HDFC Bank to turn into a shopping-hub. Find out how

If you are an HDFC customer, the bank is giving you more reasons to stick to it. Now the bank will be playing a double role of not only keeping your money safe but will also turn into a shopping mart, selling grocery, clothes, shoes and other products on its website.

The bank will also get best deals from eCommerce sites like Snapdeal, Flipkart and Amazon on its website.

Keeping the fast-paced growth in eCommerce, a senior HDFC executive said it was a timely move by India's second largest private sector lender.

"We are a large retail and payment bank...about 30-40% of customer spends on eCommerce happens through our credit and debit cards," Parag Rao, senior executive Vice-President and business head (card payment products and merchant acquiring services) at HDFC Bank told Economic Times.

Rao informed that the bank would not sell products directly as it is against the rules. "We have tied up with partners in travel, bill payment, grocery, hotel and shopping who have their sites anyway," he told ET.

Based on the customer feedback since past one year, HDFC has been working to launch SmartBuy, which will provide a platform to its customers to get better discounts and facilities at one place.

As per a PwC India report, e-Commerce spends grew at a compounded annual growth rate of 34% between 2009 and 2014 to touch $16.4 billion, adding the sector is expected to expand to $22 billion by the end of this year.

Meanwhile, taking note of the increasing importance of eCommerce companies, the Reserve Bank of India (RBI) had asked banks to form joint ventures with them or appoint them as business correspondents.

The RBI’s move to licence niche payment banks has also led to increased focus among banks on digital banking.

"The increase in e-tailing is something that doesn't matter to banks. They want these transactions to be executed through their website so that they get the fee income," Ashvin Parekh, managing partner, Ashvin Parekh Advisory Services told ET, adding “they are just gearing up for payments banks.”

Banks like ICICI Bank, HDFC Bank and Axis Bank want to ensure their transactions are not routed to any third-party website, for if a payment bank comes and these are routed to its website these banks may lose customers," said Parekh.

HDFC’s major profits come from fee income. Its other income, which includes fees and commission from offer of banking services, grew 29.9% to Rs 2,563.8 crore in the quarter to March, which led to a 20% growth in its net profit.

"HDFC Bank is the largest acquirer (of customers) in the country and it cannot leave the acquisition space. Banks are just trying to pre-empt products that the payment banks would come up with," said Parekh.

Aditya Puri, the Managing Director and Chief Executive Officer of HDFC Bank, has been pushing the digital initiative since December 2014, replicating the best practices of some of the global banks such as US-based Wells Fargo and Poland's mBank.

(Image: Reuters)