Digital transformation aiding SFB’s customer acquisition, employee retention in cost effective manner

Digital transformation in the banking space is not only helping small finance banks with customer acquisition in a cost-effective manner, but is also going to aid customer and employee retention, said R Baskar Babu, Managing Director & CEO, Suryoday Small Finance Bank in the FE Modern BFSI Summit. The digital revolution in microlending space and in the micro liability space has been immense and Small Finance Banks and their customers have been very big beneficiaries of this transformation, stated 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 major challenges for small finance banks in the last couple of years have been Demonetisation and then the pandemic. “When Covid happened, it accelerated the digital curve so high that we are now seeing approximately 5 billion UPI transactions a month. If you look at the UPI transactions over the last few years, the average transaction value is Rs 1,500. So while the volumes have gone up, the average transaction value has remained steady which means that more households, even low income households have become digital,” he highlighted. If we can use this digital transformation to solve customers’ doubts about deposits and even lending, then we can leapfrog from 2.0 to even 3.0, he added.

Samit Kumar Ghosh, Founder & Chairman, Ujjivan Financial Services emphasised that earlier in the regular banking space, it was believed that you could not serve the vast underserved segment of small ticket customers because the transaction size is very small. “Whether it’s for deposits or loans, you could not do a viable business. But we felt that Technology has changed significantly where we could do this business in a viable manner. So technology, when we first as an NBFC and then as an SFB, has been a very critical factor from the perspective of bringing the cost down and making it a viable business,” he said. Going ahead, as we move from the regular legacy technology to digital, it is even more important for us. Digital technology will always play a very important role especially for us who are not serving big ticket corporations, but small SMEs, individuals, farmers, and affordable housing.  

Rajeev Yadav echoed that sentiment stating that digital use, benefit and innovation has been even more immense in the microlending models than the urban learning models. The cost of doing business is a very easy variable when you’re dealing with a small ticket segment and only by adopting digital solutions, it changes the whole process making customers’ lives easier. The digital revolution in microlending space and in the micro liability space is immense. Our customers and as banks ourselves, we are very big beneficiaries of this transformation.

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