 "Now, Citibank begin online disbursal of loans")
Foreign lender Citibank, in a bid to adapt to changing customer behaviour, has moved its end-to-end process of loan sanction and disbursal of unsecured credit online. With this, the bank has managed to digitise the complete loan process for its personal loan portfolio.
“We pre-qualify the customers and we send them an email/SMS (short messaging service) with the offer — this is not just an in-principle approval; rather, it’s a full pre-approval. The customer can, therefore, get the money into their account in a couple of hours. Instant gratification has become a customer differentiator and is imperative now,” said Arjun Chowdhry, head of Cards and Unsecured Lending, Citibank India.
At the moment, this option is available only for Citibank customers but going ahead the bank is looking at extending it to non-Citibank customers as well. However, for this, the bank will be looking at certain tie-ups which are still underway. At present, about 20 per cent of personal loans come via the digital medium. The interest rate for a personal loan varies between 12.50 and 20 per cent and the bank offers a maximum loan amount of Rs 30 lakh.
This is in line with the bank’s overall strategy to grow consumer transaction on the digital medium. Several other lenders have upped their focus on the digital medium and are increasingly launching products around this. Earlier, HDFC Bank had also digitised the process of personal loans. Typically, banks only offer in-principle approval online.
The Reserve Bank of India (RBI) suggests that Citibank India recorded mobile banking transactions worth Rs 473.56 crore in the month of July, double what it had recorded in the same month last year, which was Rs 230.38 crore.
Chowdhry explains this is in line with the change in customer behaviour where they are looking for instant result and gratification. Therefore, to keep up with this the bank also offered instant discounts instead of cashback offers on e-commerce sites. With these offers and incentives the bank says it has been witnessing a higher than industry growth in the card segment.
“Credit card spends have been encouraging and are now increasingly driven by online spends. Apart from e-commerce retailing, categories like travel, bill pay etc. are also driving growth. Our spends continue to be higher than the market average, by 1.4 – 1.5 times,” added Chowdhry.
A McKinsey report suggests that credit cards booked online for Citibank are about 21 per cent, much higher than the industry estimate of four per cent.
According to RBI data, at the end of May, Citibank’s credit card base was 2.42 million. In the last financial year, the lender’s retail book grew by 12 per cent while the overall profit grew by 18 per cent to Rs 3,423 crore.
