Let’s start with how a Payments Bank, technically a stripped down version of a normal commercial bank has the odds stacked against it: Firstly, it can’t lend. Secondly, it can’t collect deposits above Rs. 1 lakh.
Now, let’s see how Renu Satti, managing director and CEO of Paytm Payments Bank, upended the ‘abnormal’ into ‘normal.’ Much like any other ‘normal’ bank, Paytm Bank can lend by tying up with partner banks. Secondly, while consumers can’t have deposits above `1 lakh by end of the day, “there’s no limit on the intra-day transaction,” grins Satti. Paytm Bank has partnered with Induslnd Bank to create a fixed deposit when a user’s balance exceeds a lakh, redeemable without pre-closure or miscellaneous charges.
Every problem, reckons Satti, comes with a solution. The key is to hunt for it rather than get bogged down by hurdles. Paytm Bank in particular is geared around disruptive solutions says Satti. She defines it as not adding more features but a product that is very simple enough for customers to understand quickly and use. “For consumers, Paytm bank is a bank,” she says. They are not bothered with distinctions between commercial and payments banks if they get the services they expect.
With no minimum balance requirement, zero charges on digital transactions, availability of virtual and physical debit card and 4% interest on savings accounts, Paytm Bank is making a valiant bid to prove that a payments bank can not only function but also make money like any other bank. Take, for instance, its innovation in rolling out partner outlets — Paytm Ka ATM — for opening bank accounts, and making cash deposits and withdrawals. While the first phase saw over 3,000 such points in cities including Delhi NCR, Lucknow, Kanpur, Allahabad, Varanasi and Aligarh, the target is to take it to one lakh.
Paytm Payments Bank, reckon marketing experts, is uniquely positioned to make the most of the massive brand equity that Paytm as a wallet enjoys. From rolling out corporate food wallets, to opening salaried accounts to corporate banking, Paytm is trying to leverage its financial background across services.
Ashita Aggarwal, head of marketing at SP Jain Institute of Management and Research, believes Paytm is poised to ride the ‘dual trend’ wave. Like two televisions, two ACs and two cars, having two bank accounts is the new norm.
“It’s easy for wallet users to make a seamless transition into a bank account,” she says. “The huge catchment area that a wallet provides will help Paytm churn out big numbers,” she adds. Another area where Paytm as a bank stands to gain is its focus on bottom of the pyramid. “They are not fighting for the attention of creamy layer,” she observes.
The intention is to get unbanked into the mainstream. “Still there are crores who are either fed up with sarkari banks or are considered untouchables by pricey private ones,” Aggarwal contends, pointing out how Paytm Bank has been working in this area.
In February, Paytm Bank tied up with Mumbai Dabbawala Association, wherein around 5,000 dabbawalas would get to collect instant payments using Paytm QR.“That’s the kind of opportunity Paytm has,” she adds.
To fintech experts, the success of Paytm’s Bank will be closely tied to the success of the initial licensees. “Financial services are a business of
trust,” reckons Sanjay Swamy, managing partner at Prime Venture Partners. A payment bank will be key to establishing this, and could potentially result in greater success for other services, or even with international expansion.
Apart from competition from traditional banks, the bigger challenge will be the ability to innovate on banking and offer a differentiated product. “That will require a strong technology platform combined with a willingness to grow but not at all cost,” he cautions.
Satti, for her part, asserts that Paytm Bank is not a conventional bank. “It’s a technology company in a banking avatar,” she laughs, adding “That’s the biggest differentiator and disruptor.” The unrelentingfocus, claims Paytm, is roping in unserved and underserved Indians. The target: 500 million customers by 2020.
But can this be achieved? Satti exudes confidence. “The biggest wallet tag didn’t come overnight. Biggest Payments Bank label too will also take time. But it will come for sure,” she signs off.