But there was another story brewing that got lost in the din. Taking fresh guard, Jagdishan, who joined the bank as a finance manager in the mid-1990s, was constantly brainstorming with his senior management team to use the current taxing phase as an opportunity to start with a clean slate—especially the technology platform. Despite being an insider, Jagdishan discovered a frightening gap between what he knew about the bank over the shoulders of his predecessor, and what he encountered sitting in the hot seat himself. Part of the reason was the pandemic, which swiftly changed customer behaviour, forced a remote workforce culture, tested the bank’s business continuity plan, and also raised fears of cybersecurity risks.
The new job at hand was all about future-proofing and rewriting many old rules of running a bank. “My respect for Puri has gone up infinite times [considering] how he had steered the ship seamlessly,” Jagdishan once told a colleague. Under Puri, the start-up bank, founded in 1994, grew its numbers to ₹90,084 crore in net revenues, ₹31,116 crore in profits, ₹13.35 lakh crore in deposits, and ₹11.32 lakh crore of advances in FY2020-21, when he retired. It was also the stock market’s darling. HDFC Bank’s outperformance in the past decade pushed the bank closer to the country’s toppers by market capitalisation—Reliance Industries and Tata Consultancy Services. For perspective, the stock would have minted ₹15.8 crore to an investor who put in ₹1 lakh in its IPO in May 1995. However, post-pandemic, HDFC Bank’s stock returns have barely matched the returns of the 30-share BSE Sensex index or even its arch rival ICICI Bank (see chart Measuring Up).
His close associates say Jagdishan is quietly determined to come back with a bang. The bank is working on a scaleable platform by benchmarking with platforms such as Amazon and Netflix, with no downtime. “We are creating two factories, two muscles, like the enterprise factory and the digital factory, to be able to build new architecture, new designs on the cloud, which will ensure that we are able to compete with the fintechs and the platform players. This is again a journey you will start to see. You will not see it overnight. It will start to happen in 12 to 15 months’ time and the whole thing will probably be unveiled in about three years’ time,” Jagdishan promised shareholders in a virtual annual general meeting or AGM in July. (Jagdishan didn’t participate in this story.)
The new platform is aimed at transforming the bank with 5,600-plus branches and 120,000 employees into a Neo Bank (or virtual bank) in the next two to three years. There would be a one-click auto loan where the customer could visit a dealer, test drive, and walk away with the car. Hundreds of fintechs would plug into the bank’s systems without worrying about tech compatibility. A tie-up with payments giant Paytm was already sealed in August to jointly storm the small merchants’ space in smaller towns and cities for buy-now-pay-later (BNPL) loans. There is a new rural strategy of riding piggyback on the 350,000 government-owned common service centres (CSCs) platform to capture the emerging middle class in smaller towns. There is also an ecosystem approach across geographies in under-penetrated segments like healthcare, education, the gig economy, and start-ups to capture savings, lending and investment opportunities (see box The Digital Banker). Seven months after taking over, Jagdishan has also reshuffled the portfolios of his senior management team to align with the new business strategy. To extend Jagdishan’s cricket analogy, he seems all padded up to play a long innings.
THE DIGITAL BANKER
HDFC Bank honcho Sashidhar Jagdishan is taking to digital transformation with evangelistic zeal. Here’s a peek into his strategy.
Shift from legacy IT infrastructure to global benchmarking against the likes of Amazon and Google
Multiple cloud strategy with scaleable capacity, which would be fail-safe and recover faster from outages
Create a neo bank in the next two-three years
Be ready for new open banking models; leverage tech stacks and account aggregators to tap new business
Restructure organisation with sharper focus on retail assets, MSMEs, rural business
Digital auto portal for car loans in minutes and new products like buy now, pay later
Partner with fintechs to grow in new areas; tie up with Paytm to jointly tap the small merchants segment for payments solutions and lending
Reduce product launch life cycles from years and months to a few weeks
Ecosystem approach to tap opportunities in healthcare, education, gig economy, and start-ups
Industry-first new products for corporates by way of alliances and partnerships
Remote working, hot seat concept
Call it changed circumstances or personality nuances, Jagdishan is turning out to be very different from Puri. The seamless succession without any senior management exit so far shows confidence in his leadership. “Puri was multidimensional, who led the bank right from the front, whereas the bulk of Sashi’s experience is as chief financial officer (CFO),” says V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services. Parag Rao, Group Head-Payments Business, Consumer Finance, Digital Banking & Information Technology at HDFC Bank points out that “CFOs have this unique advantage of not just managing finances, but also having an extremely deep, incisive, strategic view”. Jagdishan’s leadership skills were on display when he was quick to apologise to the bank’s over 60 million customers for repeated tech outages. In a conference call hosted by Macquarie Capital in May, Jagdishan said that the deficiencies on the technology front were a blot on the reputation of the bank. “No banker actually would have publicly made such an admission,” says a former HDFC bank executive. Two months later at the virtual AGM, Jagdishan dubbed the disruption from new-age fintech players as valid fear. “One can either sit and sulk or deal with it differently,” he had said.
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