Amazon and Flipkart are practically synonymous with festive sales. Their Great Indian Festival and Big Billion Days sales, respectively, dominate the general public’s mind space when it comes to online shopping. This year, however, they had the unlikeliest of challengers—HDFC Bank.

HDFC, India’s largest private bank, decided that after years of partnering with the e-commerce giants’ sales, it would strike out on its own by building a deals platform. Called Festive Treats, the platform runs offers from around 1,000 brands and 10,000 retailers (mostly offline) across categories as diverse as apparel, consumer durables, jewellery, furniture. All available exclusively to the bank’s customers.

None of this comes cheap or easy. HDFC is no longer just piggy-backing on the well-oiled sales machines that Amazon and Flipkart have built over many years. Instead, it has had to wade into relatively unchartered territory, striking deals with retailers across the length and breadth of the country. There’s also the marketing expenses involved as well as the actual cost of funding these offers—either partially or fully. According to a source with knowledge of the matter, the bank would have spent around Rs 100 crore ($13.9 million) financing offers by the time 2020 rolls around. HDFC Bank did not comment on this figure.

That a bank would do this, especially one generally seen as among the more conservative lot, came as a surprise to many. The imperative, though, is clear. Once considered an inextricable part of the online shopping experience, banks have become nearly invisible on e-commerce websites.

“The biggest threat for banks is that e-commerce companies have successfully separated shopping from payments,” said a payments executive. “They’ve been able to tell customers to checkout now and pay later even (either through cash on delivery or EMIs).”

HDFC is done being the out-of-sight-out-of-mind pipe through which payments flow. Instead, it is competing for the consumer’s attention. The bank wants to be front and centre irrespective of your need. Speaking at an event, HDFC’s MD Aditya Puri stated as much. “Whether you want to do shopping or you want a loan in 10 seconds you have all of this with HDFC Bank.”

By severing ties with Amazon and Flipkart, HDFC stepped out of their shadows. However, it has also passed on a massive opportunity.

On average, about 20% of all debit and credit cards spends in a month happen via HDFC Bank, according to RBI data. (HDFC is the largest issuer of credit cards in the country). But the festive season is no ordinary time. Driven by offers and sales, customer spending goes up by almost 30%, according to bankers and payments executives. The opportunity that HDFC Bank side-stepped was the Rs 19,000 crore ($2.6 billion) of spending that Amazon and Flipkart saw in the six days of their sales.

AUTHOR

Arundhati Ramanathan

Arundhati is Bengaluru-based. She is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She has spent over 10 years reporting and writing on various subjects. Previous stints were at Mint, Outlook Business and Reuters.

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