Get a personal loan through ATM

When you go to withdraw cash from ATM of private bank you might see a message “You are eligible for a pre-approved personal loan of Rs 5 lakh. Press yes if you are interested.” Some to the leading private banks are now leveraging technology to ensure quality due diligence and low-cost marketing.

Now banks have started replacing the traditional agency or franchisee-based marketing of retail loans, with enterprise resource planning solutions and ATMs.

In an interview to Business Line Mr Sanjeev Patel, Executive Vice-President & Head, Direct Banking Channels, HDFC Bank told, “Marketing retail products through ATMs is non-intrusive and customer-friendly. As we have a data-base of customer transactions, we make an estimate of his needs and offer a retail product. If there is a confirmation from the customer, we go ahead with other procedures”.

“In ATM-based marketing, the cost of contacting the customer through out-bound mechanism is lesser. However, it cannot fully replace physical verification prior to loan sanctions.”

The trend is being followed due to recent dip in the direct marketing expenses of the banks. In the second quarter the direct marketing expenses of ICICI bank have decreased by more than half. For the three month period ending September 30, 2008, its expenses were at Rs 144.50 crore as compared with Rs 385 crore in the year-ago period.

According to experts discretely from being customer-friendly, the new marketing tools will also make certain quality assets for the banks. A senior ICICI bank official said, “Due to current economic conditions, retail advances (especially personal loans) to the non-customers of the bank have come to a negligible level. We first ensure that there are no defaults and check-bounces in a customer’s account before offering a loan.”

He further added this will also help in tackling the issue of growing non-performing assets.

Last week, Reserve Bank of India has warned banks to make sure credit quality as the bad loans in new generation private banks and foreign banks are “more noticeable”.

Some customers are satisfied with the tech-marketing. “When I applied through an ATM of ICICI Bank, I got a follow-up call within a day and loan was sanctioned in three days. As checking the account transaction is vital in loan-approval, it is good that they are at it before offering the loan,” said Mr H.M. Murthy, a senior official in the Railways.