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Teji Mandi Explains: How is HDFC Bank planning to revive its digital infrastructure?

06:44 PM Jun 16, 2021 | Teji Mandi

HDFC Bank's digital woes continue to haunt as the platform once again faced disruption on Tuesday when users faced difficulties while using its mobile app. This incident has added to the long list of digital disruptions and technical glitches that the bank is trying to tackle.

Triggers for Latest Glitch

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Explaining about the recent incident, the management clarified that it was majorly driven by two factors:

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1) Strong volume growth in transactions seen in recent times and

2) Shortening product life cycles from 3-5 years to as low as 3-4 months.

The management admitted that the infrastructure has not kept pace with changing requirements. The bank is investing in technology, but it will be a slow process.

HDFC Bank mobile app down for 1 hr; issues resolved

Management on Losing Credit Card Business

The latest issue has cropped up at a time when it is already under the RBI's scrutiny. And, an audit has been conducted on its IT infrastructure since December last year. The RBI has also restricted HDFC Bank from any new digital launches and sourcing of new credit card customers till the audit is underway. It helped the rivals in growing at the expense of HDFC Bank.

ICICI Bank added a record number of 672,911 new credit card users in the December-March quarter, followed by SBI Card and Axis Bank. HDFC Bank lost about 3.23 lakh credit card users.

The management indicated that the RBI has completed the audit, and the bank is awaiting approval. And, the bank is looking to tap its existing base to aid aggressive growth once the embargo is lifted. They further highlighted that despite losing the customer base, the bank has managed to gain market share in card spends by ~30 bp YoY.

HDFC to consider dividend for FY 2021

New Digital Initiatives

The bank has shared a two-dimension approach called 1) Enterprise factory and 2) Digital factory to complete digital transformation in the next two years.

Under this, the bank will continue digitalizing the current infrastructure of the bank. With this approach, the bank will continue to serve the existing customers who are migrating to digital services. At the same time, it will also build on new digital competencies suitable for digitally native customers.

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