Few players have been fleet-footed in terms of product innovations, strategy development and implementation. But one player which meets all these criteria is Citibank. Almost all new financial products and innovations, except a couple like credit cards (Bank of Baroda) and more recently the international use of domestic credit cards (StanChart), have been launched in India by Citibank. Citibank was the first to offer car finance at the dealer-level. It was the first to popularise the concept of flexible fixed deposits and multi-deposits (holding fixed deposits in units of Rs 1,000).

It allows the customers to avail of higher interest rates as well as flexibility to treat it like a savings account. When you talk about our leadership from not just being the first in product categories, it comes out of constantly innovating, because the customers are changing, their needs are changing, and their demands are becoming world class. So, we have to constantly stay ahead, says Citibank, head of sales & distribution, Sarvesh Sarup. Though, we were not the first in credit cards we clearly are the market pioneers and leaders enjoy half the cards marketshare today, he added.

Of late, the Bank was the first to launch a debit card in the country, although it is limited only to the two main metros of Mumbai and Delhi. This was on the heels of the Bank launching its international usage ATM card another first to the Bank’s credit. The card is accessible in around 100 countries and 4.63 lakh ATMs around the globe (including one in Antartica).

Citibank, which was perceived as the rich man’s bank (minimum balance in its savings account being Rs.1,00,000), is now finding it necessary to get volumes. They have now taken up a new technological step in the shape of a pilot project at Bangalore to rope in clients from other segments where the Bank had no presence. Our aim is to develop a different banking model which does not use branches, and is to be used by Citibank globally, asserts Sarup.

Ideas first
Perhaps, the most impressive of innovative product launches in recent times have been from the non-banking financial intermediary, Kotak Mahindra Finance. It launched, a year back, a unique product called K-Value, which for the first time aimed to reverse the process of buying a product, particularly consumer durables, on loan. Instead of the customer choosing a product and then applying for a loan, the K-Value scheme first sets a loan limit for the customer. The customer is then free to purchase any product on loan, preferably from a dealer authorised by Kotak. The scheme goes beyond financing consumer durables.

A K-Value customer can avail of this financing option even for buying furniture, cell phones, leisure escapades or even personal expenses such as marriages.

According to Kotak Mahindra, vice president, P Shreekanth, the scheme has dual benefits. One, submission of papers is done only once. The credit limit is fixed, which can be enhanced later, and can be used for the rest of his life by the client. Secondly, and more importantly, the customer knows beforehand what his credit limit is. With K-Value, customers get power, avers P Shreekanth.

On infinity
There are players that believe in strategically placing themselves. Two of the most strategically focused players are ICICI Bank and HDFC Bank. We from the start focused on the retail market. That is the reason for our balanced growth across major areas, says ICICI Bank, head of retail banking, MN Gopinath. While ICICI Bank has been banking on its forte fund procurement ICICI has taken up the mantel of distributing the retail products and services. One of the major strategy that the group has adhered to in recent times has been its emphasis on payroll management.

A major benefit, although which might not accrue to ICICI Bank is the ready and evaluated client list from its payroll management. The benefit would go to ICICI being the distributor of the personal finance products. These clients could be termed as more secure than those procured by any other marketing means for two reasons: One, most of the corporates chosen by the Bank for payroll management are large and reputed. Two, as per the terms, the salaries of the clients are deposited directly into the clients account.

Since the last six months, ICICI has been exploiting this arrangement in its pursuit to cross-sell its retail banking products, in particular consumer durables. ICICI sets up a small stall at the corporate’s premises and makes a presentation, even offering a discount to the clients. Cross-selling becomes more easy and efficient as data on the clients’ spending pattern is readily available.

The payroll management scheme has also given the Bank the advantage of having clustered account-holders. Characteristically, most retail banks’ customers are scattered around their branches. And it is very difficult to capture a segment, like the salaried class, at one particular place. ICICI Bank’s payroll management programme achieves just that. ICICI gets a sufficiently large customer base for any of ICICI’s retail finance products at one place.

Bang on target
HDFC Bank started off by being in the retail business. We borrow and lend retail. Our time horizon for lending is the medium term (about three years), states HDFC Bank, head credit and market risk, Paresh Sukhtankar. HDFC Bank has been aggressive in its positioning and has been among the first to fully equip itself with the latest technology. The advanced level of technology at work at HDFC can be appreciated considering the fact that all the three credit cards Visa, Master and American Express can be used to withdraw cash from the Bank’s ATM network. It was also fast in launching its bill payment service and claims to be offering it more powerfully than any other bank.

Even our Internet Banking is unique. The range of services that we offer on-line is better than what others offer today, claims HDFC Bank, head of retail branch banking, JK Basu. Our advisory service is also unique, in the sense that it is much more complete than others. We actually offer portfolio management services, adds HDFC, vice president, Neeraj Swaroop.

However, unlike the ICICI group, both the parent company HDFC and HDFC Bank are simultaneously looking at separate retail portfolios. In a way they are competing with each other in the same segment. HDFC although, plans to stick to its existing housing finance customers, while HDFC Bank plans to tap new clients. Any which way they go, both ICICI and HDFC are eyeing at having a consolidated balance sheet in the future.

Wrapping it up
The latest player on the retail banking scene is American Express Bank. It forayed into the field with a blizzard of offerings right from personal to housing loans. It began with its credit cards business, wherein it gave the incentive of transferring balances from other cards at its lower interest rates of 1.99 per cent as against over 2.5 per cent charged by other cards.

The Bank launched for the first time refinancing of almost anything that had been taken on loans. For instance, if a customer has taken a housing loan from a housing finance company, which he finds to be slightly costly, he can approach Amex for refinancing the original loan with a lower interest rate and better structured repayment options.

It also introduced this concept in the car financing market. The financing period for a car in India is limited to three years. However, almost always the first owner uses a car for at least double the financing period. Thus, in order to give a reprieve to the car owner, Amex launched a car refinancing scheme that would re-negotiate the loan repayment period at a lower interest rate. Recently, Amex also launched its personal loans scheme.