HDFC Bank Limited (HDFCBANK) Earnings Call Transcript & Summary

Good evening, everyone. Welcome to this very interesting session on HDFC Bank as a part of our India fintech conference. Clearly, the key question is whether fintechs are going to be disruptors or enablers. And as the RBI Deputy Governor very nicely put, the competition perhaps is not between banks and fintechs, but perhaps between banks that use fintechs more versus banks that use fintech less. So I think to answer some of your interesting questions and to have -- and to participate in a very fireside chat session in the Macquarie [ media ] conference, we have with us the senior management team at HDFC Bank, represented by Srinivasan Vaidyanathan, the Chief Financial Officer of HDFC Bank; Parag Rao, Country Head, Payments, Consumer Finance, Digital Banking and Technology; Anjani Rathor, the Chief Digital Officer of HDFC Bank; and finally, Ramesh Lakshminarayanan, the Chief Information Officer, the Chief Technology Officer of HDFC Bank. Thank you all the participants, and thank you for the senior management of HDFC Bank to participate in the conference and thanks for taking your time today.

It's a pleasure, Suresh. Thanks for getting us here. We look forward to that.

So thanks. Okay. So let me begin by addressing a very important question that a lot of people have in mind now that everybody is aware of your revised strategy of opening about 1,500 to 2,000 branches. Now on one hand, we are talking about being pretty tech-savvy in digital banking and so many amount of transactions and account openings and a lot of things get sent digitally, but there is an actual need to open such large amount of physical outlets. So how do you look at this proposition, Srini, and maybe you can give us more color on this. Over to you.

No, no. Very valid and topical, Suresh, to think about in the current context, what does it mean, branch means what and why and so on, right? Very, very apt in terms of the context. But let me try to give some explanations of what it means, right? See, branch and the bank, right, the branch is the microcosm of the bank itself. That's how our bank runs. Branch is not -- one would imagine a traditional or a typical teller counter and an ATM type of outfit with some service kind of counters. No. It is a microcosm of the bank. That means a bank does many things -- a branch does many things that the bank is expected and supposed to do, right? And our brand strategy that we have so far followed has paid off well in market share gains and strengthening our position several years that we have done this job, right? And the focus here continues to be on low-cost granular deposits, right, in the next stage of growth. So which means we do -- we're not changing our strategy in terms of how we get. We still need that low-cost granular deposit. 81% of our deposit base is retail, and we continue to drive that. And the deposit strategy will be distribution-driven not rate-driven, which means the deposits we want will be based on the distribution and the reach that we are able to get to the customer. And again, it's similar to what we have done so far, not, again, different from where it is. And to put a context, right, the country's distribution requirement is far and wide, right? The branch density has to increase significantly to capture the opportunity. The market is still very unbanked or underbanked, so to say. A significant deposit share remains state-owned or local community type of bank. So we have an opportunity to see how we could add certain value for our customer relationship and get there. And another aspect to think about the branch itself is a branch is the congregation place for our sales and relationship management staff. What it means is that if we don't have a branch, we won't have an office where our sales and relationship managers are going to sit and function, right? Because today, we have about 5, 6 kilometers of coverage for our sales and relationship managers to go around in the catchment area to do their business. It has to be brought down to 2 to 3 kilometers coverage to start with, right, for our staff. We need to cut down their travel, improve their productivity to focus on customer relationship and process. So that's one of the important ingredients of how we are thinking about it. A branch is also not just a deposit strategy kind of a center. It is also an asset distribution center where our retail and [ CRE ] segments are the fulcrum that operates out of the branches. And branches have different formats. I don't want to leave a thought that the branch is a single kind of a place or [ a size and an outfit ]. It has got varying sizes and houses anywhere from 3, 4 people in some branches. It can be 10, 20 or more in a metro in Mumbai, one of the most busiest. If you go there, it could be 50 people sitting there. So these are different formats that we have. And the branches that we are really staging are also technologically advanced, right? The ones that we are doing. Our digital branch's construct would be leveraging new age technology components, right, to facilitate our unassisted experience. These technologies are like -- today's Internet are wireless instead of a traditional closed-loop networks, right? And it will be high-end accounts. It will be [indiscernible], and this would enable for a faster rollout. The new technology enables faster rollout of branches, which is what we have done recently, and we continue to operate in that kind of a mindset. See, the branches -- the latest branches also allow video interactions with customers. For example, with the SME sitting in various other geolocations, it provides an assisted journey construct, which we believe is very essential for our [ DI ] 2, 3, 4 deeper geography construct that we are having. Pure unassisted digital journeys are critical in urban, metro construct. But for deeper penetration, we will continue to focus on assisted more journeys, and these digital branches will be a great lever for the same, right? Let me say that the branches are physical enablers for our sales relationship managers, and the journeys there are purely digital. With that, I hope that I gave you a background of what a branch means and why the branch construct is very critical to our distribution and execution strategy.

