Digital transformation that supports SFB’s customer acquisition and retention in a cost-effective way


Digital transformation in the banking world will not only help small financial banks acquire customers in a cost-effective manner, but will also help retain customers and employees, said R Baskar Babu, Managing Director & CEO, Suryoday Small Finance Bank in the FE Modern BFSI Summit. The digital revolution in microcredit and micro liability has been huge and Small Finance Banks and their clients are very big beneficiaries of this transformation, said Rajeev Yadav, Managing Director & CEO, Fincare Small Finance Bank.

R Baskar Babu, Managing Director & CEO, Suryoday Small Finance Bank, said at the summit that the biggest challenges facing small financial banks in recent years have been demonetization and then the pandemic. “When Covid happened, it accelerated the digital curve so high that we now see about 5 billion UPI transactions per month. If you look at the UPI trades of recent years, the average trade value is Rs 1,500. So while volumes have risen, the average transaction value has remained stable, meaning more households, even low-income households, have gone digital,” he emphasized. If we can use this digital transformation to allay customers’ doubts about deposits and even lending, we can jump from 2.0 to even 3.0, he added.

Samit Kumar Ghosh, founder and chairman of Ujjivan Financial Services, emphasized that it was previously believed in mainstream banking that you could not serve the huge underserved segment of small ticket customers because the transaction size is very small. “Whether it’s deposits or loans, you couldn’t do a viable business. But we felt that the technology has changed significantly where we could do this in a viable way. So technology, when we first as an NBFC and then as an SFB, was a very critical factor from the perspective of cutting costs and making it a viable business,” he said. As we move from mainstream legacy technology to digital, it’s even more important to us, digital technology will always play a very important role, especially for us, who don’t serve big ticket companies, but small SME’s, individuals, farmers and affordable housing.

Rajeev Yadav echoed that sentiment by stating that digital use, benefit and innovation have been even greater in the microloan models than the urban learning models. The cost of doing business is a very easy variable when you are dealing with a small ticket segment and just by using digital solutions it changes the whole process making life easier for customers. The digital revolution in the microcredit space and in the microliability space is immense. Our customers, and as banks themselves, are very big beneficiaries of this transformation.

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