The Bank’s Country Head for Payments, Consumer Finance, Technology and Digital Marketing, Parag Rao Told reporters that 50-60 percent of the journey on digital transformation is over.
From a cost perspective, such a journey involves an upfront expense, after which the returns start accruing once the resolution is found, he said while speaking on the sidelines of a bank event, adding that the cost-to-income ratio would hit the bumps. After due to higher expenditure, the ratio has now stabilized.
“I think we are plateauing (on cost-to-income) … Overall, we are already seeing a plateau of costs,” Rao said. General banking Activities continue.
Its Chief Information Officer Ramesh Laxminarayan said that since 2018 there was an explosion of transactions that legacy systems in the banking world were not able to handle.
He said the bank, which has more than 2,500 people working in its backoffice technology operations in the financial capital, has taken an approach where it has built ‘garages’ of small teams consisting of over 200 people, which are spread across Bengaluru, Pune and Like working in different places. Chennai to develop relevant solutions.
He added that all the new solutions are cloud-native which can be easily scaled up as and when required and do not require huge investment in backend like datacenter.
A senior official said the lender’s technical teams are looking at solutions for small businesses, replacing mobile banking and coming up with a better payments suite, but declined to give more details.
Rao said the merger with its parent HDFC would “multiply” the opportunities posed by digital solutions for the lender across all segments of the business.
“We will find a good group of customers who have housing loans for more than 10 years, they are well underwritten so it is an opportunity on many fronts. It is an opportunity for more assets, it is liability accounts. There’s an opportunity for that, it’s also an opportunity for payment because all of them,” he said.
The bank on Thursday launched an app named ‘SmartHub Vyapar’ aimed at merchants after a trial phase for over a year. It aims to become a one-stop merchant solution for merchant’s banking and business needs, Rao said.
The app offers 25 services and transactions for merchants and Rao said that in the beta stage itself, 11 lakh merchants have used it, with an increase in the overall throughput on cross-sell of loans, value transactions etc. The lender aims to make the new app the largest app used by merchants in the country in three years.
He added that HDFC Bank, which currently serves around 32 lakh merchants, is on track to achieve its medium term target of taking the overall merchant base to 2 crores courtesy all the initiatives.
Significantly, in September 2020, a source in the bank had said that it has set a target of increasing the total number of merchants to 2 crore in three years.
The bank is currently expanding the current account related loan facilities through the newly launched app and will also include vehicle loans, gold loans, loans against property and loans against security.
Rao said the new app is based on the pillars of offering payments, banking, lending and other value-added services to merchants.