Yes, I think that's clear, Srini. Parag, you want to add something here more than what Srini has said?

Okay, to only add. So when we look at even the current digital landscape and sort of break it up, you see a significant portion of the kind of sourcing which you do, especially new acquisition, still happens in an assisted manner especially when you go to the deeper geography. We tend to sort of get a little bit [ skewed by us ] sitting in the cities, thinking that everyone -- everything is 100% unassisted. But the reality of the matter is that even as high as 70%, 80% of a lot of the so-called digital journeys are assisted journeys, okay? And that, as we foresee and given our experience on the ground especially in the deeper geographies, will be a reality in the foreseeable future. We need to be prepared for those kind of situations. And hence, branch -- well, the branch expansion, I think the nature and the nuance and the flavor in the branch exactly as Srini explained will be sort of will be carried forward, okay? That will be a place where people come to do a lot of the digitally-assisted journeys. In fact, the initiative by the RBI on raising DBUs, in fact, is exactly a step in that direction wherein they've taken on sort of one more -- or they've put on one more very important KRA, if you may call, also on the banking system to say that how do you create these digital banking units which are essentially physical locations where people can come to but actually avail of and experience strong digital journeys, some of them assisted, but many of them unassisted, so that this whole flavor of digital is spread out into the deeper geography. And that is the core mission of India, and hence, banks will actually carry forward a lot of these journeys. So a lot of the new technologies, which we are sort of already adopting in various parts of the bank, will be deployed in these DBUs, and Ramesh and Anjani can sort of take you through a little more of the details. But fundamentally, these will be showcased places where customers can come in, in the traditional way of a branch, in a physical place where they can interact with [ warm bodies ] and branch officials, but I think they can conduct a lot of their transactions which they hitherto did in a physical mode, in a semi-assisted mode or even a completely digital mode, okay? And so the DBU is actually an institutionalized mechanism in which RBI sort of clearly understood that this is the reality in India for the near future. So a lot of the new technologies will apply here, and that's what I think we wanted to add. We're just seeing what's happening on the ground and adapting to what. And mind you, the branch is one of our strategies. Obviously, our initiatives on doing completely digital through the website, through our Adobe journeys forms, which we are doing through changing customer UI/UX, and a lot of the other customer-facing digital journeys which we'll sort of -- which we'll talk about subsequently, those will continue obviously. But this is one of the initiatives where we need to be, I think, cognizant of the fact that in India, there will still be a large proportion of assisted digital journeys which will exist, and we need to be ready for them.

Yes. So extending this conversation on digital banking units, Anjani, we would like to have your thoughts here because for a bank like HDFC or any of your large competitors, a lot of these things were anyways being done. So what does the digital banking unit offers to you in the sense as an organization? What exactly is changing here with respect to the landscape? Or it is just like just another more concise or a precise way of doing the business? Anything that you can give us a color on what exactly changes with the digital banking unit [ guideline ].

So at the digital banking unit, it gives us an opportunity to bring all our customer journeys, which are zero touch, paperless. Each of these customer journeys can be exposed at these points where a customer can walk in and conduct himself or herself completely through an assisted journey, or there will also be a bank staff present during the banking hours to support a customer. Now this becomes a way to manifest all the journeys and the work in digital that banks have been doing through these digital banking units. So it becomes a good way to educate the citizens who are there in that catchment and later on, also take it through an assisted manner across the entire digital landscape. So the DBU is going to help propagate digital banking as we move forward.

Okay. So I just wanted to also add here on the [ business side ], Suresh, I think the construct of the DBU is also changing, right? Srini alluded to the technology. A lot of cost goes in the back-end technology [ today in the world ] through MPLS network, switches, routers. What we are doing here is changing the paradigm by using a new set of technologies out there, which is largely cloud-enabled, very secure, proxy-driven technologies. And we already started the rollout. So we also believe that the way we also look at setting up the branch technology costs, right, those also will dramatically change. The capabilities will also go up. So that's another thing that's changing on the ground with the DBU construct that we are kind of taking it forward. And just [ leverage ] on the network side, Suresh, some of the very new age technology connections that [indiscernible], and banks have to kind of, again, move from those technologies, clearly. That's -- it can be network technologies go a little far away back [ still, and we are ] moving in the direction very, very rapidly.

So while we have you here, Ramesh, I think the next question and the most important question for a lot of people is you've been the tech head or the CIO for the last 18 months. And what exactly do you think was something that HDFC Bank had to do in the last 18 months? And since this was an India fintech day, a lot of fintechs obviously [ tied ] on the fact that they don't have big monolithic architectures. They're far more nimble, better technology, better UI/UX. I mean in a large bank like HDFC Bank with a lot of legacy systems, how easy or difficult it is to change the entire technology architecture? And are we really, do you think, on track to move towards a pretty state-of-the-art tech system? So anything that you can tell us what was lacking and what has been done in the last 18 months, that would be great.

