Ritesh Saxena, IndusInd Bank, BFSI News, ET BFSI
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Organisations acquiring customers digitally have often been at the mercy of aggregators and big search engines and so is the case similar with banks trying to funnel in customers through digital marketing and other platforms.
Ritesh Saxena, Head – Direct Banking at IndusInd Bank in a conversation with ETBFSI talks about the strategy at IndusInd Bank with digital acquisition, how digital marketing plays a role, important metrics and the partnership model. Edited Excerpts:
Q. What is the strategy for digital business at IndusInd Bank?
The banking service is digital in nature with cash being the only physical aspect. To a large extent digital business in banking is evolving as compared to 3-4 years back when a lot of digital enablement was in nature of servicing only and not a way of doing business.
As a challenger bank, we had to be aggressive. Digital business evolved in two stages, one organic and inorganic – website, social media presence, ATMs which are web-enabled, mobile applications are now transformed into customer acquisition channels whereas previously functioned more from servicing point. Regulations and public infrastructure like Aadhar has helped a lot, we brought onboarding platforms on our web to acquire for both our asset & deposit customers.
KYC is just one part of onboarding, the customer does not give any business till he transacts or passes credit worthiness test. Getting these journeys completely digital, frictionless and seamless is important to ensure prospective customers don’t drop off.
Investments have gone beyond technology infrastructure, like – analytics, evolving credit models, partnerships with payment service providers. These internal and external parts come together to funnel the customer in and service them. The loss in physical onboarding through branches was off-set by digital acquisition channel through digital marketing with seamless onboarding to ensure there was no blip to business.
Q. How is digital marketing leveraged for direct digital business?Digital marketing is the other area of evolution which is core to digital business. While we create the digital platforms, we need to have a digital plan to work with platforms like Google and Facebook to get the right economics of acquiring customers. All Fintechs, start-ups have realised that creating a product, simple user journey is perhaps the easier part given all the tech evolution is happening, but getting the customer economics in (cost of customer acquisition) which does not kill you is tough. Reality is these Big Tech platforms don’t let you do digital marketing in a cost-friendly manner. That is the sad story which a lot of start-ups face and burn a lot of cash.
We banks don’t have investors (VC) funds to burn to get customers as it’s a P&L involved decision of optimising your cost of acquisition through various digital marketing initiatives like SEO, Redirecting advertisements and a lot of other initiatives.
Getting a customer and is he really worth following as few might funnel but not all are worth following. These are things that take time to perfect and eventually get the right implemental economics.
Digital marketing led acquisition is a different ball game as physical acquisition costs are fixed and given. Also, important to note banks are eyeing for the same pie of the business on the same medium for the same customer, unit economics really matters here.
Fintechs have mono-product lines as compared to banks that have multiple products, if a customer funnels in and may not have qualified for a credit card; we can pitch him a credit card against his FD so he gets serviced by some other product.
Most customers are price sensitive and everything is price led, it allows you to optimise the investments to get the customer by ensuring if he is not satisfied with one product you are able to get him another product and it’s a win-win.
Q. How does it work with the existing customer base?
Existing customers have been traditionally covered by RMs or through branches or contact centers for cross-sell or upgrading. The new digital platforms backed by analytics have allowed us to run it centrally without the need of assisted channels as a start point.
The bank has invested in a very Deep Artificial Intelligence led engine which runs across products and client databases from different segments like deposit to credit card to vehicle finance. I have that same universe within the bank. All we need is to create an ability similar to what aggregators (like Paisabazaar, Bank Bazaar) created for the open market.
A lot of good work and actual business has happened on the asset cross sell which is personal loan and credit card offerings to customers who keep their salary account or deposit account with us. More than 50% of our retail lending, deposit and even wealth business happens through digital channels and not just through open market but through a lot of analytics led, direct to customer, app based, email based and if required even tele-assisted follow-up for closure and a lot of these businesses have moved out of branches.
This is the next version of retail banking in India, if IndusInd Bank has 2000 branches in India which do an X business, for it to go 2X do we need 2X branches? or can I move all of the next X business to digital platforms without having to put a brick and mortar branch. That’s essentially the go-to. Physical channels will continue but a lot of the assisted business is moving to the sky RM models (digital).
Q. How are the metrics around digital marketing?
We doubled and tripled the investments in the digital marketing front across products and services not because we wanted to offset the dip in branch led business but because more customers were reaching out through these digital platforms. Pull-based business opportunities like health insurance were also in demand; a lot of digital marketing initiatives got fast tracked.
Video KYC changed the economics and at a fraction of physical cost we can do the physical KYC and do multiple business with him or would’ve been only one business of deposit before video-KYC where the customer wasn’t verified face-to-face.
On vectors being measured, earlier things were not straight through; most of our digital marketing arrangement partners were on the basis of cost per lead which captured mobile number either paid on per lead or impressions. Now the straight through journey changed the equation on this, earlier you were at the mercy of the aggregators and what would be the quality of the lead as banks make money on conversion of that lead.
The equation has moved from paying per lead to paying per converted customer and some of those have helped focus to target better and ensure that the same lead is not going to dozens of banks and see sub-optimal conversion.
Digital business is not only about aggregator arrangements it’s also on the payment side where merchant aggregators which are country wide operating in the payment gateway space and non-digital merchant led aggregators like old-age Pine Labs and similar players and how they’ve metamorphosed and deeply integrated with banks through APIs.
These payment partners get merchant customers to bank equivalent to current account journeys which have been created with more control as entity verification is bigger science than individual verification. For entities, you’ve to check their registrations, office, etc. all these risk parameters have been added to the onboarding mechanism and we have been among the first ones to launch a digital current account onboarding.
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