Paytm, India’s most popular mobile payments app company, today announced that it had received approval from Reserve Bank of India (RBI) for launching its own digital bank.
This was a project that the company was pursuing for a long time now. Paytm’s founder & CEO Vijay Shekhar Sharma confirmed today that he would be taking up a full-time executive role in this latest venture. Even though he didn’t comment on how long will it take for Paytm to launch the digital bank formally, rumors in the industry suggest that it could be a matter of only one or two months from today.
Sharma has had quite a ride, much of which is in the news almost every other day. Paytm has managed to raise from investors $760 million till date from the likes of Alibaba and Ant Financial. According to sources, Paytm could be around $6 billion in worth today. Alibaba, one of the earliest investor in Paytm also invested in MyBank in 2015 which is very close to Paytm’s proposition and objective of serving the cashless economy, especially those who do not ascribe to traditional banking systems.
In a blog post recently, Sharma wrote “At Paytm Payments Bank, our aim is to build a new business model in the banking industry, focused on bringing financial services to 100’s of millions of un-served or underserved Indians… With the power of technology and innovation-at-scale, we aim to become a benchmark in the world of banking.”
Sharma’s ambition with this digital bank is for it to be able to support half a billion people in India. To be able to do this, Paytm is going to start with targeting 200 million banking and mobile wallet accounts within the next one year with services such as lending, wealth management and so on. Eventually, he wants to reach out to those who have never been engaged with a banking system before.
Interestingly the announcement came at a time when Paytm was seen as the primary benefactor of the demonetization initiative by Indian government where currency notes of 500 INR and 1000 INR were recalled, and the country was left cashless for weeks. The move saw the widest ever adoption of the app with newer customer segments coming on board. Before the demonetization scheme, however, Paytm had 135 million wallet users in India which were double than that of its nearest competitor. Within 12 days of demonetization scheme, Paytm had reached the benchmark of seven million transactions per day of over $17.5 million in volume. Not only that, its offline pointed of transaction jumped from merely 15 percent of total volume to 65 percent. In a year-end analysis, the company said that it had managed to cross the mark of 177 million subscribers towards December 2016 end.
Speaking on this occasional and monumental leverage, Sharma had said “It’s the most incredible opportunity for any fintech company in India, not just us. The Prime Minister has kickstarted a digital revolution in this country.” So much so that the Prime Minister even posed for Paytm’s full page media adverts a day after demonetization scheme was announced. Paytm is one of eleven Indian entities to have received this approval from the RBI, including country’s leading telecom operator Airtel.