Tag: Parag Rao

HDFC bank issues 400,000 credit cards after embargo, BFSI News, ET BFSI

Banking & Finance

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After the embargo on HDFC Bank was lifted last month, they have issued over 400,000 credit cards, a report by the Business Standard says.

This signifies the aggressive growth that the private lender has made since then. This record issuance is as of September 21, 2021.

HDFC Bank was looking to get back to its pre-embargo run rate of 300,000 credit cards per month, which they had planned to achieve in the next 2-3 months. After that, they expected to hit 500,000 credit cards per month from February 2022.

“As a leader in the cards space, we promised, we’d be back with a bang. We are now pushing the pedal not only to acquire new customers, but also to enhance offerings of our existing cards,” the Business Standard report quoted Parag Rao, group head – Payments, Consumer Finance, Digital Banking & IT, HDFC Bank, as saying.

The bank expects to achieve growth in the credit cards business on the back of new alliances with a number of industrial sectors.

Pre-embargo, the open market customer acquisition was less than 20 per cent, which may now go up to 22-24 per cent, the bank has indicated. This is because the bank is coming up with several new initiatives in the upcoming months which include co-branded cards with corporate India spanning pharma, travel, FMCG, hospitality, telecom, and fintech.

“Our strategy to re-invent, create and co-create has been crafted based on the analysis of customers’ buying behaviour, the categories they spend on and the spend patterns. The months that we have spent readying and sharpening our strategy are now bearing fruit. We are ready to unveil best in class offerings and experience to our customers, just in time for festive season,” he added.

As of July (latest data), HDFC Bank has 14.76 million credit cards in the market. Its market share in outstanding credit cards dropped by more than 2 per cent due to the restrictions imposed by the regulator.



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Deposit customers, alliances to lead HDFC Bank’s credit card comeback, BFSI News, ET BFSI

Banking & Finance

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HDFC Bank expects to increase its credit card issuance to half a million per month by February 2022 riding on its expanded liability base, new partnerships and wider product suite as it looks to make up for the lost nine months in which it was restricted in issuing new cards by the Reserve Bank of India (RBI).

Parag Rao, group head, payments, consumer finance, digital banking and IT, HDFC Bank said the bank expects to get to the pre-ban run rate of 300,000 per month in the next two months and increase it to 500,000 by February in largely driven by new deposit customers added to the bank’s franchise in the last nine months.

“Over the years our business has grown largely on the back of our liability customers and we expect that to continue. Over the last nine months we have added 400,000 accounts every month, this in addition to the 60 million customer base we have will be the main drivers of our growth and we have enough headroom to grow. We already have a pipeline of pre-approved cards based on customer profiles that have been monitored since the ban,” Rao said.

80% of the bank’s new cards are issued to new customers currently and Rao does not expect this ratio to drop much dispute new commercial partnerships the bank plans to launch.

On December 3 last year, RBI barred HDFC Bank from issuing new credit cards and introducing new digital products after multiple glitches linked to digital banking, cards and payments on the bank’s platform were reported in the past two years.

The ban was lifted on August 17 but not before impacting the bank’s market share as number of outstanding credit cards dropped from 15.4 million in November 2020 to 14.8 million in June 2021, even as its closest competitors gained at its expense.

Even as the credit card ban was lifted the RBI still has some restrictions on the bank for new launches of digital business generating activities planned under Digital 2.0. It is unclear how those restrictions will impact the bank.

Despite the loss of market share in credit cards, HDFC Bank remains the largest issuer of credit cards in India ahead of SBI Card (12 million) and ICICI Bank (11 million) latest available RBI data as of June 2021 showed.

Rao said the bank used the last nine months in relooking at its value proporsition, engaging with existing customers more deeply and building new strategic alliances which will be announced starting from the festive season next month.

HDFC Bank has lined 20 initiatives including co-branded cards with tie-ups with travel, fintech, consumption, hospitality and mobility companies among others. These alliances will be unveiled over the next nine months.

Rao said depsite the ban the bank has been able to retain its market share in terms of card spends and spends on its cards are still 1.5 times higher than the nearest competitor.

The bank will use more digital data for underwriting and is also in the process to create a multichannel social media and phone-based hub to address customer greviances.

The bank also plans to increase its footprint in merchant acquiring and point of sale businesses to 200 million from 2.3 million currently, Rao said.



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HDFC Bank aims to regain lost market share in 1 year after RBI lifts credit card ban, BFSI News, ET BFSI

Banking & Finance

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HDFC Bank is looking at winning back the market share by number of cards in the next one year, a senior official said on Monday. The largest private sector lender by assets was allowed to issue new credit cards by the RBI last week, over eight months after being banned from doing so due to concerns over repeated technological outages.

Parag Rao, its group head for payments and consumer finance, digital banking and IT told reporters that the bank has set some milestones for itself as it seeks to re-enter the market.

The first is to achieve monthly new credit card sales to 3 lakh, the number right before the ban in November 2020, Rao said, adding that the same will be achieved in three months.

Two quarters after that, it aims to take the monthly new card sales to 5 lakh a month, Rao said, adding that in three to four quarters from now, it plans to regain the market share by number of cards.

