The message is loud and clear out there - change or perish. With opening of Indian financial sector to private players two decades back, public sector banks are facing tough challenge not only to retain their market share, but also to attract country’s young and upwardly mobile mass into their fold.
However, public sector lenders are slowly learning their ways to shed the legacy issues and to attract young customers to their premises. “Public sector banks face legacy issues in the form of old practices, customer service and approach to banking. However, things are changing rapidly to attract young customers as India’s demographic advantage need to be tapped for greater growth,” H S Upendra Kamath, executive director of Canara Bank said.
As a higher youth customer base gives a bank access to low cost deposit to expand lending, it’s the effort of each bank to grab this opportunity. While some banks are working on tailor made products meant for younger mass, others are trying to tap them young from students’ stage.
“Canara bank has a customised a product named ‘Super Salary Savings Scheme’ for IT professionals which works as a salary account along with host of other services offered to the client,” Kamath said. The bank is also focusing on non-IT young professionals to be part of this scheme in the recent time, he added. Along with tailor made products, the bank is planning to come up with gen-next branches, targeting youth. “We have now opened gen-next branches on pilot basis which provides lobby banking facilities. In these branches, we provide facilities like access to internet, cheque dropping facility, tele-banking facilities among others,” he said. He also said that the bank was planning to open few branches every year in select cities.
Other major players like State Bank of India (SBI), Bank of Baroda have already joined the bandwagon with opening of gen-next branches in select metros. These banks are also working on innovative ways to reach customers effectively by reducing the hassle of loan sanction and loan processing timing. “Instead of regular timing of 10 am to 5 pm, we are planning to split timing from 10 am to 1 pm in the first half and 4pm-8 pm in the second half of these loan processing centres. We are also mulling another option of opening the branch on Sundays which professionals can avail in their convenience ,” he said.
Another critical area of concern is effective customer service to retain a customer along with spreading of goodwill for future references. “While a private sector bank is able to sell three to four other products to an account holder, it is less than one for a public sector bank. So, we are working to increase cross selling to young customers from our product offerings through training of our front end staffs on a regular basis,” Kamath said.
Technology up-gradation is another area of focus of the bank with new generation shifting to Internet banking. Canara bank is also planning to enter into wealth management space for elite youth who are in the creamy layer. “Though bank provides services like counsellings for various kind of investment, we don’t have integrated wealth management services. This is one area in which we will work on in the future. However, anything concrete is yet to evolve in this matter ,” Kamath said.
In case of another public sector lender-Vijaya Bank, the approach is little different. “We want to tap young customers from students’ stage. In this effort , we are opening students’ accounts in schools and colleges which gives an edge to the bank in terms of customers’ loyalty in future,” Vijaya Bank executive director, Subhalakshmi Panse said.
The bank is also providing a recurring deposit facility to students in the multiple of Rs 10 per month for 10 years. “The aim of this recurring deposit account is that we will provide student loans to clients having this account, considering the deposit as margin money,”she added .
Barring product customisation, the bank is also increasing its spend on advertisement and branding exercise. “As part of our branding exercise, there is also an increase in add flow to journals and magazines along with public hoardings to increase our visibility among young customers,” she said.
It’s not only the young customers inside the country, but the young NRIs which the bank is also aiming to tap in the future. “We have done road shows in Abu Dhabi and Dubai to tap the young NRI customers,” she said.
In case of Corporation Bank, it has devised student card that works as a debit card along with swapping card for various purposes. “This card is chip based which provides both debit facility to the students along with all required information about the student embedded in the chip for official and academic use,” a top official of Corporation Bank said.
He also said that the bank had some pay roll products for young professionals against which the bank was disbursing various retail loans in attractive terms. The bank is also mulling to open gen-next branches in various cities to tap young professionals.
However, industry experts have a different view regarding this issue. “Though change is taking place in public sector banks, still more need to done to attract young customers,” Harish Bijoor, a brand expert said. Change in banks should follow a bottom-up approach than a top-down approach as followed by many public sector lenders, he added. Further, he also said there need to be an attitudinal shift among bank staffers to serve customers better.
