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Poornima Mohandas

Mumbai , Sept 3

IF you happen to be a customer of HDFC Bank with a large account balance, far surpassing the quarterly minimum balance and don't bother the bank with high number of transactions or cheque dishonours, there is cause to celebrate. For, you might just be waived two per cent interest on your next two-wheeler/personal loan or get a credit card at a reduced fee and be assured of customer satisfaction. The `highly profitable' customer may even enjoy a waiver of service charges on a duplicate account statement, a stop payment instruction or a one-off cheque dishonour.

On the contrary if you don't maintain your minimum quarterly balance, frequently deposit and withdraw large amounts of cash and access the ATM network excessively leading to extra costs for the bank, you might just see yourself being warned by the bank manager. "Improve your transaction behaviour or else bear charges," he will say.

In some exceptional cases, the bank has even asked 30 of its customers to take its business elsewhere following a one-time exercise. Some of these transaction patterns not only create a loss for the bank but also violate RBI norms.

Differential service and pricing is what the new age private sector bank is pursuing by distinguishing between the `more profitable' and the `less profitable' customer, making it the first to do so by arriving at a profitability scoring system, says Mr Neeraj Swaroop, Country Head-Retail Banking, HDFC Bank.

The bank set on the growth trajectory is clear in its view that it cannot be a mass bank and simultaneously offer customer-centric services, because the masses are too large in this country. The bank will concentrate on the `superior masses' consisting of the middle/upper middle class.

The bank has implemented a data warehousing facility from i-flex Solutions by way of which the bank measures the profitability, credit score and a loan eligibility limit of all its 25 lakh depositors. This kind of rating system, which was earlier prevalent in the corporate banking business, has now been duplicated in the retail front.

The profitability and credit score grading are available with the front-end staff of the bank branches. The customer service personnel proactively push personal/vehicle loans and credit cards to the highly profitable customer at very `competitive' rates.

"In the case of a highly profitable customer, the interest rate of an auto loan will be reduced by as much as 0.50-0.75 percentage point, by 1.0-2.0 per cent may be cut if it were a two-wheeler/personal loan and a credit card may come cheaper at an initial fee of Rs 500 instead of Rs 750,'' said Mr Swaroop.

This distinguishing practice has helped HDFC Bank push cross-sell ratios up and double sales of credit cards and asset products at the branch level two months after its implementation. The bank has doubled its monthly dispensation of credit cards to roughly 5,000 and loans to Rs 50 crore through its branch network across the country.

HDFC Bank divides its customer base broadly into, the top 5 per cent the highly profitable segment, 20-25 per cent the moderately profitable segment, 50 per cent the low profitable segment and 20 per cent the loss making segment of customers. The top 30 per cent will be the cream and be kept well nurtured.

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