Rao added that during the ban, the bank lost its market share by number of cards but was able to maintain the market share on initiatives taken to prod users to spend.

It can be noted that as per data, the bank’s market share by number of cards had come down by around 2 percentage points to under 25 per cent, as smaller rivals including ICICI Bank and SBI Cards seized the opportunity to close the gap.

After the lifting of the ban, HDFC Bank had spoken about coming back with a bang.

Rao said spends on credit cards are 60 per cent higher in April-June quarter on its card portfolio.

The bank will depend on its internal set of customers to grow the number of cards and is also looking at partnering with key players like Paytm announced earlier in the day, to increase its sourcing.

Rao also said that the conservative approach on the credit front will continue for the bank even as it goes aggressively on the new business sourcing.

The bank scrip was trading 0.57 per cent up at Rs 1,522.95 a piece on BSE at 1318 hrs as against gains of 0.43 per cent on the benchmark.



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HDFC Bank, BFSI News, ET BFSI

Banking & Finance

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The RBI‘s ban on selling new credit cards has impacted market share on an incremental basis, HDFC Bank said on Wednesday, promising to get back to the market “with a bang” once the “temporal” embargo is lifted and recoup the losses. The bank’s head of consumer finance, digital banking and information technology, Parag Rao, said that it has used the last six months to “introspect, re-engineer and innovate” about the cards business, where it has 15.5 million customers.

The bank has lost its market share by a couple of percentage points because of the ban, but the actions taken internally have ensured that it continues to hold on to market share by spends, he said.

In December, the RBI acted against repeated technological outages at HDFC Bank over two years by slapping unprecedented penalties, which included a ban on any new credit card issuance and also prohibition on launching new digital initiatives.

“We have got very aggressive plans to get back in the market with a big bang… You will rapidly see HDFC Bank not just regaining market share but also significantly increasing our spend market share,” Rao said.

Without sharing any details over when he expects the ban to be lifted, Rao said within 3-4 months of the ban getting lifted, one should expect a correction in the incremental market share back to the pre-ban levels, launch of new products and features and also partnerships which have been forged during this period.

“We were very clear that this is at best a temporal situation. During the six months when we were not issuing new credit cards, we increased our merchant acceptance base, our liability franchise increased and today we are sitting on a large base of already analytically data mined customers who have already kept ready and pre-approved,” he said.

The “large sales force” has been trained, re-skilled and primed for the aggressive play ahead and backend processes for them have also been made more streamlined, Rao said.

He admitted that rivals have seized up on the opportunity once HDFC Bank stopped issuing the cards, amidst reports on how ICICI Bank and SBI, among others have grown. It can be noted that HDFC Bank’s credit card customers decreased by 4.67 lakh between December and April, when they stood at 14.9 million, while SBI has gained over 6 lakh new cards and ICICI gained 10 lakh.

The bank has been in constant discussion with RBI ever since the ban was imposed and has upgraded its systems as per the indications from the regulator, Rao said, adding that it has now presented a plan which focuses on the immediate, short term, mid-term and long term plan to the central bank.

“We are awaiting the comments from the RBI. We are hopeful that RBI will be satisfied with the plan which we had submitted,” he said.

Rao said the bank’s investments in technology were already at par with global standards, but the recent regulatory action will see higher spends on technology over the next two or three years.

Reiterating its focus outlined earlier, he said outages do happen and they happen with rivals as well, but the important aspect will be how it manages its way out of a crisis.

The bank’s shares were trading 0.17 per cent down at Rs 1,499 apiece on the BSE at 1344 hrs, as against gains of 0.28 per cent on the benchmark. AA MKJ



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HDFC Bank to enhance digital banking experience with Digital & Enterprise Factory, BFSI News, ET BFSI

Banking & Finance

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To roll out its new digital products and services in the future and augment its IT Infrastructure, HDFC Bank has launched a Digital Factory and an Enterprise Factory. The dual approach of building the Digital Factory along with an Enterprise Factory is part of the bank’s technology transformation agenda to run and transform the bank. The factories will be pivoted on APIs, data and cloud.

The bank proposes to strengthen capabilities for the Digital and Enterprise Factories by hiring up to 500 people over the next two years, from diverse backgrounds such as data analytics, AI, ML, Design Thinking, Cloud and DevOps.

“The Digital and Enterprise Factories will help us realise the strategy of ‘running’ the bank, while ‘building’ the bank for the future.” said Parag Rao, Group Head – Payments, Consumer Finance, Digital Banking & IT, HDFC Bank. “Since inception, we have led the digital transformation of the Indian financial services sector and continue to invest in technologies to improve customer experience and enhance efficiencies. This is changing the paradigm by redefining financial services and designing products and services by always keeping the customer at the centre.’’ he added.

The Enterprise Factory will upgrade legacy infrastructure, decouple existing systems and build its own capabilities by embracing open-source to build resilience and scale. The bank is also developing future-ready IP technologies and moving to a native cloud architecture in collaboration with fintech, niche technology and large IT companies.



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