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Asia-PacificMay 1 2018

Paytm Payments Bank looks to 500 million mark

Renu Satti, CEO at the banking arm of India’s largest e-commerce platform, Paytm, tells Stefania Palma how it intends to achieve its ambitious growth plans.
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Paytm

Paytm Payments Bank aims to have 500 million customers in the next three years, or the equivalent of the populations of the US and Indonesia combined.

Currently, Paytm Payments Bank – the banking arm of Paytm, India’s largest mobile e-commerce website, which also offers digital payments – has 180 million customers. This is remarkable, considering the bank officially launched only in November 2017. It followed the Reserve Bank of India (RBI), the country's central bank, selecting Paytm as one of the e-commerce platforms to receive a banking licence, in an effort to modernise a sector historically plagued by non-performing loans and poor bank capitalisation. 

Expansive plans

Some analysts argue that the newly licensed banks – which stem from e-commerce companies, telcos and microfinance institutions – could threaten the dominance of India’s full-service public sector banks. Paytm Payments Bank’s plans suggest this is possible. “We really want our customers to have every product [available in] a banking ecosystem,” says Renu Satti, the bank’s CEO and managing director.

Paytm Payments Bank offers savings, current and digital wallet accounts. In January 2018, it launched a physical debit card, in addition to having a digital version in its mobile application. And although payments banks cannot lend or issue credit cards as per RBI guidelines, Paytm Payments Bank will offer these services through partnerships with India’s traditional lenders.

Paytm’s bank has already launched a wealth management product in collaboration with IndusInd Bank. The aggregate balance of payments banks’ customers cannot exceed Rs100,000 ($1511) at the end of any day, so Paytm Payments Bank automatically transfers the excess into a fixed deposit account that offers annual interest of up to 6.85%.

But this is not all. “We are talking with other banks about [broadening the] product portfolio, including lending. This might be [launched] at some point this year,” says Ms Satti.

Food for thought

Paytm Payments Bank is also targeting corporate customers, and 500 companies have signed up to a new ‘food wallet’ that digitises food coupons for employees. It also plans to launch digital corporate salary accounts, as well as gift wallets, through which employers can allocate staff bonuses or rewards. Digitising business expenses and reimbursement is another idea the bank is working on, adds Ms Satti.

The bank is aiming to leverage the tech-savvy, user-friendly nature of parent platform Paytm to build its client base. “We are offering products that are already available in the [banking] ecosystem. But how the customer is experiencing it... that is where our added value comes from,” says Ms Satti. 

Expanding across India is a further target for Paytm Payments Bank in 2018, and it will roll out 100,000 outlets by the end of the year. These will not be traditional branches – of which the bank only has one on the ground floor of its headquarters in Noida, a satellite city of New Delhi. Instead, it will offer banking services partly via merchant acquirers who are already included in Paytm’s digital payments ecosystem. “The outlets can [offer] everything a branch can offer,” says Ms Satti.

Paytm Payments Bank’s expansion will not focus on India’s metropolises. “These banking outlets are not required in Delhi, they are not required in Bombay. These outlets [will be] in third-, fourth-, fifth- and sixth-tier cities,” says Ms Satti. The bank’s growth is centred on financial inclusion, with one of its programmes, Asha kiran (meaning 'ray of hope'), dedicated to boosting women’s empowerment, she adds.

“We really have to reach out to all the underbanked and underserved. The real need is among people in rural areas. The bank account is our anchor product, but we want to offer them much more. We want to move them to digital payments; and then once they have a transaction history with us, they will be eligible for credit access. We want to move them to the formal economy,” says Ms Satti.

Paytm Payments Bank is currently not profitable, as it is still in its investment phase. However, Ms Satti says the bank will break even or turn a profit in two or three years’ time. It is also well capitalised, having received a Rs4bn capital infusion from Vijay Shekhar Sharma, the founder of Paytm, and One97 Communications, the company running Paytm, whose investors include SoftBank, Alibaba and Alibaba’s finance arm, Ant Financial.

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