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In 2023, HDFC Bank wants to exploit HDFC’s bond with customers, says CEO Jagdishan

HDFC Bank wants to harness HDFC’s bond with customers

According to the statement made by HDFC Bank’s CEO, Sashidhar Jagdishan, during a townhall meeting, the bank aims to capitalize on the emotional connection formed between the lender and borrower through housing loans. Jagdishan stated that housing loans are considered an “emotional product,” emphasizing the significance of the bond created between the financier and the borrower.

Furthermore, Jagdishan mentioned that the Bank perceives substantial opportunities in the mortgage sector, particularly following its merger with the former Housing Development Finance Corp (HDFC) Ltd. This merger likely provides it with enhanced capabilities and resources, allowing the bank to tap into the potential of the mortgage market and strengthen its position in that segment.

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According to Jagdishan’s statement during the townhall meeting, the Bank  HDFC is recognized as a leader across various products and customer segments, boasting a sizable customer base and distribution network. However, Jagdishan also acknowledged that the penetration levels of the home loan product within the bank’s customer base have been relatively low. He further highlighted that the bank has not fully leveraged its distribution capabilities in the context of home loans.

This statement implies that the Bank recognizes the untapped potential within its existing customer base and distribution network regarding home loans. Despite being a dominant player in the financial sector, the bank acknowledges that there is room for growth and improvement specifically in the area of home loans.

By focusing on enhancing the penetration and leveraging its distribution channels, it aims to strengthen its position in the home loan market and capitalize on the opportunities it presents.

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In the statement, Jagdishan emphasizes the significant growth opportunity that lies ahead for the Bank in the context of home loans. He states that the bank sees a large and long-term runway for growth in this area.

As part of their strategy, the Bank aims to upsell additional products to their home loan customers. This includes offering a comprehensive range of products from both the bank and its subsidiaries. The bank intends to provide a complete bouquet of services across various categories such as payments, savings, borrowing, investing, insurance, and trading.

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To achieve this, Bank plans to bundle multiple products together for their home loan customers. For example, they may offer a savings account to meet banking needs, a personal loan to contribute upfront to the builder, a consumer durable loan for purchasing household items for the new home, life insurance to provide financial protection for the family, and home insurance to safeguard against fire and structural damages.

Additionally, it aims to include a credit card as part of the bundle and also facilitate systematic investment plans (SIP) along with equated monthly installment (EMI) payments to help customers create wealth.

Season of mergers

By offering this comprehensive suite of products, it intends to enhance customer engagement, increase cross-selling opportunities, and provide a holistic financial solution to its home loan customers.

According to Jagdishan’s statement, the merger between HDFC Bank Ltd and its mortgage lender parent, HDFC, has been completed. This merger took over 14 months to finalize since it was initially announced. As a result, the merger establishes one of the world’s most valuable lenders.

Jagdishan also mentions that this merger will bring about a paradigm shift in how the bank conducts its business in the future. The focus will shift from sales management to relationship management, emphasizing the importance of building long-term customer relationships.

The ability to bundle various products together is expected to be a game changer, enabling faster product sales and reducing the number of touchpoints required to serve customers.

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By leveraging the power of bundling, HDFC Bank aims to enhance customer experience and streamline the process of offering a comprehensive range of financial products and services to its customers. The completion of the merger is expected to significantly strengthen the bank’s position in the market and contribute to its overall value as one of the leading lenders in the world.

The completion of the merger between HDFC Bank Ltd and HDFC, India’s largest private lender and mortgage lender parent, respectively, has resulted in a significant increase in the market value of HDFC Bank. This merger is considered the largest transaction of its kind in India.

As a result of the merger, it is expected to climb to the fourth position globally in terms of market value. It would trail only major American and Chinese banks such as JP Morgan Chase, with a market cap of $419 billion, Bank of America with $228.4 billion, and the Industrial and Commercial Bank of China (ICBC) with $225.1 billion.

These figures highlight the substantial growth and increased market value that the merger has brought to HDFC Bank, solidifying its position as a prominent player in the global banking industry.

According to Jagdishan, the potential for growth in the financial services and mortgage sectors is substantial due to the current underserved and under-penetrated nature of these markets. He believes that the Bank, with its extensive distribution and customer base, ample capital, healthy asset quality, and profitability, is in the best position to capitalize on this growth.

Jagdishan further emphasized the ambitious growth targets of HDFC Bank. He stated that the bank aims to expand at a rapid pace, potentially achieving the feat of creating a new HDFC Bank every four years.

This statement reflects the bank’s determination to seize the opportunities presented by the underserved financial services and mortgage markets and its confidence in its ability to achieve significant growth within a relatively short timeframe.

By leveraging its strengths and positioning itself strategically, HDFC Bank aims to capture a substantial share of the growing market and reinforce its position as a leading player in the financial services industry.

Jagdishan assured the employees of HDFC Ltd, who have now become employees of HDFC Bank, that the bank has fulfilled its commitment to safeguard their jobs and compensation. In order to ensure fairness in assigning appropriate roles and levels within the bank, an independent external expert was engaged to develop a formula.

The expert’s work was reviewed by a committee consisting of senior members from both HDFC Ltd. and HDFC Bank. The committee conducted a thorough assessment and made any necessary adjustments or corrections based on their management expertise and insights. This process aimed to ensure that the tagging of destination roles and levels within the bank was done fairly and accurately.

By involving an external expert and conducting a comprehensive review, HDFC Bank sought to maintain transparency and integrity in the transition process for the employees of HDFC Ltd. This approach aimed to provide employees with confidence in the fairness of their new roles and levels within the bank.

Jagdishan acknowledged that during such transitional exercises, there may be concerns and apprehensions among employees about whether they have been treated fairly. To address these concerns, HDFC Bank has established a grievance committee.

This committee is dedicated to listening to and addressing the grievances of any employee who wishes to express their concerns. Jagdishan assured the employees that once they settle into their new roles, the committee will carefully examine any further corrections that may be required in terms of levels or designations.

Furthermore, Jagdishan expressed appreciation for the contributions of key individuals in building the HDFC group and its institutions. He specifically mentioned the role of Deepak Parekh, the former chairman of HDFC Ltd, and Aditya Puri, the former chief executive of HDFC Bank, along with other senior members of the management team.

This recognition highlights the importance of their leadership and the impact they have had in shaping the growth and success of the HDFC group and its constituent entities.



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