What does brand HDFC mean to consumers?

Earlier this week, HDFC Ltd. merged with HDFC Bank. But did people ever see them as two separate entities?

Before the year 1977 buying a home in India was out of most people’s reach. People worked hard all through their working life, saving every penny to eventually buy a home around the time of their retirement. Borrowing money to buy a house was rare, as the interest rates were quite high and moreover, a lack of job security meant uncertainty about repaying the loan.

Quite a different scenario from today’s time, when people take out a loan to buy a home at the beginning of their career and repay it over the course of their career. The beginning of this shift commenced in 1977 with the incorporation of Housing Development Finance Corporation (HDFC) Ltd.

Providing long-term housing finance to facilitate home ownership, it laid out a corridor for people to build their dream home. With easy home loan options available, buying a home became a reality for many and home ownerships grew. This not only boosted the real estate sector in the country but also allied categories like paints, furniture, etc.

Despite its all important role, today’s millennials and Gen Z remain largely unaware of its existence. And that’s because they tend to confuse it for its more popular subsidiary, HDFC Bank.

So when the two announced their merger this week, it was a revelation to many who thought that the two were one and the same companies. In fact, I also came to know that the two organisations were separate entities only now. A casual discussion in the edit meet revealed that I wasn’t the only one.

Incorporated in 1994, HDFC Bank was the first of its kind to receive an in-principle approval from the RBI for establishment of a bank in the private sector. After 28 years in business, the parent company is merging with its banker offspring in a $60 billion transaction- said to be the world’s second-biggest so far this year. The merger will create India’s biggest financial behemoth by market-capitalisation.

The proposed transaction will enable HDFC Bank to build its housing loan portfolio and enhance its existing customer base.

“After 45 years of housing finance and 9 million homes provided to Indians, we had to find a home for ourselves. We have found it within our own family and in our own bank,” said HDFC’s 77-year-old Chairman Deepak Parekh in a press conference announcing the merger.

Often, it is a matter of pride for parents when they are known by their child’s name. But can the same be said for HDFC, which 45 years after it came into existence is more popularly known for its banking and insurance services?

HDFC has many other subsidiaries, like HDFC Life, HDFC ERGO General Insurance, HDFC Securities and HDFC Red, and they are all separate organisations. But the layman simply assumes all of them to be a part of HDFC Bank.

Another interesting point to note here is that while HDFC Bank enjoys great brand recall, hardly any notable ads come to mind. The recall largely comes from its banking presence and also personal banking relationships, if any. Most of the ads that come to mind are from HDFC Life.

However, HDFC’s recent campaign ‘Safety Grid’, to encourage people to practice social distancing during the pandemic, is noteworthy. The brand used the outer grid of its logo (the square-shaped bit) to create markers on the ground on which people can stand and social distance themselves while waiting in a queue.

afaqs! spoke to experts to understand what brand HDFC means to customers,

Edited Excerpts:

KV Sridhar, global chief creative officer, Nihilent

Today HDFC stands for reliability, affordability and approachability. It is the SBI of the private sector. People don’t mind walking into an HDFC branch as it feels like a part of the family. There is an emotional attachment with the brand and in all these years they have stood by their values- trustworthiness, friendliness. That emotional equity allows the brand to extend the equity to its other brands as well. So once the brand wins our trust, it will apply to all its products. Earlier HDFC was synonymous with housing, but now it has become synonymous with banking.

HDFC is a brand like Tata. It does not matter how many smaller brands are there within, people are going to trust it. Nobody wants to know the architecture of the brand. If it's HDFC, people will blindly put their trust in it.

The most remembered HDFC in people's mind is HDFC Life, as its advertising really connected with people and it effectively added more equity to the HDFC brand. Just like the brand Tata benefits from Tata Salt advertising, HDFC benefits from the HDFC Life advertising. The more they advertise, the more HDFC gains. HDFC Bank drives the mind, and HDFC life drives the heart. Therefore, they're not only number one in the mind, but also number one in the heart.

Ashish Khazanchi, managing partner, Enormous

The bank epitomises professionalism. It seems like a dynamic people-centric bank. It has been very innovative with its debt products and bringing banking closer to people. So it's built on their advertising and also consumer experiences.

The footprint of public perception of HDFC, which is where they started from, is fairly limited. The public perception of HDFC as a brand has been built on their banking and credit products. So even I did a little bit of a double take when I read about it, and this would be the scenario with most lay consumers.

I don't think the brand image will change substantially after the merger. The brands will have greater wherewithal to push for stronger branding, and reinforcements. It will gain in all positive aspects. But I don't think there is anything negative which they would have to change.

Venu Gopal Nair, CEO, Ideascape Communications

HDFC Bank was one of the first big private banks to come in and they used technology to evolve over the incumbents. The nationalised banks had been resisting change. Even the housing sector demand took off at that point in time. In the 90s and early 2000s, you would get a very small tranche of loans. It's only recently, we see these huge amounts being given out as loans.

From the consumer perspective, I don't know if people are really aware of this distinction between the two. A lot of people are more familiar with HDFC Bank. While people do look for home loans based on who gives it at the lowest rate of interest, the brand does play a role. Banking is among the stickiest of all products, because people rarely tend to change banks. It just becomes much easier to establish relationships.

Navonil Chatterjee, joint president and CSO, Rediffusion

It's the best of private banking in India. It is very professional, efficient, and reliable, almost as reliable and trustworthy as State Bank, and 100 times more efficient. It brings the best of MNC and Indian banking together- the professionalism of the MNC and the relationship and warmth of a legacy Indian bank.

To the consumer, HDFC and HDFC are the same organisation but different departments. So their merger will make no difference at all. It is an operational matter and an internal issue. It will not decrease or increase the brand's perception. This will hopefully streamline the process even more.

The fact that the brand enjoys strong recall without any notable ads, shows that advertising is not the only way to build brands. If a brand does its job well and has delivered over the years that is its report card then. That's what makes word of mouth happen. Its presence has been built by its distribution and the presence of its ATMs. Their past performance is their pedigree and no amount of advertising can do that.