HDFC Bank is another bank that has put in place a strong Net banking model. In an interview with Neeraj Jha of FE-Thinktank, HDFC Bank's managing director Aditya Puri shares his perspective on online banking. Excerpts:How do you look at the rush for going online?
For us, it is a deliberate non-rush. We had invested Rs 50 crore upfront to have the systems and the processes in place. We had a system, which was open and scalable right from day one. This is different from being a me-too.
What does online banking mean for lesser players?
There is a lot of hype over online banking today. The fact is that there will be a segment of customers which does not want Internet banking.
What sort of banking opportunities do you see in B2C?
One, a B2C exchange allows my customers one more option to deal with me. Two, it allows me to widen my geographical coverage and get new customers. Finally, it helps me to reduce my costs in the long-run.
What about B2B opportunities in banking?
Opportunities here are huge. For instance, we have networked Telco’s suppliers and financing their dealers. We have this 60-second loan for Indica on the Net and we cover the dealers completely. That means I am lowering my costs, besides getting a larger share of the pie. We are also doing cash management that involves collecting dealer cheques and paying suppliers.
Is plastic money important in online banking? What are your plans here?
We will issue credit cards by the end of the year. We are already into debit cards, which can be used as credit cards. We launched debit cards because plastic money becomes necessary if you want to be in remote banking. And we will also be acquiring transactions.
Is it possible to have a virtual bank in India?
Yes. I can set up such a virtual bank in two weeks. So, a few others can. There is nothing non-virtual about what we have today, except perhaps the differential pricing part of it. We will introduce concessional products and other incentives for our Net banking customers. For a virtual bank with no human intervention, we will have to wait till digital signatures come in and cyberlaws are put in place.
Would you be hiving off your virtual bank? You cannot. For, it requires separate licensing. As regards a virtual bank, technically it is possible. Before setting up a virtual bank, we will have to consider profitability and feasibility issues. Consider, Prudential Egg has not made money so far.
Would you be willing to tie up with banks having strong local presence?
We believe in profitable growth. As of now, it does not seem to make much sense to us. Then, there will be problems such as mismatch of cultures between the partners.
Which customer segments are you actively looking at? Which of these segments are profitable?
We are looking at everyone, right from a young man to a good-looking girl like Aishwarya Rai. Every segment is profitable, provided if you can service them properly.