Home >Industry >Large banks fight for a slice of their customers’ shopping pie

Banks are sprucing up their mobile apps with virtual marketplaces of discounted products and services, in order to retain them and in the process gain insights into their shopping preferences.

Banks such as Kotak Mahindra Bank, ICICI Bank, Axis Bank and State Bank of India (SBI) already offer such features, some of them providing them through internet banking as well.

These lenders allow customers to access e-commerce websites such as Amazon and Flipkart through their in-house apps and avail of discounts.

Experts believe that such super apps would help banks track and analyze the spending patterns of their customers and cross-sell more products.

Kotak Mahindra Bank app’s KayMall section guides users to travel and hotel bookings, e-commerce websites for grocery, fashion, appliances and electronics, and magazine subscriptions.

“Over 80% of our customers are mobile banking active, meaning they have used the mobile banking app at least once in the past 60 days. That said, over 25% of the mobile banking active base have visited KayMall in the past three months," said Deepak Sharma, president and chief digital officer, Kotak Mahindra Bank.

Sharma added that this is part of Kotak’s strategy to become a one-stop super app serving all customer requirements, including banking, lifestyle and investments.

Private lender Axis Bank has an online marketplace called Grab Deals that offers exclusive deals for debit and credit cardholders. Last month, the bank conducted a 10-day sale called Grab Deals Fest offering 15% cashback on e-commerce purchases.

“These offers are over and above any other offers available to customers through other channels. The bank believes offering these discounts will strengthen the bank’s relationship with the customer and be a win-win for both over time," said Sameer Shetty, president and head (digital business and transformation) at Axis Bank.

Industry experts said large banks will pursue this strategy, and more are likely to join as benefits like customer stickiness improve. While customers earn more discounts than they would through a regular e-commerce portal, banks are able to lay their hands on one thing that every retail lender is chasing nowadays—data.

“The bank has greater visibility on the finances of their customers and will be more easily able to extend credit. But for many players, especially the smaller ones, this may not be regarded as a core function and rather a distraction for the main business," said Raj Khosla, founder and managing director of financial services marketplace MyMoneyMantra.

To be sure, the ride will not be an easy one for lenders as large fintech players such as Google Pay already have established their presence with big bouquets of such services.

A PwC report in December said that apart from allowing users to make digital payments, these apps provide services such as ticket booking, games, online shopping, banking and consumer finance.

“The emergence of super apps is one of the primary reasons why Unified Payments Interface (UPI) transactions have grown since demonetization," the report said, referring to the government’s decision in November 2016 to withdraw high-value currency notes of 1,000 and 500.

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