HDFC Bank to regain lost card market share in next three-four quarters, says top official

Country’s largest private sector lender, HDFC Bank is looking to regain its lost market share across card segments in next three-four quarters after the Reserve Bank of India (RBI) lifted the ban on new digital launches, said Parag Rao, Group Head – Payments, Consumer Finance, Digital Banking & IT, HDFC Bank, said in a media call.

The bank took the embargo period as an opportunity to relook into the strategy, product portfolio and customer spends to ensure the HDFC Bank card becomes the preferred card for the customers to spend, Rao said.

As an immediate target customer base to source new cards, it would be our internal customer base, 70-75% will be salaried and rest self-employed, Rao added.

Regain lost market share

Rao explained that the bank has set on its card strategy. First, the bank aims to hit the card run-rate to pre-Covid levels. In November 2020 pre-embargo period the bank was issuing around 300,000 cards.

The second milestone, in the next two quarters the bank aims to hit half a million cards, and in the next three-four quarters, to regain the entire market share lost, said Rao.

The bank continued to add 400,000 liabilities accounts every month since the RBI had introduced the embargo. These customers who have shown good credit behavior would be a good pool for us to issue new credit cards, he added.

On the underwriting standards for new issuances, Rao explained that the bank’s conservative approach to customer acquisition will continue and we will not dilute risk standards but use digital methods to underwrite on fly.

Alliances & Relook Product Portfolio

The bank is looking to create strategic alliances across categories and relook at its product portfolio.

Rao said, We will be relooking at product portfolio and value proposition and plan to restage and relaunch existing products.

The strategic alliances cut across large institutions, fintech, auto sector and many important sectors relevant in card and retail space, he said.

HDFC Bank is looking to launch new products and cards to tap new segments where there are gaps in the existing portfolio. Rao said, we will be also doing restaging existing products – strengthening old products and spruce them up with relevant changes. Our strategy will be combination of new products and relaunching exist products, he added.

Digital 2.0 Initiatives

The bank has planned activities under Digital 2.0 is to digitize the whole bank, create new platforms and set competence.

As the RBI ban continues under Digital 2.0, Rao said, “We have been in constant touch with the regulators, at different levels on day-to-day and weekly basis. We have submitted short-term, medium-term and long term plans to remediate the observations raised by RBI and third-party auditor.”

He added, we have submitted plans with concrete time-lines and most short-term plans have been closed, medium terms are in process and long term plans are in place and interaction with RBI continues to happen.

Rao said, the activities under Digital 2.0 are a mix of digtisation of the existing bank to transform infrastructure and a resilient approach to changing product features, faster go-to-market and a couple of initiatives to enhance customer experience.

New card Issuances

As Mastercard and Diners Club continues to be under embargo by the regulator to allow new issuance of cards on its platform. Rao said, Immediate sourcing will happen on Visa and RuPay platform.