Suresh, first of all, I think I just wanted to clear this [indiscernible] something lacking and something what we can. See, bank -- HDFC Bank was digitally enabled for very long, right? And there's a lot of foundational technology that we've been using for very long. What essentially happens is that when the technology -- new technology, especially the cloud side technology, started coming up, there are fintechs who were kind of on the sidelines who can rapidly scale up onto SaaS model because they are what they are. They are fintechs. They don't have a regulated entity. Putting them quickly into a cloud-enabled SaaS model is far easier. But then there are risks around that, I mean, if you go deeper into it in terms of the security construct, the regulator [ views ]. And that's where, I think, fundamentally I want us to look at it when we do this cloud transformation, which is very essential because the kind of digital ecosystem that India has built over the last 3, 4, 5 years, there is no way that you can do it on, on-prem, on the classical technologies. So both the entity, whether the fintech or the bank, both have to transition, just as the path that has been taken by HDFC Bank would be slightly more rigorous, so to say, and it has to be in line with the regulatory and security requirements. So I think most of the fintechs today go on a SaaS approach, Suresh, where they just take a public cloud [ and then ] on top of it, they build their application and they're ready to go. Then if you were to go through a full security assessment, looking at [ encrypting ] the data, keep -- putting in the perimeter security, a lot of those kind of things start coming up, right? Cross-border jurisdictions. A lot of those kind of items that start coming in for a larger entity. And what we have done over the last 18 months is very clearly, we realized, first, that we need to enable the cloudification. So I don't know if you know that, but our -- we are one of the fastest cloud adoption landing zones in the country today. We have a landing zone which we created in last 6 months, Suresh, which technically has now connected us to 3 large clouds, so not just 1. We have a cloud connecting to AWS, a cloud connecting to Azure and a cloud connecting to Google. This is a very different construct. In fact, the way this construct happens is fairly in line with what the regulator thought process is. And why is it that? Because in all of this, the perimeter security is completely still in line with the traditional ingress approach where the bank controls the perimeter security. At the same time, it allows you to use the entire cloud computing of the public cloud like AWS or Google. And then what we've also bought in is something called -- a very interesting concept called bring your own keys where we are actually encrypting the data even in the public cloud using our own keys in the bank. This gives a far higher construct. And this is fairly, I would say, looked at, scrutinized by the regulators. And they are fairly in line. They think this is the right way to go. And you will see more and more banks, more and more fintechs being pushed to this construct. And we were [ off the blocks ] in, like I said, in last -- I would say, last 6 to 7 months, we've actually been able to put the landing zone. We started getting a lot of our cloud -- new applications. Just as a case, our new auto application, our new customer experience hub, our merchant application, all of them are cloud-driven, [ cloud-bound ]. And what we've also done through this landing zone construct [ traditionally also ], enable fintech. We spoke about how we partner with fintechs. So today, when you partner with [ Vita ], with Sprinklr and some of those fintech companies, you need to provide them a cloud environment, and you need to also give them a DevOps pipeline which is in line with what they can rapidly develop. This is what our landing zone construct has given. So the first thing that we've been able to do is we've been able to, first, get the entire cloud construct done. And then we have started onboarding each of the new age digital platforms on to the cloud rapidly in the same agile way that a fintech would normally do. And then what we are also doing is while we do the strategy, parallelly, we are also refactoring our traditional applications into cloud-ready, and that's where the enterprise factory construct comes in. So clearly, we are hitting the [ whole ] strategy. We're kind of taking it from all the [ clients ] actually. One is to really, first, create an ecosystem, allow the fintechs to come and develop and co-create with you. At the same time, you also create your own capabilities [ to go and flow ]. And this is what -- I would say it's a fairly different strategy. In fact, we are on the ground rolling. Like I mentioned, multiple applications already started being rolled out on the [ big ] cloud infrastructure. And we'll do more of this as we rapidly scale up, and that is where I think the capabilities will come up rapidly [ in the going quarters ] actually. So I hope that answers the question.

Yes. Yes. Pretty clear. Thanks so much, Ramesh. And maybe we can move on to some of the really new developments. There are quite a lot of contextual questions. One is, Parag, maybe you can tell us whether this credit card and UPI thing, is it really a big thing? I mean we're not clear whether MDR would be allowed on this or not. So would you do more Rupay-based cards? And really, is there a big potential to scale up this business in a big way? We know they are in the early stages. But as the cards head also and the payments product head, how do you look at this particular thing as an opportunity?

