HDFC Bank, India’s largest private sector lender, has decided to take a “temporary break” from its partnership with US technology giant Apple. This decision comes after a thorough review of the collaboration from a cost-to-income perspective, according to a senior official from the bank.
A Fruitful Partnership Put on Hold
For the past five years, HDFC Bank and Apple have had a strong partnership that benefited customers through attractive offers like instant cashbacks and EMI facilities on Apple products purchased using HDFC Bank credit cards. Parag Rao, the Group Head of Payments, Consumer Finance, Marketing, and Liability Product Group at HDFC Bank, highlighted the success of this collaboration. However, after evaluating the cost-effectiveness of the partnership, the bank decided to take a pause.
“We worked with Apple for five years. We built a good brand relationship with Apple. We took a pause because we reviewed the entire nature of the partnership. We monitor cost to income, and sometimes the cost-to-income measure does not work out for a particular partnership. We have taken a temporary break,” said Rao.
Apple Moves On to New Banking Partners
With the pause in HDFC Bank’s collaboration, Apple has now partnered with other banks, including American Express, Axis Bank, and ICICI Bank. These banks are currently offering similar benefits, such as instant cashbacks and no-cost EMI options, to customers purchasing Apple products.
Rao acknowledged the shift, saying, “They have taken on some other bank partners, and I think you can judge the quality of the relationship, which we had with Apple from the fact that for five years, we were the only bank, and now they have taken on two.”
Preparing for the Festive Season Surge
Despite stepping back from the Apple partnership, HDFC Bank is gearing up for a busy festive season. Rao mentioned that the bank is preparing for an expected spike in business, particularly in terms of incremental deposits, loan disbursements, and credit card spending.
“We are preparing for the typical spike which happens. But we do believe that we will be able to get a good share of incremental deposits on the liabilities side, disbursals on the asset side, and, of course, spend on the cards side. So, we are preparing a very focused plan, and we are talking to our partners,” he said.
Prudent Approach to Retail Loans
Rao also addressed concerns about the growing risk associated with retail unsecured loans. While regulators are cautious, HDFC Bank remains confident in its portfolio, emphasizing its prudent underwriting policy.
“We have always been prudent in our underwriting policy. You will never see us suddenly opening up our policy gates. We are market leaders. We don’t need to just get any business. We are very clear about that,” he added.
Success of the Revamped PayZapp
Rao shared positive feedback on HDFC Bank’s revamped PayZapp, which has attracted close to 14 million customers. Interestingly, 60% of these customers are from HDFC Bank, while the rest come from other banks.
“We are seeing good traction, good active rates, and good transactions happening,” Rao mentioned. He also noted that the National Payments Corporation of India (NPCI) is working with banks to increase their contribution to UPI transactions on their apps. HDFC Bank currently holds a significant 14% share of the UPI ecosystem.
Focus on Retail Deposits
As part of its growth strategy, HDFC Bank is doubling down on retail granular deposits. Rao explained that the bank is expanding its branch network and leveraging digital tools to attract fixed deposits, reinforcing its position as a leading retail bank.
“So, we are expanding branch banking, using a lot of digital tools to garner fixed deposits… we will continue to grow our branch franchise; we are ultimately a large retail bank,” Rao concluded.
This pause in partnership with Apple doesn’t seem to be slowing down HDFC Bank, as they continue to focus on growth and preparing for the busy times ahead.
