'In trying to be a one-stop financial services shop, we are not spreading ourselves thin'

Part I: 'E-economy is ruthless. You don't get a second chance'

What is your strategy for consumer banking?

I know it is very fashionable to use words like convergence, brick-and-click, etc. The fact of the matter is that you must understand that the only limitation to the use of technology is human technology.

A human being is not a robot. Each one has his/her preferences, needs, likes, dislikes. So unless you are going to restrict the segment you deal with, or upset your customer by saying 'I will not give you a choice', you better understand the segments you are dealing with, and how you are going to deliver to the segments.

If you tell my dad not to go to the bank (but operate his account through the Net), he will shift his bank. If you tell my son to go to the bank (rather than using the Net), he will shift his bank. So there is a via media. But if you go out and make technology user-friendly and sell it not as a technology but as convenience, then the adoption is phenomenal.

Today, for instance, the ATM usage in India with our bank -- as I am advised by my colleagues -- is among the highest in the world.

We have told the customer: 'Why have you come running to the bank at lunch time? You could have withdrawn money in the evening.' And we hired people to demonstrate (Netbanking) to him so that feeling of change, that feeling of inadequacy goes away. 'Come, let me show you how it is done.' This principle has helped us. The same thing we did for telephone banking. We didn't say, 'Use telephone banking, it is hi-tech.'

For instance, we told a customer who visited a bank in rain: 'Boss, you have spent 25 rupees to come here in this weather, no? You could have done this on the telephone and saved time, money and at your convenience.'

What did HDFC Bank do right to emerge as one of the best private sector banks? Where do you think other banks falter?

I find commenting on other banks very difficult. We did right in putting the right architecture in place, having a clear strategy, having customer segments, and recognising that this is not hype. Ultimately, business is what? It all boils down to who is your customer, how are you going to offer services to him, and what is your competition.

Here, let me say that there is a difference between vision and strategy. Vision is very clear. Vision is a natural fallout of customers' needs, market forces, the ability of technology to meet these needs. And this does not change every day, be it e-economy or no-economy or b-economy! So if this is the basis on which you formulate your vision, this remains.

Once that is done, the strategy keeps changing. So the strategy one day may be a branch close to him, and the next day, it may be for acquisition.

A Boston Consulting Group study said that an acquisition on a remote basis costs you four times as much. Servicing on a remote basis costs you four times less. So our strategy was to have branches and also remote channels . However, we thought of our branches differently. Our branches have five or six people and do no processing. Then it doesn't become that high-cost a channel.

In addition, if you look at it simplistically, our high net worth individuals want to be recognised. He wants a relationship manager allocated to him.

All the major banks say they want to be one-stop financial services shops. They seem to have their fingers in every pie, so to say. There is a view that banks are spreading themselves thin.

Thank God, we have only a finger in every pie! Let me explain the difference, how that finger helps (laughs).

When we say we will be a one-stop financial services shop, at no stage is it our intention to produce everything that we sell. However, we are in the business of customer convenience and meeting customer needs.

So, because we sell mutual funds, insurance, nine per cent tax relief bonds, it does not mean we are in those businesses. We are using our distribution channels to meet your financial needs.

Several dot-coms claim that they have X number of hits/page-views. But if I am visiting a news site, I am doing it to catch up with news. I don't want somebody selling a car there. But when you come to a bank, you want all your financial needs met.

Again, when I say, 'We are in bill payment', it's not my business. I have got an interface with utilities like MSEB and MTNL, I load it on, and you visit our site or bank and register yourself and make bill payment. Technology does it. So we are not spreading ourselves thin at all.

HDFC Bank is entering the e-broking segment. What is your outlook?

We are launching our brokerage company HDFC Securities in the next 15 to 30 days. We will link our customers with our brokerage company. It is run by professionals separately.

Lot of our customers have expressed the need for execution in a convenient and reasonably priced manner. We have a million customers today. And what happens is, today in India, because of the regulations, you can't have a Charles Schwab because you can't do, in one entity, demat, banking and brokerage. You need different licences. So we want to provide the convenience to our customers to be able to, within the HDFC umbrella, do their brokerage, buy mutual funds, insurance, pay bills. We want to offer choice. Say, if you log in to our Web-site, you can deal with HDFC, HDFC Bank and HDFC Brokerage and complete your transaction.

ICICI Bank has already entered this segment. Do you think you may not have the early mover advantage?

Ultimately, the game revolves around the customers. Sure, another private bank may have entered the scene first. But the Net explosion is really still to come. So the issue is not whether you have moved in first. There is the customer who ultimately makes the decision.

We are the largest player in demat. We are the largest in retail advisory. We have a large retail customer base. So a month this side or that does not make that much of a difference.

Part III: 'Our low NPAs mean we are playing smart, not safe'

Part IV: 'A debit card is really more appropriate for the Indian psyche'

Part V: 'Banking regulations in India are not as restrictive as people make them out to be'

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