Okay. So the way we look at it is I think there is, I think, far more good than, I think, negative to this kind of a move. UPI is quickly -- rapidly over the last 3 to 4 years has become a very significant payment mode for most consumers, especially for small ticket transactions, okay? And I think the introduction of the linkage of currently today Rupay cards, but then obviously there are moves to see that other cards also get sort of linked to the system, is a means in which you can actually extend credit right on top of that direct debit transaction. And so to that extent, I think it will only open up and make this transaction even more attractive for you and simultaneously, also drive a lot of usage on to credit cards, okay? So that's clearly something which we see happening. On one side, we've always been talking about cards being underpenetrated and how whilst it's grown from 30 million to 70 million to 75-odd million, but then when is that actually big ramp-up. I think this move is one of the steps, I think, which is only going to help rapidly increase adoption of credit cards, especially on the kind of transactions and using credit cards for a lot of smaller ticket transactions because it provides you that OD or that other credit, which is today not present sort of in a typical UPI transaction. Even when you have UPI OD, it's still a little bit of a cumbersome process. So this, I think, is only a good -- positive move. Because it's an incremental step of providing credit, I'm sure -- whilst I know discussions are happening, I'm sure the economics of the transaction will obviously be sort of taken care of, okay? But net-net, I think it's a good move. It's a good move, and you'll obviously also see larger issuance of Rupay cards happening across the ecosystem.

Yes, but does it really change the approach of selecting your card customers? Because one of the biggest opportunities that fintechs always say is that not everybody has an access to a card. Cards are not being issued to people who earn 20 rupees, 25 rupees of salary -- INR 20,000, INR 25,000 of salary. So that doesn't change, right? But your criteria for giving credit card to a customer will still remain the same, right? I mean -- yes, you're muted, Parag.

Absolutely, right? I mean, finally, one has to understand that the card is a credit product and you need to apply the principles of good credit and underwriting on an asset product when it comes to lending, okay? So I don't see dilution of norms. I think it only makes access to credit for customers a little more easier. It only makes access to credit at the point of purchase a little more easier. Obviously, when you use data and couple of data -- and I'm sure I can keep on talking about how when you look at overall data, UPI data, for example, if I'm an acquirer which also acquires the UPI transaction and the card transaction, we can look at all that data aggregated, put together and use the AML and actually underwrite the customer slightly better, which help me give me incremental numbers in terms of credit underwriting. But you're right. Fundamentally, the credit underwriting approach is not going to change. With the advent of more data and monetization of data, we can probably -- it will help us fine-tune our scorecards and be able to give more credit on the fly, okay? So those are the obvious advantages and benefits which will happen through this [ whole means ].

Maybe the next question is on UPI Lite. I think both perhaps Anjani or Ramesh can answer this. Obviously, one of the biggest issues with UPI was it was clogging the entire CBS system in a big way. I mean moving transactions to UPI Lite, can this be another big movement in the overall payment space whereby by declogging the CBS network, it gives further impetus for the banks to invest in the UPI systems and also for that matter, move certain kinds of businesses which are earlier being done by fintechs to the wallet side? So any color on this would be great, Anjani or Ramesh, if you can throw us, yes.

I'll take the question on the core banking side. Yes, definitely, Suresh, because see what was happening is that today, the core banking largely was taking [ all the load ] up to any amount, right? So a 5 rupee amount, a 10 rupee amount could kind of [ come into ] the core bank. And banks have reacted to that. In fact, for example, our story on UPI has been extremely good because what we did was we basically containerized, cloudified the entire UPI architecture. And that's why you see our technical declines on UPI has been remarkably low over the last 1 year. But you just need to move forward and look forward. So what UPI Lite does is that it allows you to do an off-line transaction in that sense. And it allows you to, up to certain wallet limit, you can just kind of -- up to particular limit, you can just clear it off without [ hitting ] the core banking. And what this also provides, it also facilitates very nicely with the new technologies, Suresh. So the customer has the full choice without you loading up the core banking. And that allows us a lot of flexibility to offer many more, I would say, products [ or offering spaces to ] UPI because suddenly, our systems get a little bit more [ eased up ]. So clearly, it's a very forward-looking move, and I do see that being a good game-changer in the kind of small ticket transactions, the way they are handled. So we are quite positive about this move, and it just helps the industry across all the banking ecosystem and not just our bank, but banks that can quickly harness the technology. And as an example, a lot of this would come as back-ended memory-based type clearances. You don't need to really go back to the database. That's where the real meat of this type of technology lies. So very positive move, and I'll let Anjani...

So sorry, let me add to it with an analogy. If you recall, Suresh, almost 15, 20 years back in the FMCG space when the companies introduced those paisa packets or the sachets, that was when actually the penetration of things like shampoos, toothpastes, et cetera, really took off in the smaller areas [ where you ] basically brought down the price point and brought down the quantity of purchase and the burden on customers, okay? And that actually revolutionized actually the usage of a lot of branded products. In a similar way, in the payments space, this whole de-linking of -- while it's a back-end thing, but what's going to happen is making these off-line transactions will drive a lot of significantly more still small ticket value [ adds, which ] still today happen on cash or off-line, et cetera. And so I draw that analogy. So I think it's a good move.

