 FY21 were digital under Yes Aim
  • 87% of fresh personal loan applications are score-card driven

Financial Highlights

  • Net Loss: Rs 3,788 crore in Q4 FY21 vs Rs 3,668 crore in Q4 FY20
  • Net Interest Income: Rs 987 crore in Q4 FY21 vs Rs 1,274 crore in Q4 FY20
  • Cumulative provisions: Rs 26,558 crore in Q4 FY21
  • Advances: Rs 1.66 lakh crore in FY21, down by 3% YoY
  • Deposits: Rs 1.62 lakh crore in FY21, up by 55%
  • Gross NPA: 15.41% in Q4 FY21 vs 16.8% in Q4 FY20
  • Net NPA: 5.88% in Q4 FY21 vs 5.03% in Q4 FY20

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