HDFC Bank will stagger its new digital launches over the next few quarters now that the regulatory embargo on them has been lifted, Parag Rao, head of payments business and IT at the bank, told Shritama Bose. Some parts of the payments ecosystem are not yet ready to go live with Aadhaar OTP based integration for UPI. A launch will only be ideal when 90-95% of the system is ready, Rao added. Edited excerpts:

When are you going to launch the fully digital challenger bank?
We are currently working on a mobile-only on-the-fly credit card, which will also be handled entirely over the phone and will not involve any physical contact. This should be a precursor to many of the fully mobile-ready DIY products we’re releasing to market, but we’ll start with credit cards first. We are still researching the market to see what form a digital bank can be presented to customers in the Indian market. Individual products will be launched. As we think the market is ready for the right type of product, we’ll need to bundle it all together under a bank wrapper and wrapper. We want to go to the market at the right time.

Something for your merchant customers?
We have already soft launched our digital merchant application called SmartHub Vyapar. It is aimed at small and medium traders. For large merchants we will also be using the SmartHub Vyapar app paired with a POS machine as this is the kind of requirement a large merchant would have. We are working with world leader Adobe to create a very intrinsic and fungible customer experience layer to integrate many of our products which are instant and digital. We have deployed it for some products for our existing customers. We are expanding the range to make sure we cover all of our products for our internal customers and when we go to market we will go with the enhancement layer for new bank customers. We are also focusing on the renovation and redesign of our SME platform. The one we have today involves the conventional physical RM way of approaching the customer and taking care of their various banking needs. The web interface and app interaction will be an all-digital platform where a lot of the things an SME would expect from their service provider are digital and DIY. This will help us reach many more SMEs.

We are already a market leader in the SME space, which will help us better serve our existing customers and expand to many more territories.

You regained some of your credit card market share after the issuance ban was lifted, but since December the trend has reversed.
There is a phenomenon that we constantly continue to do on our portfolio, which is to eliminate inactive cards every quarter. Unlike many other players, we do not continue to inflate our numbers. The number published is a net figure and not a gross figure. Our acquisition plans continue to increase. We exceeded pre-embargo fulfillment rates and in the future we plan to increase them even more.

The launch deadline for Aadhaar OTP based UPI integration is expected to be extended. What is the readiness level of the system?
Well, the fact that it’s extended itself indicates that the ecosystem isn’t completely ready yet. The UPI is a highly interoperable and deeply interconnected ecosystem between payment service providers (PSPs), issuing banks and the issuing bank. Even if one step is not ready, the overall customer experience of a transaction is extremely poor. So while this is a strength of the ecosystem, when you make changes or new additions, it requires the whole ecosystem to be at least 90-95% ready for the transactions run smoothly. Some parts of the system will take longer. Given that, some of these deadlines have been pushed back a bit.