Launched on May 23, 2017, Paytm Payments Bank is the new product from the house of Softbank and China's Alibaba backed One97 Communications.
Launched on May 23, 2017, Paytm Payments Bank is the new product from the house of Softbank and China’s Alibaba backed One97 Communications. According to data platform Tofler, the payments bank posted losses worth Rs 30.7 crore between August 2016 and March 31, 2017, as the bank’s revenues were pegged at Rs 2.5 crore. In a conversation with FE Bureau, Renu Satti, MD and CEO, Paytm Payments Bank talks about the importance of KYC, and how the company plans to sell financial services products by end of this financial year. (Edited excerpts)
Q. What are your views on RBI’s new PPI guidelines for inter-portability?
The RBI’s new guidelines are good for the financial eco-system. It shows that RBI recognizes pre-paid instruments as a long-term business that is scalable. Wallet KYC is definitely a way to ensure that financial systems are safe and secure. Our goal is to build fully biometric Aadhar compliant KYC network. We are the country’s largest wallet company, and our KYC customer acquisition will make us the country’s largest KYC wallet company.
We are also happy about other wallet-related initiatives. Now, an unlimited amount of money can move from the Bank to the Wallet. This will facilitate easy money transfer from the Paytm Payments Bank Account to the Paytm Wallet, and vice versa.
Q. A complete KYC has also been mandatory which is said can burn a hole in wallet’s pockets. Do you agree?
KYC is important to keep the financial systems safe and secure. We strongly support this regulation. I think only serious players can now be a part of the financial market. We have expanded our KYC network ahead of the guidelines and will now be investing $500 Mn into it. We aim to acquire half a billion KYC wallets in the next three years. This will establish our dominance as the leading wallet and payments bank in the country.
Q. The company will invest $500 Million into KYC operations and hire over 10,000 KYC personnel in line with its target of 500 Million KYC wallets over the next three years, with you required to complete all KYC process by December 31, how many staffers have been appointed, where does the plan stands now?
Our teams are aggressively working to make our existing customer-base KYC-enabled. We have a current workforce of 10,000 and are hiring an additional 10,000 for large-scale KYC operations. We are also getting ready with more than 100,000 Banking Outlets and KYC points to expand our network across the country.
Q. On the capital requirement, RBI said that wallets need to have a minimum net worth of Rs 25 crore from the earlier norms of Rs 5 crore paid-up capital and Rs 1 crore net worth. Even as I am sure Paytm does qualify on these rules, are these rules too stringent, would it be possible to maintain the bar all the time?
The higher positive net worth for wallets is important. This shows that RBI recognizes wallets as an important player in financial services. Now we will see only serious players offering payments and financial services. As the money will move across wallets of different companies, RBI will need that higher capital to support such transactions.
Q. Paytm Payments Bank has proposed to set up 31 branches, 33 controlling offices and 3,000 access points by March 31, 2018. Is the plan on the right path, now with KYC being made compulsory to what extent setting up of offices have become important?
We will continue with our earlier plans to set up branches across the country. With KYC becoming mandatory, it is important for us to expand our access points. As we are meeting more people for their KYC, we expect to see a massive jump in new bank account opening as more customers would like to have a bank account with us. We are also getting ready with more than 100,000 Banking Outlets and KYC points to expand our network across the country.
Q. Would there be a transaction fee levied in case a customer wants to transfer money from another wallet to Paytm?
We will adhere to the guidelines for interoperability as and when they are announced. Customers who have their money locked in other wallets will soon be able to seamlessly transfer their money to our platform. This move will help us gain more customers in the long-term.
Q. Paytm Payments Bank posted Rs 30 crore loss in seven months of operation till March 2017 on the back of revenues of Rs 2.5 crore, at 4% interest rate which lesser than competitors, what kind of traction has payments bank seen, and what are the plans for expansion this year?
We pioneered the way the wallet can expand its reach, use-cases and become an essential part of daily life. As hundreds of millions of customers experienced digital payments for the first time on our platform, more than 10 million customers have signed up for a bank account with us as a part of our beta launch. In the coming months, we will offer full set of financial services including wealth management, lending in partnerships and payments along with deposits offering.
Q. Do you think Paytm, which has a wallet and a payments bank would be at an advantage as compared to other players who might have a stand alone wallet? If yes, then how?
Paytm Wallet is now being complimented by Paytm Payments Bank accounts. Money kept in your Paytm Payments Bank account along with its wealth management solutions can give returns from 4% to 6%. That means you are not only getting the best experience of wallet but also returns on the money in the savings account.