Financial Literacy Can Play A Huge Role In Retirement Planning, Says IDFC’s Madhivanan Balakrishnan

IDFC First Bank Executive Director and COO Madhivanan Balakrishnan highlights the impact of digital enhancement in customer services, financial literacy, and awareness about retirement planning

Outlook Money
November 21, 2023
Retirement planning

Retirement planning

With innovation leading the digital revolution across economic sectors, including finances, IDFC First Bank aims to tap this tremendous opportunity to enhance people’s access to its financial products, ease services, and empower customers by providing tools to deal with financial matters, including retirement planning. In an interview with Nidhi Sinha, Editor, Outlook Money, and Suchetana Ray, Editor, Outlook Business, the bank’s Executive Director and Chief Operating Officer, Madhivanan Balakrishnan, talks about IDFC’s commitment to digital enhancement, the importance of financial literacy, and retirement planning



Here are some excerpts from the interview:


IDFC FIRST Bank has transformed itself into a digital-oriented retail bank and invested in digital capabilities. How have you helped reshape customers, and how are they reshaping you as a bank? 


We have been in banking for almost two-and-a-half decades, and there has been a dramatic change over this period. There was a time when people flooded into branches, and the core idea was to open new branches and have more people to service them. Those days, innovation used to be around physical services like navigating people to the right counter, ensuring prompt service, etc. 


Today, customers do not walk into branches. We all have 100-150 apps on our phones because that’s how people have started interacting. Today, your day-to-day life is driven by digital interfaces and apps to interact with various stakeholders, and it is equally applicable to banking. We have picked up that cue and worked on making it better. 


While we are a very young bank and do not have a legacy in terms of the number of branches, infrastructure, etc., we are singularly focused on how to create that unique moment of experience for every transaction that our customers do and every piece of advice or information that they get. 


We address questions like: Can the mobile app be the most effective tool to access any banking services, not just payments? For example, can it help you access the customer service centre easily? Is there a mechanism to do things yourself by making it easy, say, by changing the interface and making the journeys more intuitive? Banking is essentially a bunch of processes orchestrated to deliver an outcome, so the question is how to integrate the front-end app with seamless processes in the back-end. 


I think, as a bank, we are extremely savvy, and we try to keep pace with the fast-changing scenarios. That’s why we’ll see new versions coming in frequently and new experiences being enabled for customers. We intend to virtually create a world around finance so that our customers can be served easily anywhere, anytime. But, at the same time, we are also there physically—our branches and our customer service centres are there to help our customers whenever needed and to reassure them. The future will be a unique and hybrid world because, in certain aspects, you need that human touch. 


Banks have always been seen as trustworthy institutions, especially by senior citizens, whose population is steadily increasing. The elderly population is projected to more than double by 2036 to 225 million and then reach 425 million by 2061, according to Census 2011. In this scenario, the conversation on retirement planning becomes extremely important. What are your thoughts on this? 


While India has been very lucky to have a strong demographic dividend, wherein we have one of the largest young working population that resides here, I think many people are approaching the age of 40. So, in another 20 years, there’s going to be a big skew in the 60-plus population. Another aspect is that post-Covid, people’s perception of their lives has undergone a big change. People have now become more careful, and they want to live a better and more balanced life. Given this change in behaviour and the reality of the demographic situation, I think retirement planning is very important. 


While in the very old days, my parents and maybe their parents used to save and then spend, now as India has become a more dramatic and consumerist society, people borrow first to spend and then save. It is necessary that people in their 40s strike a balance between both these aspects—saving and spending—and plan their future better. It is very important that they appreciate that the earlier they start, the better it is for them, as it lets compounding work its magic on their investments


From a financial services perspective, there’s no single solution for everyone, and it’s different strokes for different people, depending upon the individual’s life stage. It’s, therefore, important to make a conscious effort to plan for one’s retirement while still young. 


Can financial literacy play a role in spreading awareness about the need to plan for retirement? What role can the government and financial institutions play? 


Financial literacy can certainly play a huge role in empowering people. The earlier generation was more traditional, but today’s generation is well exposed to various options, such as digital apps and sites for managing their investments. Those in the age group of 40 years are reasonably well-educated and have a higher financial literacy level as compared to their previous generation. But planning is a complex topic. Given the multiple options available, decisions like how much you should allocate and where and when are very critical. Everybody has heard and read about Warren Buffet and his disciplined way of long-term investing, but translating the same into your own life is very important. 


I think banks, financial institutions, media organisations and the government should all play a very active role to ensure that we don’t end up like some of the developed countries where we have too much debt in terms of pension management and similar liabilities. 


For the full interview, please read 


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