Days after the Reserve Bank of India (RBI) lifted its ban on the HDFC Bank's acquisition of new credit card customers, the country's second-largest bank is back with a new strategy to regain the lost market share in three to four quarters. Let's take a look at the private bank's new strategy:
Regain the lost market share
The first immediate milestone that the bank has set is to hit the card acquisition run rate, which they had prior to the RBI's ban. It had a run rate on incremental issuance of credit cards in excess of 300,000 cards a month just before the RBI's diktat. So the immediate target is to get back to that level in the next two to three months. The next milestone will be to hit half-a-million cards a month.
"The bank expects this to happen over the next two quarters. Over the next three to four quarters, our clear aim is to regain the lost market share," says Parag Rao, Head (Payments, Cards and digital banking) at the bank. The bank still commands the highest market share at around 24 per cent, but it lost few percentage points share in the last 8-9 months. In the same period, the ICICI bank gained market share from 16 per cent to over 17 per cent.
Partnership model to grow
The bank is working with a lot of partners across segments and categories. There are new categories growing at a faster clip especially food delivery, education, content, video content, consumer durable, office at home etc. The bank plans to work with strong partners to offer a value proposition to customers. "We may not be able to talk about many of the partnerships, alliances, and relaunches in detail because a lot of them are work in progress, but you'll see them deployed over the next three to six to nine months," said Rao.
New customers acquisition from the bank's depositors base
The bank had earlier started the card business by offering the card first to its exist existing customers in the liabilities (saving, current and fixed deposit) base. "A significant portion of that growth or the new acquisition, which will happen over the next three to four quarters, will come from our existing liability base. This strategy continues. In fact, when the card ban was in force, the bank was growing the liabilities base robustly. "So that strategy of sourcing a fundamentally large portion of our incremental new customers from customers who already have a liability relationship will continue," says Rao.
The bank has done a lot of digital transformation at the backend, where they have looked at the user journeys and digitised many of the processes to make the actual experience seamless. The bank has fined tuned its customer-facing and back-end processes. It has also smoothened its operational capability to deliver cards at a faster pace.
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