By Ankur Mishra
Yes Bank is aiming to double its retail assets and liabilities by 2023. Rajan Pental, global head, retail banking, Yes Bank, in an interview with Ankur Mishra, says the bank does not want interest rate to be the catch for a customer to come to the bank and that the focus will be on services. Edited Excerpts:
What are the reasons to focus on retail segment?
The retail segment has the largest opportunity. With the opportunities in the corporate (segment) being limited, you would see that most banks have started focusing on retail. The bank invested in the retail business a couple of years back with a very clear-cut understanding that this is one of the largest businesses for the bank, but the bank was also doing well in other segments. And I think over the years we have created our space and a very clear cut carved out strategy around both liabilities and the assets business. So, 1,150 branches across distribution already in place.
So, this is what happened during the genesis of both strategies, but good part is today we are sitting at a point where each of these product lines have kind of grown well in their own way. So, we are in a wonderful situation to now lift the business, take it to the next level and create a very stable book around these product lines.
Which markets and segments you plan to tap?
This is a mass affluent segment and this would cut across both urban and rural. Obviously, the cut-offs will be different in urban and rural segments. But largely you can say the middle management, the salaried to look at it, and self-employed medium sized organisation and obviously senior citizens that is vast opportunity anyways.
How do you plan to build a sustainable retail franchise especially now after Lakshmi Vilas Bank (LVB) and other issues that have created a deep trust deficit among customers?
I think the biggest learning the bank has, or many people like me professionally, has been that what can keep you afloat is the service and connect with the customer. So, acquisition cannot be a standalone strategy, that is only filling the book. So, our strategy would largely depend on first that we have to keep on acquiring, because we have to grow to the next level, but more important or equally important is that how do you ensure that how do you not lose touch with each and every customer, the bank has acquired.
And secondly, how do you reach out to them from time to time, to ensure that you are able to offer the entire bank and not just one product. And third is that, if there are requirements, service requirements from the customer, how can you constantly keep on upgrading the platform to be able to give him a top-class service bank. So, a well serviced customer will never move away. So, we have seen a good movement post the moratorium period. We are seeing acquisitions in assets and liabilities growing rapidly.
In how many quarters do you aim to reach at the level it was there before reconstruction of Yes Bank?
It is important to understand how we will reach there. One is that, what is the pace of new acquisitions. We opened close to 30,000-35,000 accounts in the first quarter of the current financial year, in the second quarter we were able to open 1.5 lakh plus accounts, and that was the normal momentum bank had in the best of the times. In October, we were able to scale up to 70,000 accounts, this was an aspirational number for the bank. We are already looking at acquiring 1 lakh customers. Second is that our customers are actually showing a lot of faith in the bank. And a lot of customers who had either taken the money off or had gone down on the balances are gradually on the path of rebuilding the relationship and putting the balances back.
And where we stand today, I am very confident that by 2023, we will be able to double our liabilities business from where we are today, and we will be able to double retail assets business and double the SME business. So in three years’ time, by 2023, we should be able to double our entire retail assets and liabilities.
What is the strategy of the bank, when highly competitive rates and services are offered by many lenders?
First of all, you very rightly pointed out rates and services, we want to kind of focus more on services, because that is where the real competition is and followed by the pricing, because good customers will always command a good pricing. But the larger strategy is that we should be able to have a very efficient platform and create innovation at the front-end. So the work is on both the sides. And clearly, if you have to be in a trusted distribution, then unless you kind of distinguish yourself in terms of better service than others, that will be the real differentiator.
You said the bank will focus on services, rather than interest rates. Should we understand that the bank will no longer continue to pay more for attracting deposits?
We do not want rate to be the catch for a customer to come to the bank. We want to offer products which are best suited requirement of a specific segment of customers.
