Kotak Mahindra Bank said its customer base increased by 50% in nine months after it launched a mobile app to facilitate quick opening of bank accounts using Aadhaar.
The company launched an app called 811 on March 29, 2017, three months after the Reserve Bank of India allowed banks to establish their customer’s identity by sending a one-time password or OTP to their Aadhaar-registered mobile number.
Moreover, the company cut the minimum balance requirement to zero and offered 6% interest on the account balance, compared to 4% offered by rivals.
The move is partly in response to the threat faced by banks from new-generation, app-based banking services providers like PayTM, Airtel Money and JioMoney.
The strategy, the company said, has paid off. “Kotak’s total customer base, which stood at 8 million when 811 was launched, has grown rapidly to around 12 million as on December 31, 2017,” it said.
Interestingly, the country’s largest bank, State Bank of India, has been traveling in the reverse direction, forcing customers to shell out thousands of rupees by way of increased minimum balance requirements.
Kotak Mahindra Bank’s executive vice chairman and managing director Uday Kotak said it will now extend the 811 service to its full suite of banking products and services.
The bank, started in 1985, claims to have a 2% share of India’s deposits and 8% share of India’s mobile transactions by value.
Uday Kotak said private sector banks in India can increase their market share from 30% to 50% in the next five years.
“We see immense opportunity and we will work to disproportionately increase Kotak’s share of the financial services pie.. Aadhaar and the larger India Stack have been game changers.”
In 2017, Aadhaar-based systems completed 10 billion authentications, which is nearly five times that of card transactions at PoS or points of sale, Kotak Mahindra Bank said.