The two companies will integrate each other's strengths such as Hitachi’s digital technologies like artificial intelligence and big data analytics, and SBI’s large customer base, branch network, brand trust.
India’s largest lender State Bank of India (SBI) has formed a joint venture ‘SBI Payment Services Private Limited’ in partnership with Hitachi Payments Services, a subsidiary of Japan’s Hitachi, for the establishment of card acceptance and future-ready digital payments platform in India, according to a joint statement on Monday. Hitachi Payments will pick a 26% equity stake in SBI Payment Services, while the rest will be held by SBI.
As part of the partnership, Hitachi – which manages more than 55,000 ATMs and 0.85 million PoS devices across the country – will contribute to the development and augmentation of digital payments service in the country by creating an online platform. SBI and Hitachi will now seek regulatory approvals for the joint venture.
The two companies will integrate each other’s strengths such as Hitachi’s digital technologies like artificial intelligence and big data analytics, and SBI’s large customer base, branch network as well as brand trust.
In October last year, the state-run lender had shortlisted Worldline, Hitachi and First Data Corporation for the proposed JV. It had also proposed to transfer its business of deploying credit card swipe machines to the JV. The joint venture will also mark Hitachi’s foray into a new business segment – the merchant acquiring business in India.
“Financial services market in India is making remarkable progress led by economic growth, financial inclusion policy and Digital India initiatives. Bank account holders have increased substantially in the past few years and as a result, banking transactions on ATMs and digital transactions have correspondingly increased dramatically,” it said.
With over 6 lakh point of sale (PoS) terminals and 420 million customers, SBI currently is the largest merchant acquirer in the market in terms of terminals through its subsidiary SBI Payment.
According to SBI Chairman Rajnish Kumar, the penetration of payment acceptance infrastructure is still low, given the 2,500 PoS per million people. “With this JV, we aim to grow the payment landscape by providing a frictionless modern digital payment platform to our customers,” he added.
Payments companies are using futuristic technologies such as artificial intelligence to provide personalised payment experience to their customers. About 83% of the Indian bankers think that artificial intelligence will work alongside humans over the next two years, quite higher than the global average of 79%, according to a recent report ‘Banking Technology Vision 2018’ by Accenture.