SANJAY AGARWAL, MD & CEO of AU Small Finance Bank, talks of its journey from finance company to bank, and its primary mission to take formal financing to the unbanked Indian. He iterates the ‘badlaav’ story amplified in the bank’s recent ad campaign, and says his vision is to be a tech-led bank
Please take us through the transformation journey of AU Small Finance Bank from being a finance company to a bank.
In 1996, AU was founded as a non-banking financial company (NBFC) that effectively worked on funding economic growth, especially for the under-served and un-served low and middle-class individuals. In 2015, when RBI came out with small finance bank licensing guidelines, AU was the biggest entity among the top 10 selected contenders, and thus we transformed into a bank in April, 2017. Today, AU stands tall as the largest small finance bank (in terms of total assets) and a listed entity with 25 years legacy of being a retail-focused and customer-centric institution. Within the very first year of starting our banking operation, we became a scheduled commercial bank and a Fortune India 500 company. Now, we have established strong operations across 758+ banking touchpoints serving more than 20 lakh customers in 15 States and two Union Territories. In these years, we have built a solid net worth of about Rs 6,490 crore, robust deposit base of over Rs 37,000+ crore and a strong lending base of about Rs 36,000+ crore. Also, I am thrilled to share that we are the first and only small finance bank to launch credit cards so far. To bring something new to the table, we have started lending based on QR codes transactions history, a first of its kind for any small finance bank. With the recent launch of our super app AU 0101, we have further simplified banking. Now, we offer banking from home with video-banking service, much to the delight of our customers.
When AU was founded two-and-a-half decades ago, its primary mission was to take formal financing to the unbanked and make banking simpler for the average Indian. What are some fundamental strategies that you adopted then and follow now? How big a challenge is it even today?
At AU, we have always believed in challenging the status quo. The first step was when we started a capital-intensive business with very little funding available. While we were starting off as a bank, instead of settling upon Mumbai or Bangalore as our base location, we dared to set foot into the world of banking with Jaipur as our headquarters. Unlike other formal funding channels who didn’t consider the under-served and un-reached a safe bet, we started a business which was completely centred around funding this section of people, making sure that we maintain a strong asset quality. We have brought value to our customers and made banking more convenient for them. The banking sector, the fulcrum of the fast-growing Indian economy, will navigate its way to sustainable growth and development in the post-pandemic era. Our bank is well poised to make the best use of opportunities that will come up in future.
The message of your mega brand campaign ‘Badlaav Humse Hai’ is to challenge the status quo in banking. What sort of changes have you set out to make in the Indian banking sector?
With each product and service, we are trying to push the existing norms and offer new delight to our customers. We are offering monthly interest, as compared to the quarterly interest norm; we are going truly paperless as we do not ask customers to fill deposit or withdrawal slips and they can avail any service or product from any branch across the country without the home branch limitation. We take joy in going the extra mile by doing small things ‘differently’. Digital banking is gaining traction and the ongoing pandemic has only accelerated this pace. As an industry first initiative, we have built an integrated video banking platform on our recently launched super app, AU 0101, that enables customers to open savings accounts and fixed deposits, perform financial transactions and helps them with more than 300 service requests available at the bank. In fact, our customers can open a savings account on WhatsApp, and access all deposit accounts on Tab. We have also provided an end-to-end digital journey for those seeking two-wheeler loans.
What do brand ambassadors Aamir Khan and Kiara Advani bring to your campaign? How will the campaign play out in reality – what have you planned?
Our ‘Badlaav Humse Hai’ campaign isn’t a promise of a dream to make a dent in the banking category but only a showcase of what is already being done every day across all its touch-points. The ‘badlaav’ is already in action. It just needed a window and a platform to be communicated. To make the campaign impactful, we chose Aamir Khan and Kiara Advani as our brand ambassadors. Khan’s name is synonymous with challenging the status quo through the projects and films he associates with. He perfectly symbolizes the change that India has always yearned for and experienced at times - just like the brand AU. Advani has become one of the most popular Indian film actors and a youth icon in recent times. Her professional choices and recent repertoire of work finds perfect resonance with AU’s journey so far. I feel that our brand ambassadors will help us reach out to the masses and tell them the ‘badlaav’ story of AU Bank. We have planned a 360-degree marketing campaign with every media playing a pivotal role to drive brand metrics.
Considering that there is huge competition in the digital banking space with many established players, what will be the USP of AU 0101?
AU 0101 is a truly omnichannel and mobile first platform which offers full stack payment suite and end-to end customer journeys for saving accounts, fixed deposits, credit cards, auto loans, personal loans, insurance and investment products. It offers a host of lifestyle services, including mobile recharge, hotel booking and flight booking which are integrated with the customer’s AU bank account for payments. Customers can also take advantage of a host of our allied BFSI products like insurance and MFs.
What are your plans, going ahead? Give us an idea of the quantum of your assets under management (AUM) and what are the goals you have set?
Our historical approach to assets – small ticket size, for income generation purpose and secured and risk-based pricing – have helped us emerge much stronger from this pandemic. Our performance and our customers’ behaviour during these challenging times have given us the confidence to continue driving our asset growth by focusing on existing products – wheels, SBL, home loan and business banking – and deepening penetration in our identified customer segments and markets. We are building a liability franchise which is granular in nature and is driven by retail – individuals and small businesses. We aspire to capture the opportunity presented by penetration of smartphones and Internet in India to deliver banking services in a convenient and cost-effective manner and build ourselves as a tech-led bank. We want to impart financial and digital literacy to bring our rural and semi-urban customers into the digital ecosystem.
Playing the role of an efficient intermediary, we are garnering deposits from urban markets (74% of our liabilities book comes from the urban market) and disbursing in our rural and semi-urban markets (66% of our assets book is lent to this market). Our vision is to build a society where every individual has access to financial services by improving access, increasing usage and enhancing quality through financial education.
“Just do it now! The power of execution has been my guiding principle always, combined with paying attention to the details. It is thanks to this approach that at AU, ordinary people come together to do extraordinary things,” says Sanjay Agarwal.
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