Technology Transforming Indian Banking Sector: Is HDFC Bank Well Positioned for New Challenges?
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Case Code: BSTR515 Case Length: 12 Pages Period: 2014 - 2016 Pub Date: 2017 Teaching Note: Available |
Price: Rs.400 Organization: HDFC Bank Industry: Banking Countries: India Themes: Business Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Growth and Innovation
HDFC Bank had managed an average growth of 20% in annual profit since 1998. The company targeted different consumers at different stages of growth and evolved into one of the most trusted banks in a span of 20 years. Initially, HDFC Bank targeted high-end corporate customers to generate business and gain credibility. From the year 2000, it started targeting mid corporate and SMEs, and retail banking in 2005 . HDFC Bank also paid special attention to establishing a customer base in the rural areas by introducing rural banking initiatives like the Kisan Card, tractor loans, small working capital loans, and milk to money ATMs...
Competition from Fintech Companies
Internet penetration in India grew from less than 1% of the population in 2000 to 30% of the population in 2015 . Smartphone penetration in India stood at 17% in 2015 and was growing at the rate of 45% annually. According to experts, the number of internet users in the country would rise from 400 million in 2015 to 790 million by 2020. Centrum Broking, a financial institution based in Mumbai, estimated that the value of mobile wallet transactions would rise from Rs 500 million in 2015 to Rs 260 billion by 2020...
Digital Revolution at HDFC Bank
To understand the importance of the rising competition from Fintech companies, HDFC Bank analyzed its own data and found that the share of internet and mobile banking transactions had grown dramatically between 2005 and 2015. In 2005, the share of internet and mobile banking transactions compared to total transactions stood at 13%. This grew to 44% in 2013, 55% in 2014, and 63% in 2015...
Looking Ahead
According to some industry experts, banks were well armed to fight the battle with Fintech companies . However, they needed to address the current requirements and deliver according to changing customer needs. The majority of Fintech companies had attacked payments which represented the entire beachhead of the banking relationship. Banks not only needed to start payment systems but also compete with Fintech companies by providing diverse tools...
Exhibits
Exhibit I: Financial Snapshot (2013-16)
Exhibit II: Organizations and Individuals Who Got New Banking Licenses from RBI in 2014-15
Exhibit III: Screenshot of PayZapp
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