Sometime in 2015-16, after a relentless spree of branch launches, The Federal Bank took its feet off the pedal of aggressive physical expansion. The old private sector lender realised that banks of the future would be ‘branch light and distribution heavy’, and decided digital should drive distribution.
This razor-sharp focus on digital innovations and expansive fintech partnerships helps it add about 14,000-15,000 customer accounts a day, up from about 4,000-5,000 new accounts that came from its physical branches. The increased numbers are contributing to more low-cost current and savings accounts (CASA), which is critical for competing in mortgages, auto, personal loans and other loan products. And this hybrid focus is the driving force behind the 91-year-old lender being named as the Best Mid-Sized Bank in the BT-KPMG Best Banks Survey 2020-21. The lender takes home the award for the second year in a row.
“The future of digital is human, not the other way around. It is about more and more technology behaving like human beings. All the technology is good, but if we aren’t humanising it, we are wasting our time. Therefore, our mantra is ‘digital at the fore, human at the core’,” Shyam Srinivasan, MD & CEO of The Federal Bank, says about the lender’s philosophy on digital growth.
Srinivasan, who recently got a three-year extension from the RBI as the MD & CEO till September 2024, has stitched 50-plus partnerships with fintechs in the areas of digital lending, payments, account opening, remittance solutions, gold and MFI loans, and cross-border inward remittances, etc. The bank has 300-plus APIs available in open banking where fintechs are permitted to plug and play.
In Q3FY22, the bank’s loan mix was 54 per cent retail and 46 per cent wholesale. Its net NPAs were at 1.05 per cent of its advances. However, its provision coverage ratio of 65.80 per cent needs further improvement. The return ratios are improving with the bank reporting return on assets (ROA) at 1.02 per cent and return on equity (ROE) at a healthy 11.62 per cent in Q3FY22.
@binu_t_paul