Okay. So let me move to another interesting question is on account aggregator system. I think it's still, obviously, they are in the early stages. But do you really think this could be perhaps some kind of a [ civil movement ] for the entire banking industry? Does it really open up a lot of opportunities either in terms of better underwriting, either in terms of better customer onboarding? And yes, so how has been your initial experience? Are there any use cases that you're willing to share the benefits here? We are also getting feedback that the sharing of data is not great by some banks. So those kind of initial [ heating ] issues are there. We're also hearing that until SBI comes onboard, this is going to be a tricky thing. We want SBI, the biggest bank, to fully participate. So any initial thoughts that any one of you can give on the account aggregator system and how you're looking at it? Maybe Anjani or anybody else? Yes?

Yes. I'll take this, Suresh. On the account aggregator front, we were one of the first few banks to integrate. And also, therefore, we're able to see the early signs of how this is working. Now in almost -- in all the lending journeys where we need a bank statement from our customer, today, customer is presented with multiple choices. A customer has the ability to upload a PDF statement. A customer has the ability to go into a net banking, mobile banking and provide access to bank statement. Ultimately, account aggregator has emerged as a very safe and a secure way of exchanging data for citizens of this country. Now the drop-offs that we see on account aggregator is definitely far superior to a physical statement or a PDF upload that customers used to do earlier. So that's a big plus. If you have 100 people coming in, a majority of customers are easily able to go through this journey and give you a bank statement, which means that if it is needed for unsecured lending or in several of the lending journeys, it becomes far more easier to close that case digitally. So this is a good development. It's a public infrastructure and a public [ good ] that has been created across the country, and it is yielding some positive signs of showing that this will scale up in future. On the other hand, not every bank has joined this momentum yet. And there are some banks who are in the process of integrating because one by one, banks have come in. And we've also read in the papers that even Finance Ministry is encouraging banks to come and join, which will be a big plus. If all the banks join in, then any customer is able to share any bank statement from any of the banks here. So that will be a big plus, again, if other banks are able to join faster.

[indiscernible] the account aggregator, essentially, I mean, if we have to give it in 1, 2 sentences, what it has done is that it has taken down the physical barrier to get details -- visibility on account into a digital form. So instead of getting a PDF statement and looking at the transaction types to make an assessment or prepare a scorecard, you've got a digital form to do that. That's one critical differentiation that it has brought. However, the competitive advantage always remains only on the scorecard. So that means you can get a physical period statement or go through a digital process or account aggregator and get the details. But what remains as a competitive advantage is how good is your scorecard to evaluate. That is proprietary to every bank. So that is where the differentiation is all about. Is your scorecard good? Then you make use of this digital process instead of a traditional physical process. Sorry, Parag. You [ may answer now ].

No problem. Suresh, I think one clear benefit of the aggregator -- account aggregator system, which -- and I'll go back once again to the time when the bureaus were sort of getting into places, especially after the '08, '09 sort of debacle globally, in India especially, is that I think one very underplayed benefit of this thing is that because of democratization of data and easy access to data, I mean, people [ giving ] and also people being able to read, I think it brought about a very strong consciousness amongst consumers and et cetera, et cetera, of the need to have a very good, clear credit score, okay? And that is a very subtle but extremely important, I think, if you may call it, sentiment, which I think -- which is -- which actually brought about good underwriting practices post '08, '09, okay? And [ civil ] actually helped that. There were initial fears that, oh my god, if people share data, then everyone else will have access to that data. But I think by far, the benefits of aggregation of data and democratization of data, I think, only helped in the positive run. Similarly, account aggregator, too, we see it as a way in which, like I said, data being available also brings about some checks and measures and balances on people who are sort of taking lending, et cetera, et cetera. And like Srini said, yes, but finally, the scores and the scorecards will be the proprietorship of the individual banks. And then -- that's number one. And number two is I think the other key thing which will really determine the success is not just about the availability of data, but also the distribution capability and how many points can you sort of expose this whole account aggregator piece, okay? So our strategy of using account aggregator is that's one of the pieces within our larger distribution and digitization strategy. So it's a very positive move as we see it.

Great. I think the next question is, clearly, the UI/UX interface and the various platforms that you have got, the PayZapp and the SmartBuy ecosystem. So can you give us any idea of how you are planning to revamp that? What are the time lines that you're looking at from a revamping of that ecosystem? And also, I'm also an HDFC Bank customer, and what exactly is happening is there is not a seamless integration between all these different apps and ecosystems that we have got, right, HDFC Bank mobile app and PayZapp and the SmartBuy platform. So is there a particular plan to completely integrate all of them and of course, give a better UI/UX interface? And so what are the time lines here, Parag?

Yes, Anjani, do you want to take it? Then I'll add on top of it.

