South Indian Bank sees opportunity in India’s low banking credit penetration

The banking credit penetration in India is still quite low when compared to global peers, but South Indian Bank sees this as an opportunity for growth. In an exclusive interview with Bizz Buzz, Thomas Joseph, EVP and Chief Business Officer of South Indian Bank, discusses the key initiatives that are driving the bank's growth in FY23-24. He also talks about how the bank is planning to evolve and stay relevant in the face of competition from new-age banks and PSUs.

Please elaborate on the key initiatives that are driving the growth of the bank in FY23-24.

• Introduction of new products and services: We're expanding our product range by improving existing services and introducing new ones like CE-CV finance, credit card PL, and loan against shares. We'll optimize existing products like auto and home loans. Our goal is double-digit growth with a high-quality loan portfolio. We have started the wealth management services for HNI clients.

• Strengthening the business models: We aim to deepen customer relationships by expanding our product range, enhancing sourcing capabilities, and empowering our teams. Furthermore, we're digitizing the entire customer journey to ensure a seamless banking experience.

• Strengthening the team: We'll focus on competency building for our team, including senior management, using learning systems and ongoing training to align processes with best practices.

• Building robust technology infrastructure: We are establishing robust systems, including platforms for retail and SME assets, and harnessing data analytics to gain valuable insights for expanding our asset product offerings.

With numerous new-age banks coming up, and strong competition from PSUs and top private banks, how do you plan to evolve and stay relevant?

The bank transitioned from a branch-based structure for assets and liabilities to dedicated verticals for retail assets, MSME, and corporate banking, with branches as supplementary lead sources. Our strategy focuses on leveraging this structure and digital capabilities for deeper market penetration, particularly in India's West, East, and North regions. We've also set up a data science division for data analysis and an operations division for transaction fulfilment. Most system development, policy adjustments, and process improvements are in place.

The banking credit penetration in India is still quite low when compared to global peers, so there is enough opportunity for all financial institutions and intermediaries. The bank has rolled out the 'Vision 2025' strategy centered on 6Cs: capital, CASA, cost to income, competency, customer focus, and compliance. The bank has undertaken transformation journey with the intent to improve business structure, systems and processes. The above initiatives will help us in meeting our Vision 2025 milestones of advances of more than Rs 1 lakh crore, CASA of over 35 per cent, PCR (excl w/off) of 65+ per cent, ROA of 1+ per cent and RoE of 13+ per cent.

The bank has seen a significant uptick in digital transactions in FY23. Do you see this trend continuing? In addition, could you give us an insight into the novel products launched?

We have introduced the following technology-based offerings:

• A GST-based instant business loan platform

• A micro LOS platform catering to agri customers

• A fully digital customer on-boarding platform

• An industry-first metal credit card which provides customers with a seamless digital on-boarding facility.

• A fully digital supply chain finance platform

• Mirror+, an award-winning mobile banking platform, that recently crossed 2 million users

The bank's digital transformation prioritizes improving the customer banking experience. We provide a comprehensive range of digital services via mobile, internet, and debit/credit cards. We're also testing API banking for advanced payments and employ AI-driven predictive modelling to personalize services, assess lending risks, and optimize underwriting processes.

Could you give us an insight into the spread of the bank’s customers geographically? In addition, what are the plans for branch expansion? How do you see the bank becoming Pan–India?

Today, we cater to 7.3 million customers with 941 branches nationwide. We have a robust presence nationwide, especially in South India. We're currently rationalizing branches to enhance efficiency. Identifying low-activity branches, we aim to merge them with nearby ones. Resources from these mergers, including banking licenses, will fuel expansion in key cities. While our branch network is robust, we'll continue optimizing its efficiency.

Could you elaborate on the MSME lending business of the bank? Are there any specific products that we can expect to be rolled out?

Since 1929, the bank has supported India's MSME sector, offering timely financial solutions. Our products serve all segments in manufacturing, trading, and services, meeting their funding needs. Recently, we formed a dedicated MSME business team to provide better service. The new structure boasts Regional Sales Heads, Zonal Sales Head and back-office support team to further improve and enhance our MSME lending portfolio.

We implemented 'SMILE' (MSME Integrated Lending Engine), improving credit underwriting, streamlining processes, and creating a robust business rule engine. This boosts turnaround times and fosters risk-calibrated growth in our MSME portfolio.

We have also improved our existing product and service portfolio and introduced new offerings. We recently rolled out small business loan product and EasyBiz (Unsecured business loan) offerings for small ticket requirements of up to Rs 50 lakhs. A simplified product ‘ZOOM’ will facilitate loans up to Rs 2 crores.

Our MSME online web portal msmeonline.southindianbank.com allows prospective customers to check their loan eligibility instantly and also provides eligible customers with instant in-principle approval. Also, we have rolled out a geography-specific loan offering for MSMEs to leverage the industrial trajectory and advantages of various geographies.

The bank has tied up with renowned corporates offering them finance solutions for their dealer network. Could you share more insight on this?

SIB has partnered with prominent companies, including Maruti Suzuki, Tata Motors, Mahindra and Mahindra, Nissan, and Tata Passenger Electric Mobility Ltd, to provide financing solutions to their dealers. Various other sectors where we have tie-ups are, steel, electrical, and consumer durables. Overall, we believe that, the synergy developed through these tie-ups will help us to increase our customer base and business.

The bank has launched numerous novel products for NRI and millennial audiences. Could you give us an insight on their response and what are the products in the pipeline?

We provide silverg Gold, and platinum accounts for high-net-worth NRI clients. We introduced SEAFARER and PULSE for mariners and healthcare professionals last year. This year, we launched EDGE for IT professionals and FLYHIGH for students. All four variants are well-received, and we'll maintain our focus on these segments. The bank has also tied up with Doha Brokerage & Financial Services for enhancing our portfolio investment services (PIS).

In the last few months, SIB has come up with numerous products benefiting its customers in the transacting experience. Could you throw light on the same?

New initiatives/products launched in recent months:

• SWIFTe is an innovative digital account opening platform that primarily targets new-to-bank users above 18 years of age, possessing a valid Aadhaar and/or PAN.

• EXIM Current Account is specially curated for importers and exporters.

• Hi-Hi Banking: We have developed Open API-based payment and reconciliation systems to ease our customer’s banking journey.

• Many associations, institutions, etc., use SIB Fee to collect fees, contributions and payments.

• We have also introduced AI-based chatbots to facilitate personalised customer service.

• We have automated many of our back office processes using Robotic Process Automation (RPA).

In the near future, we aim to enhance self-service through digital channels, equip branches with smart devices, and expand AI-driven process automation. Additionally, we're exploring secure cloud solutions to safeguard information systems. Our commitment to modernizing technology infrastructure remains, incorporating emerging capabilities.