After RBI gave out payment bank licences, the country is gearing up for intense competition as next-gen companies are going to compete with decades old India Post that has footprint in virtually every village in the country. Tech-savvy Paytm, for instance, is all set to launch its payments bank by November this year.
Speaking to Bloomberg TV India , Paytm Founder and CEO Vijay Shekhar Sharma says the company’s payments bank, which will start with an initial corpus of ₹300 crore, targets 20 crore accounts in its first year itself.
I think what we are working on is deployment of technology and various other regulatory clearances. What we know is that there are lots of steps that take time. It is not just that we are ready because we have to go to and fro with documentations with the different government departments and come back with the consent. Apart from these, we are deploying technology for the bank. We are deploying Finacle of Infosys. Wipro is applying it. A lot of hard work is involved there. I think we should be ready in 3-4 months on a readiness level in terms of technology. We should be ready much before Diwali. That’s how we are planning it.
You are targeting to start the bank with an initial corpus of ₹300 crore and aiming to open 20 crore bank accounts in the first year. What kind of consumers are you targeting?
One of the things we learnt in payments bank is that we have to build new kind of accounts — wallet current and savings bank accounts (WACASA) accounts — instead of CASA accounts of banks. Our ambition is out and clear. In the first calendar year of banking operations, we are targeting 20 crore accounts. We have to build incredibly large distribution there. We will rely on our existing app downloads that is already there. Paytm is out there with a significant amount of app users and user base. We will look to convert them into bank customers. So the ambition target that we have kept is can we cross the magic number of 20 crore customers in the first year.
It’s an ambitious target indeed. For that what is the kind of base, how much wallet to account conversion do you expect to see among your existing customers? What is your current wallet customer base?
We have to learn that there is a wallet to account procedure requires us to complete KYC (know your customer). We are targeting biometric KYC, digital KYC and Aadhaar-based KYC. I have a personal aspiration that Paytm Payments Bank should be the India’s first and only payments bank where every person’s KYC is identified through biometrics. To build an infrastructure of that kind through the nooks and corners of the country is the kind of challenge we are looking at. First of all, we are going to roll out the payments bank in few cities in North-East and Central India, which is our priority space. We have told the RBI in our application. Distribution is the primary key factor. As far as technology and resources are concerned in money terms, we are good on that.
As a combined entity, how does it shape your financials and break-even point?
The combined entity has already sizeable amount of business in payment side. We have been very aggressive on payments and the reason is that we have attained break-even point out there. We also run a small market place inside our payment business, which is profitable
. At the combined level, we are not changing much direction towards profit level. The cost we are putting in payments bank structure will be at a subsidiary level. The payments bank will not consolidate completely as it is a 49 per cent owned by the parent and 51 per cent by individual — that’s me.