So I'll take this question and then Parag and Ramesh -- yes. So as we talk about our digital ecosystem, it is much more than our mobile banking and net banking on which our customers come. In fact, we have consciously kept PayZapp as a payment digital ecosystem for us, which is different from our mobile banking and net banking. And this is a choice that we have consciously made, and this is different from some of the other banks who have brought everything together to give a [ perfect ] kind of experience. Now when we look at our banking experience, was it -- what is it that we are focusing on? We are focusing on simplicity, and we are focusing on resiliency and always-on capability of our banking system. So if you go on to our mobile banking app, net banking app, it has to be always on. It should be very resilient to be able to handle the kind of scale, and it should be very, very simple to use for any of our customers. Whether it is a rural customer or an urban customer, whether it's an old customer or a very young millennial who's coming in should be able to perform their banking services there. That's our thinking on the mobile banking and net banking. But at the same time, we do want to engage with our customers. We want to give them the new age fintech experience just like many of the new age technology companies are giving because it's the same customer who's using Netflix, who's using a commerce app, who's using a hail-a-ride app. So we want to give them a good fintech experience or a consumer tech experience, and that is where we are focusing on our newer digital property, whether it is PayZapp, which allows you to make the kind of payment like any other new consumer tech company would allow you to do that; or it's our new Xpress auto loan. You would have seen that. Any customer in any part of the country can walk into a dealership, choose a vehicle and is able to take a loan from HDFC Bank to buy or purchase that vehicle completely on their mobile phone. And this is possible not just for HDFC Bank customer but even for new-to-bank customers. So our newer digital properties that we are creating, which is on the fringes of consumer tech, their experience is completely being reimagined, and these are different compared to what our mobile banking and net banking where we are focusing on simplicity. Now are they [ going to work ] in the future? We don't know the answer yet. What we know today is that we have a [ 2-brand -- these 2 brands ] and ensuring that both are working perfectly fine. One is engaging customers. The other is ensuring that it is very simple and easy to use.

Okay. Anything else anybody wants to add on this? Srini?

Yes. Yes. So I can also comment here, which I think also the UI/UX, it's not that we are saying we will not work on -- we'll continue to kind of have a part on the UI/UX [ developments ]. So in fact, we've seen our mobile app itself and in the last 1 year, we have done a fair amount of changes on that from a UI/UX perspective. And you would see clearly, consciously the Play Store ratings have moved up. So it's not like we're not focusing on that side as well. We are...

We will just share some data points here. Our customer -- active customer base on MobileBanking App or NetBanking has gone up by 40% over the last year. Our App Store rating for mobile app has gone up from early 4s to 4.4, which is one of the top few app ratings for a bank here. Our NPS that we measure internally, we have about 200 customer journeys, which are exposed on these apps. And after the journey, we randomly pick up a few customers to seek their feedback, and our NPS has gone up more than 2.5x here on each of these journeys. Typically, on many of these journeys, we see social media mentions across. Now those mentions have significantly come down. The tonality of those mentions have gone up. So any customer measure that we use and the metrics that we use to measure, whether our strategy is working or not, we have seen very positive feedback coming in from customers on MobileBanking and NetBanking, where our focus has been on simplicity and resiliency so far.

Great. The next question is on the partnerships with fintechs. Of course, you guys are behemoth, doing a lot of things on the tech stuff, digital stuff and, of course, a wide range of customers, distribution points and reach. What exactly are you trying to seek out of your fintech partnerships? Because -- what is it that you guys can't do on your own that you need to really delve into some of these partnerships from whatever benefit it is going to provide, yes? Parag or anybody else, if you can take this question. Yes?

There are a couple of things. A couple of things, the way we look at partnerships. I mean, yes, very clearly, core infrastructure, core capabilities, core IP is something which the bank will continue to invest in, not just because we're just a very large player and we have a significant portion of the volumes but also, again, because of risk, operational risk reasons, et cetera, et cetera, and the fact that you have a significant amount of sort of volume coming through this whole place. So -- but that's one area, okay? But partnerships, we look at for 2, 3 areas, 2, 3 key sort of reasons and a couple of them not necessarily in any particular order. One is that many of the fintechs or partners, not just fintechs, okay, have a good presence in many specific customer segments or areas or geographies where the bank may not have as much as of a presence as it is today, but the segment is important either today or from a future point of view, okay? And hence, partnering with a like-minded player to offer -- jointly offer a good value proposition to customers in that segment does make significant sense to jointly go together. Many of the partners also have very good platforms, especially on the UI/UX basis because that's a lot of their thing. They have been [ embellishing ] their ability to be able to sort of make changes pretty fast, and that is the requirement, okay? So that's another area -- sort of reason why we would sort of partner, et cetera. And mind you, the backbone of such kind of partnerships will be that both the partners bring something substantial to the table. And I'll talk about the ringfencing, which we do. Okay. So that's another reason why we would sort of partner with the thing. There could be certain areas and businesses which we may not want to invest in terms of core infrastructure. So we would enter into a PSP or a SaaS kind of platform relationship with many of the partners. Once again, because -- again, it sort of -- it helps to sort of get to the market much faster. So there are a couple of reasons like I said, we would sort of this thing, but mind you 2, 3 things, we definitely take care of [ every ] one thing. One, partly because of the regulations, we clearly know that data will always reside with the bank. Typically, things like underwriting, if we do get into such kind of an arrangement sort of to source asset customers, the core credit underwriting, the full scorecards would still remain sort of with the bank. That's -- I'm just giving you 2 examples of things which we would sort of be very clearly focused on, okay? We obviously would have to abide by the regulatory rules in terms of data, data privacy, data consent, et cetera, et cetera. The entire setup is, as you know, with the new guidelines sort of also comes under the whole purview of regulation to ensure that the entire ecosystem is extremely sort of clear, okay? And of course, we would like to partner with like-minded brands because, obviously, it's also a reputational sort of thing -- important thing which we sort of get into the bank. So like I said, we can choose our partners. Many of them could be front-ending, customer-facing partnerships. It could be -- there are also quite a few back end, if you may, also infrastructure partnerships, which we sort of do. But the principles, once again, remain the same. I'll leave it here, Suresh, and if there are any more questions or we can -- or Srini wants to add onto that, you can sort of add onto it. Yes.

