The Future of Banking: Ujjivan Small Finance Bank's Vision for Digital and Financial Inclusion
In the world of finance, small finance banks play a crucial role. They cater to the underserved and unserved segments of society. We had an engaging and insightful chat with Lakshman Velayutham, Head of Marketing at Ujjivan Small Finance Bank. This bank is at the forefront of merging old-school and digital banking.
We explored key topics related to the changes and challenges small finance banks face. Lakshman shared his thoughts on the importance of brand positioning in banking. We also discussed USFB's unique approach to serving its diverse customers. He spoke about the power of storytelling in marketing. He told us how the bank uses success stories to inspire and educate customers and employees alike.
Then, we delved into the bank's strategy for bringing underserved customers on board. This includes building trust and promoting a saving habit. We also discussed the role of technology in USFB's marketing and examined the adoption of digital tools and channels that are reshaping India's banking sector.
1. Can you give a brief overview of your career and current position?
I am currently the CMO for Ujjivan Small Finance Bank. I have been with the bank for the last 4 years. Before that, I was at ICICI Bank for a decade. I have worked in retail, telecom, logistics, and various other industries. I have worked with DHL, Tata, Shopper's Stop, etc. Over the years, I have realized that be it any industry or be it any category, the fundamentals of marketing remain the same. It is true as long as you place the customer at the center point of all your initiatives. It is the customer who gives you the idea. It is the customer who gives you the thought. It is also the customer that shows you the path.
2. How does USFB serve the unserved and underserved communities?
USFB was established to provide 'state of the art' banking services to the unserved and underserved communities. They are the people who have seen little to no banking. For them, informal or semi-formal access to finance was the way of life. When USFB came in, it brought a ray of hope. We had to demystify banking. We had to make our branches more inviting. Our branches have a simple and warm atmosphere. They have benches for customers to feel comfortable in the environment they are familiar with and have grown up in. The idea was to make them walk into the branch. Make them feel like they are a part of the community. They can step in and explore all avenues of banking.
3. How did USFB transition from microfinance to a small finance bank? How do you educate your customers about banking?
Our customers had a lot of basic questions. They were asking how to open an account. This was a simple effort for a customer in a metro. It would be a greater challenge for a semi-urban or rural customer. We began our journey in the microfinance space and transitioned into a small finance bank in 2017. We carried along all our 45 lakh microfinance customers into micro banking. Thus began the journey of financial inclusion through a program called Diksha, which is a financial literacy program. We educate our customers on the basics and concepts of banking and why it is important to save. We also introduce them to ATMs and mobile banking. Our mobile banking is available in 9 languages. All our communication materials use local languages to make it easier for customers to relate to us.
4. What are the key offerings of USFB? How does technology and customer centricity play a role in your success?
We offer a 7.5% interest rate on savings accounts. We offer 8% on FDs and 8.75% for senior citizens. Coupled with technology and customer centricity, our approach ensures that customers feel comfortable and at ease when banking with USFB. This has enabled us to garner the support we have seen over the years. Today, we have over 7 million customers, and 592 branches across 24 states and UTs. 16,200 employees are serving customers across India.
“Going forward, we believe digital inclusion along with financial inclusion will play a critical and pivotal role.”
5. How do you segment your products and services? What role does content play in your marketing strategy?
When it comes to content, you need to tailor your offerings according to your customer segment. We have segmented customer offerings. We offer basic savings accounts with no minimum balance and privilege savings accounts on par with other banks. There is also Garima savings account, youth accounts, and more. When it comes to onboarding customers, we use handheld devices to open accounts and offer retail loans, such as affordable housing. Our products are designed, considering the ticket sizes, processes, and documentation within the regulatory framework laid out by the RBI. We focus on creating positive customer experiences.
6. How does brand positioning matter for a small finance bank like yours, especially when targeting customers in metro cities who might have other options?
Brand positioning matters. It helps us communicate the value we offer to our customers. Our objective is to grow customers' money and offer them loans. This, in turn, enables them to realize their dreams and live their financial freedom. Our motto is "building a better life" at all points in time. We invite all customer segments to bank with us. At the end of the day, technology is the main play. If a customer can open an account in 15 minutes or create an FD on the go, it is a win. We believe that our combined set of offerings and expertise at the branch level will help us tap into various customer segments. This would contribute to financial and digital inclusion in the long run.
7. Your primary focus is on the underserved and unserved segments. They are wary of to whom they give their money. So, how do you build trust among these conservative customers?
To build trust among these segments, we focus on promoting the habit of saving. We encourage them to deposit a certain amount into their savings account. This can be either at the beginning of the month or when they pay their EMI for their loans. This practice helps them pay off their loans while growing their money. We facilitate this habit during center meetings. There, customers gather to make payments. Over time, they understand the importance of savings. This habit becomes ingrained in their lives. Word of mouth among their community helps build trust and accelerate the adoption of our banking services.
“When customers help each other, the transition and catalyzation is faster”
8. How do you collaborate with local gram panchayats to reach out to people in rural areas? What kind of marketing activities do you undertake in your branch catchments?
We meet key influencers, tap into festive occasions, and organize events that benefit the community. For instance, we might conduct health camps or other relevant activities. This helps us connect with the customers' ecosystem and promote the importance of financial health. These activities are mutually beneficial and help us reach out to the target audience.
9. We see the stories of HDFC or Tata Mutual Fund have a great impact. What is your approach to storytelling, both for internal as well as external communication?
We have many insightful stories that touch an emotional chord and showcase our customers' as well as employees' progress in various aspects of their lives. These stories are being spoken about in their communities as well. It is a very positive play for all the banks. They show the benefits of integrating with a formal banking system. In addition to testimonials, we use social media platforms to reach a broader audience. We've found that access to social media is higher in semi-urban and rural areas than in traditional media. Byte-sized information in the form of Instagram reels or YouTube shorts can inspire and encourage current and future generations. It has helped them to prioritize what is important over what is good.
10. Marketing today is as much Science as it is Art. How do you approach marketing technology stacks and attribution within your bank?
As a 5-year-old bank, we have just begun our journey into marketing technology stacks. What we find most important is staying close to the customer. The accelerated adoption of digital services due to COVID, as well as the adoption of 4G and 5G services, is enabling the growth of the digital ecosystem. We believe that technology will play a significant role in bridging the gap between rural and urban India. It will make things happen. It will help Bharat integrate into India. The belief in the "can do" attitude will help Bharat contribute significantly to India's progress and reclaim its position.
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