SBI’s YONO story: Drop in new account opening, loan disbursals and rising customer complaints

SBI launched YONO as its digital banking platform in 2017 for its 400 million customers.

State Bank of India’s digital platform has witnessed declines in new account openings and loan disbursals, a Moneycontrol analysis of the lender’s data showed.

Analysts attributed the fall in numbers on the digital banking platform called You Only Need One, or YONO, to technological problems and lack of customer engagement practices.

“When the design and creation of YONO was made, the idea of innovating the platform was not thought through. Due to this, YONO faced several technological issues,” said Ashvin Parekh, managing director of Ashvin Parekh Advisory Services, a management consulting firm. “Additionally, some of its competitors provide better customer engagement for Gen Z (young customers) and hence, the numbers are falling.”

The state-owned lender’s customers have been complaining of issues with the YONO mobile app, most recently earlier this month, when online services were not available. The bank had said that YONO services would not be available for a few hours on April 1 due to “annual closing activities.”

Queries sent to SBI about YONO were unanswered at the time of publishing.

What is YONO?

SBI launched YONO as its digital banking platform in 2017 for its 400 million customers. The idea to create a super mobile app with all banking services and facilities such as e-commerce shopping came from the bank’s desire to set up a digital marketplace to attract young customers.

“It was increasingly becoming clear to me that we had to do something remarkably different from the run-of-the-mill apps to catapult SBI as a leader in the digital space as well,” former SBI chairman Rajnish Kumar said in his book The Custodian of Trust, describing the journey and early days of YONO. “None of the other Indian banks had taken such an expansive view of their digital aspirations and for me, at some level, it was an aspiration to win the ‘Only SBI can do it’ tag.”

Kumar said the lender invited ideas from different companies and the one proposed by McKinsey & Co., a global management consultant, was finalised. SBI brought in IBM to build the application and the website.

YONO has acquired over 57.5 million customers, according to a presentation to investors in February. That’s about 15 percent of its total customer base.

Declining numbers

According to the latest SBI numbers, pre-approved personal loans disbursed through YONO fell 19 percent to Rs 5,050 crore in the October-December 2022 quarter from Rs 6,283 crore a year earlier. Loan disbursal through YONO was 0.53 percent of the total in 2021 and 0.55 percent of the total in 2022.

The number of digital accounts opened through YONO fell to 22,100 per day in December 2022 from 28,900 per day in December 2021. Of the total savings accounts opened, 64 percent were through YONO in the December 2022 quarter compared to 67 percent in the corresponding quarter last year.

The fall in these numbers, experts said, comes as banks focus more on improving and increasing their digital services and offerings.

“At times, we’ve seen that services on YONO are not working. There are problems in the processing and service part,” said Chandan Sinha, former executive director of the Reserve Bank of India. “Due to this, customers would prefer alternative options where they do not have to face these issues.”

“Yes, there is some reduction in numbers. This is because of competition from other banks,” Kumar told Moneycontrol.

Sinha also said the decline in opening savings accounts through YONO could be due to competitive rates offered by other banks.

Currently, SBI offers interest of 2.7 percent to 3 percent on savings accounts. Bank of Baroda offers interest 2.75 percent to 3 percent on its savings accounts. Private sector banks HDFC Bank and Axis Bank offer 3 percent and 3 percent to 3.5 percent, respectively.

Another factor contributing to the fall in numbers is the perception that YONO is unable to deliver on popular retail products such as loan disbursements through digital mediums, due to tech issues, experts said.

Aditya Shah, a financial and banking analyst, said customers prefer easy and flexible loan disbursement through online platforms such as mobile apps of banks.

The YONO application is marred by technical issues, customers and experts said.

Such matters, though, are not limited to SBI or state-owned banks. Recently, HDFC Bank faced technological issues on its digital banking platforms. Yet, customers complain about YONO’s shortcomings.

“Whenever I try to open the application, it shows the server is down,” said Amit Kumar Mathur, an SBI customer from Lucknow.

Faiz S, a marketing executive from Mumbai, said he is not able to view his account balance.

“I was trying to use YONO for UPI. But I could not see my balance,” Faiz tweeted.

Hi, Yono services may be interrupted due to financial year annual closing activities. We regret your inconvenience

— State Bank of India (@TheOfficialSBI) April 1, 2023

Also read: SBI digital banking services down, customers take to social media

Also, the lender, on April 3, faced technical issues with its servers and YONO. After customers complained that the services are down, the lender in a statement said: "We regret to inform you that due to a 'technical glitch', some of our digital services were impacted for a few hours on April 03, 2023. However, the issue stands resolved, and the digital services are live and restored. We apologize for the inconvenience to our valued customers. The bank is always working toward implementing measures to prevent such occurrences. We thank you for your patience and continued trust in SBI.”

These issues, experts said, could be because of three primary reasons - overwhelming volumes, bugs in the maintenance or implementation of new systems, and external threats.

“The issue of volume could be solved through higher processing power and estimating high inflow-outflow periodicities. The second issue requires a robust testing mechanism. The third issue is crucial, though we haven’t witnessed major attacks in recent times. This is because banks and regulators are paying increasingly more attention,” said Jindal Haria, associate director - India Ratings & Research.