Yes. Suresh, if I add a few things, please [indiscernible] how it works. See we have physical DSAs. Traditionally, in addition to our branch distribution, we are in distribution, the sales force, the roaming sales force that we have. And 4, 5 -- 4 years ago, we added digital marketing. This DSA, as a channel, always existed for a long time for a reason. That means even if we have a branch close by, there is a DSA almost sitting next to the branch. And essentially, where we -- our branch has not been able to get the products to the customer or the customer has been more kind of [ uncomfortably ] working [indiscernible] we do have thousands of DSAs for various products that we have. Now the way we view these digital partnerships are these are type of digital DSAs for several reasons that are articulated. It could be a brand partnership that is leveraged, or it could be a physical essentially reach related where customers are more savvy to get on to that platform. And so we bring them back here, existing or new. So with the way we think about this, how do we think about them as a digital DSA to bring the customer on board for our product? That's how simply we think about it.

Okay. That's clear. Just one question, Parag. I mean, generally, people obviously wanted to know your outlook on what's happening with respect to card spends, revolve rates? Are you seeing pickup in the economy or the recent rate hikes, inflation? Those bodies are, of course, causing some near-term concern. And do you see there is a big difference between what's happening in the metros versus semi-urban rural areas with respect to, say, spends per card or activation rates? Any color which you can distribute between metro and rural or the semi-urban and rural areas.

Okay. So well, during the pandemic phase when all of these restructuring, et cetera, was happening, I think at an industry level, you saw, if you may call so an exit, a temporary exit of some of the so-called revolvers, okay? But that's the nature of the beast during that period, et cetera. And as a result of which you would have -- you can probably notice and see across most [ start ] P&Ls and card issuers, the sort of revolve rate would have dropped. We see that already coming back, okay? Now with the sort of lifting of all the other embargoes and a lot of the restrictions sort of being lifted, clearly, that's coming back. But my reckoning is that it will take about 12 to 15 months for us to reach the preembargo rates of sort of revolve rate. But that, like I said, it was a temporary phenomenon. It started coming back already, okay? Coming to your specific question about the differences between metro and rural, for us, I think we would be one of the few banks who source close to almost 50% of our incremental sourcing, which happens from the Suru areas, okay? and therefore, we have a good amount of sort of data to look at differences in behavior between a metro customer on a card, et cetera. Clearly, the way we see it is that -- and I'll take 2 metrics. One is what we call the spend per card, and one is the activation rates, okay? We see actually not too much of a difference in the spend per card between a metro customer and a rural customer, if you may, also, okay? The difference, however, comes about in the activation rate, okay? If, say, the activation rate for a card in the rural area is X, in the metro, it will be typically 1.5 to 2x X, let's say, activation rate, which means the reflection of the number of transactions the customer does on his card. But that very clearly, I think, is a function of the acceptance of credit cards in the Suru market. We know quite obviously the acceptance of cards in metro markets is far higher than in rural. That too, as we see as the merchant acceptance networks and cards start getting accepted even in deeper geography, that difference sort of going away, okay? But these are the fundamental core differences between the 2.

Okay. That's great. And just one final question. There is a growing fear, in general, in the minds of investors that with the availability of alternative streams of payment -- of course, UPI is not credit, but nevertheless, it's one form of payment much more convenient than using a credit card at times. I myself [ have been a ] user. Call it laziness, I've gone out and used UPI to make new payments instead of using credit cards in certain places. You are now, obviously having, a lot of fintechs who are giving the short-term loans and stuff. Do you think credit card, as a product -- or specifically, the revolver segment, which we are talking about, could be possibly a set of customer base who would actually move on to these kind of lenders in the ecosystem, thereby jeopardizing, in general -- not specific to you, but in general, for everybody else in the system with respect to the credit card business? How do you look at it, Parag?

