R. Baskar Babu, MD & CEO, Suryoday Small Finance Bank, tells us about the journey from micro-finance institution to bank, and how he brings the company’s positioning statement – ‘A Bank of Smiles’ – to fruition with focus on the customer, a strong digital ecosystem and valuing the human element.
What made you turn entrepreneur to set up Suryoday Micro Finance Private Limited in 2008 after an eventful career across companies such as HDFC Bank, GE Commercial Finance and Chola? What have been your big learnings in the course of your journey?
I was fortunate to work closely with many entrepreneurs and professionals across my working life. The urge to start something on my own was a thought I had nurtured for many years. The learnings and experiences of all my senior colleagues gave me the courage to finally begin my own journey as an entrepreneur. Having said that, the trigger to start in 2008 was quite out of the blue. I had gone to Aavishkaar Group for a job interview and at the end of it, I had Vineet Rai as my first investor for my proposed business venture in micro-finance. Thus started my journey.
Please take us through Suryoday’s transformation from a micro-finance company to a bank in 2017. What did it take to get underserved and unserved people into the ambit of banking at that time?
As a micro-finance institution (MFI), we were lending to small and micro-entrepreneurs. But our larger purpose was to get these small borrowers into the banking mainstream. We wanted them to also save some money for their well-being. So, we tried to get them to open savings accounts in banks, but realised that the banks were not interested in such ‘small’ accounts. As an MFI, we could only lend. We then ended up giving them ‘piggy banks’ and nudged them to save every day, however small an amount they could. The simple arithmetic we explained was saving Rs 30 every day meant Rs 900 every month and Rs 10,800 saved in a year. This amount meant a lot to such micro-borrowers. The desire to become a bank was felt by us at that time. When RBI opened up licences in 2014 for the new category - small finance banks - with the purpose of getting the unbanked and underbanked into the mainstream, we fitted the requirements perfectly. We applied for a banking licence and were among the 10 entities who got it in October, 2015. We raised Rs 300 crore of capital during the transformation. As of date, we have 564 branches, of which 360 are branches serving the microfinance segment through Joint Liability Group (JLG) loans.
Your big focus area now is building a granular deposit base. What kind of efforts go into customer acquisition and garnering retail deposits at present? What are your investments in marketing the brand?
For us at Suryoday, the focus is always the customer. So, our thrust has been on customer experience. Our positioning statement – ‘A Bank of Smiles’ – effectively captures our thrust at providing a banking experience to the customer that he/she has always been deserving. We believe every happy customer is a brand ambassador and he/she will help us get more customers. As a category, banking is a business of strong relationships. Therefore, the purpose of mainline communication is limited. ‘A Bank of Smiles’ is a way of life at Suryoday, and this manifests in the way every employee believes and behaves, not just with each other but with customers, vendors, service providers and partners.
At Suryoday, our efforts have been towards strengthening the relationship with existing customers as well as engaging with prospective customers through BTL activities, social media campaigns, radio campaigns, events and sponsorships. We have been strong advocates of a greener environment and have conducted campaigns and events to urge people to avoid single-use plastics.
We offer competitive interest rates on fixed deposit and savings accounts. Besides introducing doorstep banking to our retail customers through banking correspondents, we also credit interest on savings accounts on a monthly basis. On the deposit side, our focus is on small customers and senior citizens. We want to make it even more special for senior citizens by offering a higher interest rate and a steady stream of income. To attract senior citizens, the bank offers an interest rate of up to 7.5% on fixed deposits. Savings account deposits fetch an interest rate of up to 6.25%. Our focus is on granular retail deposits. We engage in group local branding activities like car sanitization, high tea for senior citizens at clubs, cricket tournaments in residential societies and the like, rather than larger branding exercises like advertisements and hoardings.
What kind of digital transformation are you witnessing today? How has the use of analytics helped? How has your collaboration with Paytm and other payment banks worked?
At Suryoday, the focus has always been the customer. If anything gives more convenience and ease for our customers, we went for it. Our technology solutions were state of the art and with robust front-end and back-end applications that were scalable. We also invested in supporting infrastructure, analytics, etc. As we transformed into a small finance bank, the canvas became different and bigger. The need was for new solutions. Staying abreast with technology as an MFI gave us the ability to plan and implement quickly and efficiently. The benefit of planning afresh and putting in place all the necessary tech solutions without being burdened by legacy systems was achieved seamlessly. The technology architecture and solutions that we implemented included a critical module – the Customer Relationship Management solution – the unifying application enabling us to have a 360-degree view of the customer in a seamless manner. Our system architecture is fully API-enabled and has been designed to easily integrate with any future applications we may implement. We also have developed front-end/field-force mobility solutions that integrate real-time for credit decisions, e-KYC validation, etc, and would eliminate the need for paper-based processes and improve turn-around times. In addition, we have also invested in many support systems for compliance, risk management, governance and analytics. This helps us to enhance better cross-sell opportunities to existing customers, develop scorecards, sharper customer campaigns, improvement in geo-mapping for focused collections.
With a focus on digitisation, the company entered into partnerships with Airtel Payments Bank, Paytm Payments Bank and Fino Payments Bank for sweep-in account facilities for our customers. As of March 31, 2021, total deposits sourced through partnerships was around Rs 60 crore. In a first-of-its-kind initiative by any SFB, Suryoday tied up with Paytm for a completely digital lending programme for MSMEs up to an amount of Rs 1 lakh. Till date, we have a portfolio of Rs 73 crore on this account.
Give us a brief overview of Suryoday’s performance over the last five years – the network, deposit base, revenue growth, etc. What is the size (net worth) of your operations today?
The network has increased to 564 branches including BC outlets and URCs. As of December 31, 2021 we had a deposit base of Rs 3,169.5 crore and net worth of Rs 1,553.5 crore.
What do you have to say about the Government’s proposal to bring in RBI-backed central bank digital currency (CBDC)?
Central banks are building capacity to harness new technologies, to be ready for what may lie ahead. If CBDCs are designed prudently, they can potentially offer more resilience, more safety, greater availability and lower costs than private forms of digital money. That is clearly the case when compared to unbacked crypto assets that are inherently volatile. Even the better managed and regulated stable coins may not be quite a match against a stable and well-designed central bank digital currency.
