Your bank has been called a “class apart” in a path-breaking report by IIT Bombay Professor Ashish Das and MoneyLife Foundation. What is the significance of the compliment?
Well, when we were drawing up the vision for our bank after the merger with IDFC, we started from a clean slate. We identified ethical banking in our vision statement. But we didn’t want this to be a rote slogan that employees read and forget. So, we literally revamped all our products, services, terms and conditions, disclosures and everything to live with this theme. Over time, thanks to this approach our products became more and more friendly, our descriptions became more and more clean and clear. We are happy that now an independent study by Prof Ashish Das of IIT Bombay and Moneylife has acknowledged the same. They are highly credible people, so we are happy to be called “a class apart” among Indian banks in this report.
How did the bank come up with the zero-fee banking proposition?
One day our finance team found that our bank was not charging for debit card fees, while all other banks were doing so. So, our CFO advised our business heads to benchmark ourselves and charge for the same. Our product management team worked on this and shot off letters to customers saying that we will be charging debit card fees between Rs. 500 to Rs. 600 per year from all customers from July 2022.
Some customers said that we supported your bank from the beginning when you were small, can you reconsider this. By chance one of those mails reached me and we took the opportunity to relook at all our fees and descriptions and for other players as well. The descriptions were very detailed, but customer couldn’t understand it much, it was the same in the industry. After some debate we said let’s make it simple – just a Zero for all services, urban and rural, small accounts or large accounts, everyone. We thought let us go zero fee, our customers will be happy, let us make a proposition out of Zero fee banking. Now our customers are very happy about this.
Can you give us some examples of the kind of charges that banks levy, and which you have scrapped?
It will take long to describe them. Suffice to say that there is a long list of charges for IMPS, NEFT, RTGS, cash deposits, cash withdrawal, third party transactions, non-home branch transactions, overseas ATM withdrawal, SMS…there are about 35 charges like this. Our bank has simply got rid of all the charges.
Can you share some instances of such descriptions?
It’s usually complicated, hard to calculate with lots of ifs and buts, and subject to X or Y. We have done away with all these complicated descriptions, and simply made it zero. Even our rural banking customers who keep just Rs 5,000 as a minimum balance now enjoy this.
Did this have a serious impact on your profit and loss account?
Yes, indeed. When we implemented it, it did impact us. The positive thing is that goodwill will be gained over time from customer experience. But since we are building a bank for the long run, we are willing to wait.
Do your current and prospective customers know about the benefits you are offering?
It is very difficult to educate and advertise these things. This must spread through word of mouth over many years, say, 4-5 years.
Apart from zero fee banking, what are the other unique features that you offer?
For every product that we have launched, we have followed the theme of being customer-first and ethical. In credit cards, for example, the rewards points do not expire. We are the only bank that allows customers to redeem rewards points for the next online purchase. Like this, we have many features for every product of the bank.
So which part of the report by Prof Ashish Das and MoneyLife is useful for you?
This Ashish Das-Moneylife report is comprehensive, it compares the reasonableness of various charges of the system. Every bank has given their own product names and their own ways of describing fee structures under each product. So how do you compare charges across two banks? It’s a difficult and painstaking task to extract, compare and put it all together. Looks like they have done that.
How do you plan to promote your products?
This report has made our employees very happy because it is easier for them to represent us now. It is now externally certified that our products are highly customer friendly, so they can promote our products with greater confidence. To be called ‘class part’ in a category by Prof Das is a huge compliment.
Is your big success in deposits over the last 5 years attributable to the zero-fee banking proposition?
Well, it is very hard to pick one reason. There are many things that we have done, we built brand awareness, brand character and a strong institutional feel. Also, we are crazy about giving great customer service. Thirdly, we used technology in full effect to increase customer convenience. We gave our customers a great, really world-class app, with many solutions embedded. Our mobile app has a Google rating of 4.9 out of 5, which is quite fantastic. So, all these things play a role in getting deposits. It all adds up.
What’s the outlook for deposits at your bank?
Our deposit is now reaching Rs 2 lakh crore as of FY24. We have guided that in the next 5 years this will easily cross Rs 6 lakh crore. Eighteen out of 19 guidance points in Guidance 1.0 have been achieved. We now look forward to delivering Guidance 2.0.