The way I look at it is yes and no, okay? UPI, obviously, over the last couple of years, has sort of gained a lot of momentum, and it's taken a large chunk of the small value transactions, especially the transactions which are happening in cash, okay? There's been a small sort of -- the way I see it is the overlap between credit cards is still, I think, low. It's is still pretty low, okay? Having said this, with the growth in UPI despite -- or rather, despite the growth in UPI, you've seen all payment forms actually grow, and therefore, the overall payment buy has grown. And this, I see happening over the foreseeable future in India because overall payment, electronic payment penetration in India is still pretty low compared to many other developing and developed economies. So I see over the foreseeable future, all payment forms growing, okay? We talked about some of the reasons why and how credit itself will grow: a combination of distribution, combination of increased risk appetite of issuers, combination of things like UPI linkage with credit cards and so on and so forth. So each and every form factor will actually grow. So we actually don't see. There will always be some overlap. There's this new increase change behavior between customers like you and me also who also have started using UPI for certain types of transactions. We will continue to use credit for certain types of transactions and so on and so forth. Okay. So the way I see it is, in the medium term to long term, all payment forms will continue growing. I think the role of banks, the role of payment service providers will be to ensure that you provide the full suite of payment products and make it available for your customers. okay? The customer finally choose. So our role will not be a credit versus a debit versus the UPI. I think our role will [ metamorphosize ] us into being a full-suite deliverer of payment solutions, and the customer will pick and choose whatever he wants. In all probability, you will see one customer using multiple forms of payments, and the customer, I think, is smart enough to decide which payment for me which suits them better. Okay, this paradigm will apply not just on the issuing side but also even on the acceptance side, wherein the merchant will not just accept cards. He'll accept wallets, he'll accept UPI, accept QR, so on and so forth, okay? And so therefore, the role of payment service providers will be full suite plug-and-play, one-box solutions or as we call [ transformative ], translated into our own strategy, a platform approach to many of these segments wherein we offer all the solutions in one box, okay, simple plug-and-play solution. Our SmartHub platform solution to small merchants is exactly that. PayZapp, in a sense, is all payment forms in one envelope along with the ecosystem of marketplace built into that. So it's a platform approach, which we're sort of looking at. I hope that answers your question. Was there anything I missed out, Suresh?

Sure. No, no, it's fine. I think this is pretty clear. I think the final, final question is on the merger with HDFC Limited on the tech side. Ramesh and Srini, are there any integration challenges that you foresee? Can you just guide our investors as to what could be the thing which we should look out for? And what are the challenges that [indiscernible] may face. If you can guide and [indiscernible], that would be great. Yes.

Yes. From a tech perspective, there is no challenge absolutely. And in fact, unlike a bank-to-bank merger where you'll have to necessarily collapse a core banking system right into the -- into one of the systems here, mortgage is something that we don't have as a platform. So it fits along very nicely with the existing cluster. So you really don't focus on migrating the data and the back-end platform. However, what is critical is how do you get the front-end stitch because that is where your biggest synergy lies, right, and the ability to really -- for the customer to have a 360-degree on both sides. So what we are thinking here is that while we do some of the back-end [ GM-based ] merger -- integration, but the focus will largely be on front-end API-based integration to it. So what it means is that you really created digital journeys where both customers can look in from day 0 on how the relationship on both sides look like. So that means a lot of API journeys, which stitch together on the front end. And of course, in the data mining, right, clearly, how do you kind of identify the common customers, the cross-sell opportunities and then digitize that journey and push it into the API layer and then the platforms to carry -- your front-end platform to carry? So we are thinking on this merger in a slightly different way. Like I said, we are focused on that part of the journey, the API application, the data integration and the digital journey creations. And I think that said, our bang for the buck would come to -- in this merger rather than focusing on the background integration because it's just one more core system that will sit along with the back-end system. And that can be really integrated to a [ GL ] kind of -- just like how we do for other retail assets existing today. So that's it from a tech perspective to make it clear. So Srini, you can comment.

Yes. Ramesh, thanks for this. Suresh, the way we think about it is we do have a card system that supports cars product. We have certain other system to support our personal loan or our auto loans, et cetera. We have a system that supports our cash credit to [ all our ] consumer. And we have a system that supports our savings account and current accounts as well. So now we have another system for mortgage and low-touch, low-frequency transaction system, which we don't have [indiscernible]. All we have to do is just bring it on board, right? Let's shift and board it on our system. Like the card system is bolted onto core banking and other front end. This gets bolted on. And as Ramesh described through gateway process, it gets the feed into our credit analytics for scoring, for our marketing to get the right kind of propensity of customer cross-sell and put that into a CRM system for our relationship manager to start a meaningful conversation with the customer on both sides. So that's essentially the way to think about how the journey is envisaged.

Okay. I think that's very, very insightful and thank -- we would really like to thank the entire senior management for HDFC Bank to take out today and participate on the India fintech conference. And thanks to all the participants for joining for the conference, and please do join us tomorrow. Thanks, everyone, for your time.

Thank you.

Thank you, Suresh.

Bye-bye.