Category: Banking & Finance

As digital adoption picks up across the board, RBL Bank continues to remain aggressive on its branch expansion to improve its presence across the country. RBL Bank’s head for branch banking, Surinder Chawla, talks about the strategy of branch expansion and business, user behaviour evolving across retail and MSMEs and the way forward. Edited Excerpts:

Q. How’s the shift in the branch banking business strategy taking into consideration the impact of the pandemic and lockdowns subsequently?

Multiple changes have happened before and after the lockdown.

The last 3-4 months have been very different from how we look and approach things. The first big change is digitisation. Customer adoption of digital technologies has been very high compared to earlier. That is a big change, and it is a good change from customers as well from the bank point of view. The second big change is that earlier you had to meet clients to get work done and all that is done digitally even from a product perspective. The third big factor is some products which were push based, because of the pandemic/ health concerns of the client, those have become very accepted by the clientele. The biggest jump that has happened is in health insurance. As a strategy what all is happening is our investment in digital has become digitally large. If you want to scale up, serve customers digitally, whether it is full Net banking or Whatsapp banking. We have put almost all of our products and services on the digital platform.

From the liabilities and CASA point of view, engagement has become so much more because digitally frequency is here. The strategy is digital, engaging and making sure that the client does most of the things on his own. We roughly have now 20-25,000 digital accounts being added per month and it was around 12,000 in January-February 2021. Last year this number would have been 5-7,000 before lockdown.

Q. How is the impact on SME and small business clientele? Is the same shift happening at the same speed or is it slow there?

If someone wants to trade in cash, then you have to connect with them physically. Apart from that, everything is digitally possible. We have a way of processing documents digitally. Most of the clients’ needs can be carried through digital channels. RBI last week allowed video KYC for sole proprietorship. Of course, cash will be an exception. There is also enablement happening for the business guys. That shift, which was slow so far, will become very fast paced now.

Q. How’s the user behaviour evolving in MSME clientele and how neo-bank platforms are targeting them?

That is working well. Let us not forget that an MSME business client has never done something digitally, he has done digitally but also done physically. All the neo-banks are providing a layer over the current account and other services like invoicing, billing, tax planning, etc. That demand was there earlier and still there. The changes were primarily on the account opening side. Physical interaction was required but now the video-KYC is available, it is a game-changer. More and more banks are taking trade documents digitally. More and more banks will move services digitally. So, that pace is bound to pick up. The problem will be for those banks who want to deal in cash.Q. What are the plans for RBL bank in the branch expansion model? Would you look at rationalising?

So talking about RBL in specific, we do not have a large network. We only have 429 branches as of March. For us, branch expansion plans continue to be aggressive as we must increase our coverage. Let us not forget that Indian consumers may do a lot of work digitally, having the branch closer will increase their confidence. Branch in my view will still play an important role. The difference will be that the number of branches will decrease compared to before. While engagement is digital, the Indian consumer may want to meet someone for confidence. We are planning to add 75 more branches compared to 40-45 branches last year as we have a small network.

Q. How is the impact of the second Covid wave panning out on customers acquisition, transactions etc?

I will divide the impact on the liabilities and asset sides. For the liabilities apart from the fact that people are not coming to the branches, we were able to do fairly well. We have ramped up our digital capabilities. The number of accounts opened was in the same range as what we were doing earlier. From that angle, there has not been a significant impact. In terms of transactions, only the cash transactions have taken a hit, our customers transacted digitally. The engagement rate was high, and customers did not really face a challenge.

Q. As unlocking of lockdowns has started, what’s the way forward?

On the liabilities side, I expect to be fairly good. We have been spending more time and effort in improving the quality of our liability profile as well. We look to make sure that our book is more granular, our cost of funds has come down, we are able to get more customers. We plan to open branches, we expect that CASA ratio improves.