Axis Bank CEO Amitabh Chaudhary On India's Banking Growth & Big Trends | Sonia Shenoy Sumit Podcast

So, you know, there are a couple of obviously imminent challenges which are coming our way. One is the whole investment in AI and what AI could do to how the future of banking could look like. But firstly, AI is a great opportunity and a huge opportunity for the entire banking system, which also means that you need to have a clear vision on what AI can do for you and how will you get to your destination and are you making the right kind of investments in people, technology, models, which parts of the bank you're making the investment in because people who can get this right. Firstly, you require a lot of investment and secondly, you need to get this right. So if you can get this right, you can get huge gains in terms of both revenue enhancement and cost efficiencies and whatever impact you have on the P&L, you can have it go and reinvest in the business. So you can create a moat because AI is a huge opportunity. AI also brings a lot of risk with it. You already are aware of various models which have been launched which could, cybersecurity was already an issue. It could become a bigger issue going forward. So cybersecurity all of us anyway worry about. With what is happening with AI, we need to worry about it even more than before.

I also believe that the expectations of the customers at large and regulators is also changing quite rapidly. They expect customers to be treated well. Customers expect a very different experience. Customers expect instant, seamless kind of experience. Customers expect that we should know them before even they tell us who they are. For us to be able to do that, again, huge investments required in analytics, technology, putting it all together, being able to recognize the customer quickly, being able to put myriad systems together in such a way that not only I can recognize the customer, I can give a seamless experience and at the same time provide the product and the service as quickly as possible. So it is not just about what is happening with AI and cybersecurity but it's also the customer expectations and regulatory expectations are changing.

We are facing intense competition. The deposit growth in India has slowed down. Deposit has become the core of how growth in banking will come from. So as investments as Indians have become more and more educated about financial products and as they're putting some of their savings in mutual funds and NPS and insurance, share of CASA is going down. So share of cheap deposits is going down. The competition for those cheap deposits is only intensifying. Also as customers are investing with more and more financial service providers, primacy of relationship is going away. With AI, the primacy of relationship could reduce even further because if I can implement the right AI tools, my understanding of you as a customer might be even better than a bank who is a primary bank for you because they only have your data. I might have your data about everything you do. So in that sense, when customer is going and looking at various apps and they are actually investing in various products and my relationship is not the primary relationship, how do I make myself relevant in front of the customer? So customer expectations are changing but then the other side of the coin is how do I make myself even relevant? The customer experience will come later. First I have to be relevant to the customer for them to experience me. I have the best rated app, mobile app in the world, but if people are going to use it, what will I do with that best rated app? So I need to get more and more people to first come and use the app, then only they can experience it. So that's the third thing which is a big issue. Now with the huge investments required in analytics, technology, cybersecurity and so of that nature, I've been saying this forever. Big institutions are becoming bigger at the cost of smaller institutions. And this trend is only intensifying. A smaller institution cannot be a full suite service banking service provider because the amount of investments required, they cannot afford at the same pace as what we can. I can compete with the fintechs. I can compete with NBFCs. I can compete with some NBFC which might have found a niche space over a period of time given our size and some of the other banks also, we can find and reach a reasonable market share in each of those areas. So, one has to ask ourselves a question and that's an important trend. Does not worry us, but what I worry about is I do not want the banks who are bigger than me to become bigger than me more. I want to close the gap rather than the gap increasing.

So, first is that we obviously need to ensure that our ability to garner deposits goes to a completely different level. We have 5% market share in deposits. That share has to increase. And so, what we can do as an institution to get more deposits into the system. I'm adding more branches. I'm adding more smarter branches. The whole orchestration which we are creating in Axis Bank in terms of approaching a market, what do I do with the customer on a daily basis, what technology enables I can provide to my arms or my entire workforce, so they're more relevant in front of the customer. How can I use AI to make them more relevant? So, a lot of work around how do I garner more deposits from a new customer and from an existing customer. And that journey we've been on for the last 3-4 years. And that's why it gives us the confidence to say that we believe that we can grow advances at a rate of growth which is about 300 basis points more than the industry. And that can only happen if we grow the deposits also at the same rate. So, we do believe that with all the work which we have done and what we intend to do and what our vision is that on the deposit side we can grow at a faster pace, right? Then the industry. Now, we are not talking about some specific banks here, but generally the industry. Second, we need to create those platforms using some of the new technologies where I can understand the customer better. I can underwrite the customer better. I can provide a more seamless experience. So, we are doing things of that nature and are doing a lot of work. Third, we are... you have said this that you are the third largest private bank. I need to show levels of hunger which are more than the others. Only then I can win share against them. So, from a cultural perspective, we are trying to see what do we need to... we have great culture, but there are some parts of the culture we need to work on. So, it's not just about ensuring that deposit is important and investing in technology and creating those platforms, but work on the culture itself and show more hunger, show more aspiration. You know, wants the desire to win has to go up and so on and so forth. And I think that has also been a work in progress and I can see that now. When I go to meet clients, I see junior most employees approaching a customer and introducing themselves and saying and very soon asking who do you have an account with and what do you do and what can we do for you and stuff like that and it's just amazing to see that happen because then you can see that seeping in from at least in front of me that these are doing it which they were not doing earlier. So, culture is important aspect.

Fourth, we have to continue to invest in our people in terms of learning, development. Can we make them a more wholesome banker in terms of whenever they stand in front of the customer and can they answer all the queries? Do they understand the customer? Do they understand the needs of the customer? Only then we offer products and services. We are not there to sell a product or a service. We are there to satisfy customers' need. That's why a couple of years back we... and there's a fifth point. We said, "What are the areas of distinctness for the bank? What will the man on the street see different in Axis?" And at that time we defined two things. We've added another thing to it over the last couple of years. It was about customer obsession. Am I obsessed in providing the best possible service to the customer? And that has been a journey we are on. We call it Sparsh. We also said we'll invest in a huge way in the Bharat, which is the rural and the semi-urban markets. We have done a lot of work there. We have relaunched a part of it very recently. So, we have now created specific large groups of branches which will be focused only on the rural markets. There'll be no large city attached to it. They'll only focus on the rural side. So, we are ensuring that lives of people depend on ensuring that we do well in those markets, right? Because our market share in the rural part of the country is much lower than our natural market share. So, that was another area of distinctness. I said we've added one more, which is on the technology side. We want to be seen as an innovative technology bank. I think we have... There was a gap between us and some of the competitors. We have definitely bridged that gap. Now we are moving towards a stage where in many areas we start being seen as better than some of the others. So, I talked to you about the mobile app. If you look at our, for example, the new corporate platform, corporate banking platform, it is best in class. Obviously, a lot of the companies have banks who have been providing them these services forever. But when they see our platform, they will know it is better.