Customers are moving away from cash to digital: Axis Bank's Rajiv Anand

Interview with Rajiv Anand, Executive director & head of retail, Axis Bank

Axis Bank is seeing more transactions through mobile phones than through their ATM networks, says Rajiv Anand, executive director and head of retail. Banks need not to worry about financial tech start-ups, he tells Chirag Madia & Anup Roy. Edited excerpts:

In the past year especially, the banking sector has seen a sea change in terms of a push towards digitisation. How have things changed for Axis Bank?

It’s not a one-year story. The trend started three-four years ago and continues to gather steam. Particularly in the area of digital payment after demonetisation, we have seen significant uplift. Thanks to demonetisation, the debited PoS (debit card used in point of sale machines), is worth two-three years of growth. We are seeing tremendous growth in UPI, the government-promoted United Payments Interface. In November alone, UPI would have done 100 million transactions; our market share would be about 35 per cent. 

Mobile banking is seeing tremendous growth. Internet banking continues to grow but a third of customers access our website from their mobiles. We also have huge customer bases on feature phones. It doesn’t matter how you want to access our services — in all cases, we will try and make it as simple as possible. About 70 per cent of our transactions come through digital channels. Customer service requests, account opening, etc — most of these happen through digital platforms.

Could you elaborate with some numbers?  

The amount of transactions we are putting through our mobiles, about Rs 150,00 crore, are bigger than the amount we are putting through our ATMs. That shows the shift away from cash, towards mobile transactions, an epochal moment for us in India. Customer behaviour is moving away from cash, to digital.

There seems to be significant fear of data leakage, as some cases have shown. How are you ensuring the mistrust amid customers does come down?

Data security and personal identity protection is utmost critical. We take these concerns very seriously. Possible measures and mitigation are discussed and debated even at board level. There’s a specialised, highly skilled, information technology security team focused on this and we use world-class infrastructure to prevent data breaches and manage vulnerabilities.

In mobile phones, for example, we have multiple layers of security. One, you have to use your registered mobile number. Second, there is an IMEI binding. So, the device is also locked. Suppose you change your phone tomorrow, you will have to re-register it all over again. Third, you have an MPIN number, the third level of security. We also have advanced data analytics and machine learning techniques to understand customer behaviour and identify possibly fraudulent transactions. Hackers are becoming intelligent by the day; so, there are vulnerabilities. But, using newer technologies, we are taking significant steps towards detecting, responding and preventing such threats. Capabilities are already in place but this is a continuous journey, with no finish line. 

After demonetisation, there was a surge in digital payments. Recent data show customers are back to withdrawing cash from banks.  

You are talking of remonetisation, after 86 per cent of money was removed from the system. Of the total money taken out of the banking system, about 90 per cent has been put back. Put differently, effectively with 10 per cent less cash, the system is doing quite nicely because certain people have changed or adapted to digital technologies. So, if the digital transaction was of Rs 100 through debit cards at PoS, pre-demonetisation, that number is Rs 190 today. Yes, that number was more during two months of demonetisation but it has not come down to 100. So, we have gone to a new normal. Clearly, for a certain set of customers, habit has changed. If you look at UPI, it was close to zero before demonetisation; today, a year down the line, it’s hitting 100 million transactions and this number will continue to grow.  Customers are seeing the convenience of small value payments made digitally. 

With so many private and public sector banks pushing own products or technological developments to customers, how do you try to differentiate yourself?

It is important to understand customer needs and how we, as a bank, can provide solutions to those. We all spend at least two hours daily on the phone; apart from staying connected, we use it for booking cabs on Ola or movie tickets on Book My Show, among many other things. That’s how seamless the customer experience is today, irrespective of the category. As a bank, I have to provide similar experience for a consumer’s banking needs, too – this basic consumer insight is at the core of all our solutioning. The beauty about technology is that we are able to manage operational risks on one side and customer experience on the other. One should recognise that customer expectation, as well as technology, is changing rapidly. To meet those needs, we have set up an innovation lab called Thought Factory, where we continuously engage with the start-up community, conduct hackathons across the country. The main aim is to explore what we can we take away as a bank from innovators outside the bank, and solve a range of problems.

Are fintech and payments banks a threat to (older) banks?

That’s the question you should ask them — what can fintech or payments banks do if incumbent banks are also able to create innovative digital solutions? Banks have the advantage of a brand, trust and also a large distribution network. So, how will payments banks compete? Remember, one of the instruments we have, and payment banks don’t, is lending. For example, pre-approved or pre-qualified customers can get a loan in five seconds on our digital platform or from any of our branches. These entities need to compete against that.