Following members of the FIAKS community participated in the knowledge sharing E-Panel discussions:
- Mr Roopesh Chandran, Director Business Development, Visa
- Mr Kamonasish Aayush Mazumdar, Chief Marketing Officer, MeraEvents
- Mr Abhay Kulkarni, General Manager Sales, Worldline Global
- Mr Ajay B Panicker, CEO & Founder, NetPay Limited
- Dr R Bhaskaran, Former Chief Executive Officer,IIBF
- Mr Hemal Shah, Technical Product Manager, Mastercard
- Mr Ishan Vaish, India Partnership Manager, Apple
- Mr Vijay Shekhar Sharma, Founder One97 & Paytm
- Mr Sony A, Head – Digital, South Indian Bank
- Mr Amrish Rau, CEO PayU India, Naspers Group
- Mr Piush Kothari, Business Head Digital, Customer Analytics and Strategy, Aditya Birla Idea Payment Bank
- Mr Balaji Vishwanath , Vice President- Digital Acquisition & New Initiatives
- Mr Dilip Asbe, Managing Director & CEO, NPCI
- Mr Neeraj Chandra, Head of Operations, Abu Dhabi Commercial Bank
- Ms Saru Kaushal, Country Business Head, Global Corporate Payments at American Express
- Mr Anupam Varghese, Former Head of Products, EKO India Financial
- Mr Abhishek Arun, Vice President, Paytm
- Many other CEO/CXO Bankers & Fintech professionals on FIAKS Forum
FIAKS Community Question
A total deposit of all payments Banks is less than 540 crores as of May 2018 which is less than SBI Andheri East Branch. Why are payment banks unable to scale up on deposits? What needs to be done at the regulatory end? What are the possible strategies the bank need to think about?
FIAKS Community Discussions
The tweet of Dibijay Mishra was “I filed an RTI on the state of payments bank (PB) deposits in India. @RBI has sent me in response to the RTI. Total deposit with *four* functional payments banks (including Paytm) is just Rs 540 Cr. This is as of May 2018, the most updated data available with the RBI. Rs. 540 Crs deposits are less than what would be in the SBI Andheri East branch.
This tweet was extensively discussed in various FIAKS community. Discussion started with community member said that people put money in banks because of two reasons:
- Auto salary credits
- Safety and trust
To scale PBs need good B2B alliances from SMEs to open salary accounts. Brand also needs to establish through ATL and BTL for people. While limit is a constraint, it’s not an immediate blocker for a large set of people. Also, banking needs to be aspirational from both products as well as offerings. If there were health and other livelihood benefits for the lower middle class it will attract attention.
Another expert responding to the question said the payment banks were supposed to have a model based on transaction fees/value adds more than interests on deposits raised. Though whether a model exists there fundamentally is the open question?
It was said that all of this is good in theory but the DNA of how banking works is that it has to be for everybody and not just a special class of citizenry, meaning banks can’t look just into low income exclusively because this goes against the fundamental theory of how a bank can work. A bank can’t work without an even bell curve – at the end of the day all banks are risk distributors and opportunity seekers, that’s how they run. You can’t mitigate risks by only looking at red lined people, you will need a balance between all kinds in order to serve everybody, including the red-lined poor and this will be by default true going forward if RBI takes the right steps and opens up banking as a sector.
There are many ways of enabling banks to do work for the poor and mass, but they can’t be made to work only for a certain section without looking at overall business outlook, and by the way, this burden/opportunity has to be shared by traditional banks too, and not just by opening bank branches.
PayTm redefined banking for small merchants. Today, even a panwala or a chaiwala is able to collect make and receive payments. Paytm is the new currency in market, which is growing day by day. I think there is a principal non-user standpoint thinking at play here. What we must ask is why should a user open a bank account with a PB? PB itself sounds like a caste system for banking, which itself diminishes trust. We can’t think like bankers, technocrats, and management professionals.
Here, the fish we are asking to climb the tree is the PB, not the normal bank which is counter-intuitive because if normal traditional banks with thousands of crores or corpus from private funds, governments and hotline access to RBI can’t make it happen, we are expecting smaller banks to fill this gap? Why and how? The only difference between banks and PBs must be a more stringent look and better policy application at best.
Adding to it, a CXO banker said I hope you mean more stringent look at universal banks. If it is the reverse then without lending and the primary segment PBs are supposed to cater to, the model will be impacted.
Payment bank seems to be coming at a wrong time when wallets had started gaining a user base. if they could have poised payment banks as wallets giving you 4% interest people could have related easily. it seems that people were flooded with lot many payment options and hence are hesitant to have one another accountable. As a common man payment bank conceptually is still not understood.
The discussion became interesting when a FIAKS community expert said technically money comes and goes. These people don’t use it to keep a ton of money, as they don’t have a lot of residual money. Secondly, we have sweep out arrangement, which has additional rupee deposit, which again due to the limitation on amount can’t be attributed to PB account deposit. We shouldn’t bother much of deposits in an account as this money is not useful to lending (that’s why traditional bank keep account of assets and liabilities). Here, an active account is more indicator of performance. Active equal to in or out money transaction or residual deposit.
Another expert said payments bank business model is dependent on deposits, transaction and consumer loyalty. Loyalty and transactions will happen if the consumer truly sees the payments bank account as their transaction account. That would mean they would like to store money there. These numbers show that consumers are yet to take up payments bank as the first choice and hence don’t necessarily use them for transactions. That’s where UPI leads Payments bank. In a UPI transaction, the consumer can keep money with their favorite bank and use for transactions. By the way, the UPI transaction on our platforms has grown 10X in the last 5 months.
So that means traditional banks shouldn’t promote UPI, isn’t it? No.
Register and read on how UPI will lead Payments Banks and at the same time benefit Universal Banks in the country