Even as non-bank wallet players go all out to win the battle for users’ mindspace, banks have been quietly tailoring digital offerings to create more customers for their products. The 811 — touted to be the first-of-its-kind digital bank — has helped mid-sized private lender Kotak Mahindra Bank (KMB) take its deposit base to 10.5 million from 8 million within the first six months of the launch. The product is believed to be seeing 1 million downloads every quarter. Ambuj Chandna, senior EVP, KMB, said 98% of those using 811 were new customers for the bank. “We’ve basically launched this product for only new customers. While we also made 811 a good experience for existing customers since there was a huge demand, that’s a very small segment, only about 2-3% of the total number of users,” Chandna said. He added the bank was now working with a focus on cross-selling its credit products to this new catchment of mostly credit-worthy customers. “We are getting a significantly strong proportion of people with good Cibil scores. So, we are building a stack of innovations which will help us cross-sell deeper into the space,” he explained.
Similarly, HDFC Bank is looking to convert users of its wallet PayZapp into credit customers. Parag Rao, group head (credit cards and payments), said almost half of all PayZapp users were not customers of HDFC Bank. “For them, we will offer two digital products — online lending and savings accounts,” Rao said. He added the bank would launch a virtual credit card from which customers will have access to a credit line. “For savings accounts, we’ll do an eKYC and make them our customers,” Rao said. Late last week, ICICI Bank said it was teaming up with PayTm to offer short-term instant digital credits on the latter’s e-commerce platform. Änup Bagchi, ED, ICICI Bank, said this was the first time a lender was assessing credit real time. “We are using financial data but we are also using behavioural data of the customers to help us with our credit scoring,” Bagchi said.
Indeed, the conversion of an existing set of wallet users to bank customers was one of the stated goals of Axis Bank at the time of its acquisition of Freecharge in July this year. CFO Jairam Sridharan had said at the time there would be “an instant doubling of the Axis customer base” with the acquisition. “Freecharge entrenches us in the digital payment landscape. It enhances our reach in a new customer segment which is digital, which is mobile-first, which is relatively young, and it creates a platform for us to distribute our digital products and service,” he had observed. The announcement of demonetisation forced a number of banks to embrace all the options of digital payments available to them. The country’s two largest lenders by assets — State Bank of India (SBI) and HDFC Bank — joined the Unified Payments Interface (UPI) platform only in December 2016 after some of their grievances were redressed by the National Payments Corporation of India (NPCI).
Lenders are now working to capitalise on the users they garnered then in order to give retail credit growth a push. Between November 2016 and October 2017, UPI payment volumes have jumped to 77 million to 0.3 million. PPIs (mobile wallets and pre-paid cards) saw a transaction volume of 240.29 million in September; in September, 2016, the volumes were 97.07 million. In terms of value, September 2017 saw transactions worth Rs 10,977 crore while a year ago, this was Rs 5,628 crore. Mobile banking volumes which stood at 113.69 million in September 2017 were higher than the 73.06 million seen in September 2016. In terms of value, however, the increase to Rs 84,782 crore in September 2017 from Rs 77,688 crore in September the previous year was not much higher.