ICICI Bank is working out new initiatives in online banking. In an interview with Neeraj Jha of FE-Thinktank, the bank's managing director and CEO H N Sinor talks at length about the bank's online banking strategy. Excerpts:
What is your definition of Net banking?
It is an additional channel through which a customer can transact. Internet helps the banks to gain substantially in terms of transaction costs. According to our study, a Net-driven transaction would cost Rs 2 compared to Rs 43 and Rs 20 for transactions done through a branch and an ATM respectively.What is your Net banking customer base?
In the last count, it was 1,40,000. During the last 2-3 months, page views of ICICI.com has been touching the one-million a month-mark. Our Infinity product has been getting about 30,000 hits per month. As of now, some 3,000 transactions are taking place on the Net per month.
How much have you invested in your Net banking initiative?
We would not have invested more than Rs five crore including software and other costs.
What paybacks are you looking at in your online banking technology investments?
I will not look at that now. We have made these investments so that we could be early birds and be ready with our products and processes in time.
What customer segments are you actively looking at in online banking?
High net worth clients apart, we are looking at the middle class. We are also looking at those in the 30 to 40 year age bracket working in the corporate sector and proficient in using technology. Earlier, it was a generation game. Not any longer. For, people in their 40s and 50s are also becoming Net-savvy.
What Net banking customer base are you looking at? How would you acquire them?
As per our estimate, there will be about 30 million Net users in the next three to five years. We are obviously looking at a big share in that. Well, we are at an advantage. For, there are only a few players out there now. The situation may not change in the next three years.
Who are your competitors in Net banking?
Right now, the contest both in B2B and B2C segments is three-cornered. That is, among ICICI Bank, HDFC Bank and Citibank. But, I see SBI, Bank of Baroda and Corporation Bank joining the fray soon. Among the foreign banks, HSBC and Standard Chartered Bank too have major plans. In all, there will be around seven or eight players.
What are the likely threats to this scenario?
One threat is that departmental stores and portals might become banks. It has happened in the USA, with departmental stores taking up many of the banks' functions, particularly the front desk operations. We do not know what will be the role of banks in the coming years and what direction they will take. We have to be very alert when it comes to competition, which can emerge from anywhere. Banks talking about technology for the next five years will face problems.
Most banks going online do not seem to have strong business models. What are your comments?
You can have a business model but you are not sure whether it will work or not at the end of the day. For internal purposes, you can certainly have a business model for either cost-cutting or revenue-generation purposes.
How do you generate volumes online?
I do not see any hurdle in growing beyond the metros. Cybercafes are there. All you need are access points. We plan to tie up with computer manufacturers for making PCs available to individuals at lower prices, especially in the metros. We are going to provide touch-screen kiosks at our ATM centres. We are also tying up with Satyam Online's cybercafes, where we will install our ATMs and they will allow our customers to use the Net.