IDFC FIRST Bank has posted stellar results in the recent past. Riding on its digital capabilities, the bank is looking at constant innovation to serve its customers better. In a freewheeling interview with Suchetana Ray, editor, Outlook Business, and Nidhi Sinha, editor, Outlook Money, the bank’s executive director and chief operating officer Madhivanan Balakrishnan talks about the bank’s strategies, including the use of its digital capabilities, to enhance customer experience. Edited excerpts:
Customer deposits were up 44% in the first quarter at IDFC FIRST Bank, and retail deposits formed about 77% of this growth. There is talk about the new post-pandemic bank customer wanting more. How is the bank reinforcing its commitment towards its customers?
For us, customers are a priority, which gets reflected in our catch line “Always You First”. The fantastic growth that we are seeing in deposits is a result of two primary factors. One is trust that the brand has been building over a period of time. In the last three years, especially after Covid-19, I think some of the actions that were taken and the products that we launched on the liability side have continuously reinforced this philosophy of putting the customer first, be it the kind of rate of interest on offer or the fact that we are offering almost 28 different services free.
Two, the bank is digital savvy and can understand its core customers well enough to build services around their needs. That is the secret of how we are being relevant. In fact, it is not just quarter-on-quarter performance, you will see consistent growth.
IDFC FIRST Bank has transformed itself into a digital-oriented retail bank. How has the bank helped reshape digital friendly customers and how are they reshaping it?
We have been in banking for almost two-and-a-half decades, and I have seen this dramatic change happen over this period. There was a time when people used to flood into branches, and the core idea was to open new branches and have more people to service them. Those days, innovation used to be around physical services, like navigating people to the right counter, ensuring prompt service, etc.
Today, customers do not walk into branches. All of us have 100 to 150 apps on our phones, because that is the way people have started interacting. When your day-to-day life is driven by digital and apps are a way of interacting with various stakeholders, I think it is equally applicable for banking and we have picked up that cue and worked on making it better.
While we are a very young bank and do not have a legacy in terms of the number of branches, infrastructure, etc., we are singularly focused on how to create that unique moment of experience for every transaction that our customers make. We address questions like “Can the mobile app be the most influential, easy to access and an effective tool that enables you to access banking services?” It is not just about making payments. For example, can it help you to access customer service centre easily? Is there a mechanism to do things yourself because you are making it easy by changing the interface and how do the journeys play out in an intuitive manner? Banking is essentially a bunch of processes orchestrated to deliver an outcome, so the question is “how to integrate the front-end app with processes in the back end seamlessly?”.
I think as a bank, we are extremely savvy, and we try to keep pace with the fast-changing scenarios. That is why we will see new versions coming in frequently and new experiences being enabled. We intend to virtually create a world around finance, so that our customers can be served easily anywhere/anytime. But, at the same time, we are also there physically—our branches, our customer service centres are there to help our customers. It is going to be a unique hybrid world, because in certain aspects, you need that human touch. Yes, we are giving modern versions of being in touch, for example, through video KYC or through virtual relationship managers, where interactions are possible. So, it is convenience combined with the assurance of a human touch.
Equity investments got a digital push post Covid. But the current high interest rates seem to have made FDs a favourite again. With the Reserve Bank of India not tinkering with rates in the last few policy announcements, where are the interest rates headed now?
From the macroeconomic indicators that we have been looking at, things seem to be cooling down a bit. Even though food inflation was sort of heating up, prices are now cooling down with decent rain, and I think food inflation will be in control. Our house view is that this current interest regime will continue for some more time.
We are not expecting an upward spike again. Given that, I think FD rates will stay put for some time. The CASA ratios are heading southwards but not on an absolute level. The volumes of deposits continue to inch upwards. With rates rising, people are happier to block their funds in FDs. If you look at IDFC FIRST Bank rates, we have a very attractive 7.5% rate for a deposit of one year and one day to around 550 days.