Until A Decade Ago, A Significant Portion Of India Lacked Basic Banking Services: V Vaidyanathan, IDFC First Bank

In the Indian banking sector, V Vaidyanathan, the Managing Director and CEO of IDFC First Bank, stands as a prominent figure. With a career spanning over two decades in India's financial sector, Vaidyanathan brings a unique perspective, having experienced the country's financial evolution as a banker and later as an entrepreneur. 

In an interview with BW Businessworld, he shares insights into the innovative strategies that have allowed IDFC First Bank to establish itself as a noteworthy player in the competitive banking industry. From a strong commitment to providing top-notch customer experiences to forward-looking technological advancements, Vaidyanathan outlines the bank's path to success and discusses India's remarkable financial transformation over the past decade.
 
As a relatively new player in the banking industry, what unique strategies or competitive advantages has IDFC First Bank employed to establish itself in the market?
 
We are truly passionate about creating high-quality customer experiences. So, as we are building for the long run, all these small things we do today will eventually evolve into the experiences of tomorrow, shaping the brand of the future.

So, for example, the way we've now designed our products, every product, including savings accounts and credit cards, sets us apart by offering zero fees on all services. We are the only bank providing credit cards with zero fees and there are no minimum spend conditions.

But for every product the bank offers, we add something special, and we believe that over time, those who experience our products will appreciate it. That's the key.

It's all about the experience. And as people continue to experience our offerings over the years - whether it's five, eight or ten years - that's how our brand will be established.
 
IDFC First Bank has made considerable investments in technology and digital banking. What future technological advancements can we expect from the bank?
 
Currently, we have one of the best apps in the country, however, it's still a work in progress, and that's one really good thing. The second thing we want to build is a real-time, hyper-personalised solution. This means that if a customer is requesting a statement of account, we can send not just the statement itself but also provide meaningful analysis of the statement by categorising the various transactions. Now, that's a value addition.
 
Could you elaborate on the transformation you've observed in India's financial landscape over the past decade, especially in terms of banking and digital infrastructure?

India is experiencing growth; the economy is expanding and retail penetration is increasing. The digital infrastructure is in place to support this growing retail sector and every segment of the ecosystem has become comfortable with digital payments.

When you consider the growth of the banking and financial services sector, it's notable that until about eight to ten years ago, even after India gained independence in 1947, around 400 to 500 million people in the country didn't have access to basic banking services like having a bank account, let alone accessing loans, insurance or mutual funds.

To put it into perspective, until a decade ago, a significant portion of India's population lived without basic banking services, similar to how they did a thousand years ago. This was a significant challenge.
 
In the last ten years, something magical has occurred. Not only have people gained access to bank accounts, which has been widely discussed, but the entire ecosystem surrounding banking in the country has evolved. It's not just about bank accounts; it's about the emergence of identity systems, credit bureaus and the widespread telecom network. All of these factors have contributed to robust competition.

What we're witnessing is the result of rising aspirations, a well-developed digital infrastructure, a growing middle-income class, and a thriving savings culture.

I would like to emphasise that India has advanced rapidly. I hope that each of you is experiencing these changes, which makes it easier to understand what I'm saying. Over the past eight to ten years, India has made remarkable progress.