In its second phase of growth through retail banking, Citibank is adopting a more cautious approach. Offering products and services tailored to specific customer segments, using digital tools to get customers, and leveraging the robust credit bureau framework are some of the steps the bank is taking.

In an interview to Business Line , Mr Anand Selvakesari , Head – Consumer Banking, Citibank, speaks about why the bank is optimistic about the retail segment in India.

Excerpts from the interview:

Do you think this is the second phase of growth for retail banking in India after the crisis of 2008-09?

Looking at our plans for the next 3-5 years, we are optimistic on retail banking and the opportunities it provides. This is mainly on account of a few key market trends.

The first is urbanisation. This is reflected in the significant growth of the emerging affluent segment.

Second is wealth creation. According to market estimates, wealth is expected to double in the ‘emerging affluent' and affluent space to $31 billion by 2015. It currently stands at around $14 billion and includes entrepreneurial wealth, which is the case with India as well.

Third is the personal consumption story, which is expected to grow twice as fast. As per market estimates, it currently stands at Rs 45-lakh crore and is expected to touch Rs 85-lakh crore by 2015.

Fourth is the increasing inclination of Indians to go global. Earlier it was only NRIs, which segment has now grown to become a sizeable group. It is estimated to be at 13 million individuals.

In addition, we see resident Indians becoming very global. They are travelling, doing business and all of this is resulting in noteworthy flows. India also has the largest remittance flows in the world right now.

When you put up all these factors together along with the evolving regulatory framework, such as the opening up of mobile payments, the potential for growth is huge.

How differently are you approaching the retail segment now compared to pre-2009?

India is a very large market. So we have to be very clear about the segments we operate in. We have identified five distinct segments. One is salaried accounts, which is very large in India. As urbanisation gains momentum, this opportunity is only going to get bigger.

Second is the emerging affluent segment that we launched recently. The third is the affluent segment.

Then there is the high net worth segment which is significantly smaller, but very important because wealth gets concentrated. And, fifth is the NRI segment.

To us these are the five segments and our focus is to provide a strong value proposition to each of these five segments.

In India, a substantial portion of wealth is being created by entrepreneurs. So it is important to have a robust platform that seamlessly integrates both personal as well as a tailored business banking proposition. Customers also expect such services from us.

For the card and loan products we want to tap into the broader market. There is more opportunity outside of our customer base in these two segments. Geographically we want to focus in the cities that we are present today. We want to build our infrastructure and resources and go deeper into the 30 cities we are currently present.

We want to ensure that we leverage the credit bureau framework effectively. It is a good framework. We have our lessons learnt from the pre-crisis period and have since further enhanced our own credit framework.

Even when we go for a broader play in cards and loans, what we want to do is to ensure that we get the right customers.

So, in addition to the distribution channels that we have, namely, the branch, telephone and direct sales agents, we are building our own capabilities, which we call as universal bankers. We are building our own sales force. Our focus is to target customers with the ‘right profile' through multiple channels.

Given the restricted number of branches we have, it is very important we focus on building our digital capabilities. We continue to develop and innovate on our capabilities. Interestingly, even customers want a digital experience. Currently, about 20 per cent of new customer acquisition happens through the Internet.

When you say you want the ‘right profile' customers are you excluding a large section of the Indian customers? Is it a firewall you are putting in place?

It is not a firewall. We have limited branch network. We have 42 branches in 30 cities. In many of the cities we have a single branch. We do not want to compromise on our service standards. We have a certain capacity to handle, given our network.

Given the quality of service we want to offer and our capacity to handle, we have to take a view on the segments we want to operate in.

If you have a huge branch network, then it is a different situation. We would be discussing a much larger base. We would have had the capacity to access a larger pool of customers. However, we understand and acknowledge our limitations. As a result we have carefully defined our target segments and the services we want to offer.

How big a role do fees and interest rates play in retaining customers?

Interest rates are important, but they are not the only factor or the deciding factor. Our philosophy is building relationship. If you look at our emerging affluent customers, they will hold at least two or three product relationships with us. These are not single product relationships. So, rate plays a less significant role in the context of the overall relationship.

From a relationship perspective it is about speed, convenience, customer service, keeping things simple, and advice about wealth management — it is the complete package.

So, when you look at the whole package we tend to waive a lot of fees.

But if you look at a credit card or a loan only customer, then obviously there is an interest rate component that comes into play. From that perspective when we do a broader play we want to be competitive on rates.

But, at the same time, rates are not the only thing that we compete on. We want to compete on service and innovation.

In any market a small percentage of customers will always shop for rates. But from our experience relationship always works. And, as a part of a relationship, if we waive some fees, customers tend to value that and be extremely loyal.

Are there any product segments you want to enter?

We are working on more offerings in the cards and mobile payments space and for the emerging affluent and HNI customers segments. In the last 12 months we launched a new credit card called Premier Miles. It is ‘airline agnostic'. It is not linked to a particular airline as an answer to market and customer needs.

You earn miles and have a choice to transfer your miles to your own frequent flier programme between three international and three domestic carriers. You redeem your miles instantly on our online Web site to book domestic as well as international tickets, hotels and car rentals. We continue to expand this service.

We have about 10 per cent share in the mobile payments space. We are the only foreign bank to be empanelled in the UID. We are building our retail brokerage platform under Citi Wealth Advisor. We are present in eight cities. We opened new outlets in Delhi and Pune last year, one in Chennai last month and plan to open more. Through these outlets we want to bring equity and equity-related products to our clients — e-brokerage and assisted trade.

>priyan@thehindu.co.in

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