No Fear. No Greed. No Entitlement. Paytm, India’s “Most Sincere” Bank, Lead’s India’s Fintech Charge

From mobile wallet, launched in 2014, to fully fledged bank in 2018, Paytm’s rise from fintech startup to 13,000 employees and 3 million plus offline merchants in India has been a phenomenal one; a case of right place, right time, right backers.

PayTM, which stands for Payment Through Mobile, was spun out of parent company One97 Communications Ltd back in 2010. The company was inspired by a visit founder Vijay Shekhar Sharma (pictured) took to China, where he discovered that market stall traders were using their mobiles to accept and make payments, and concluded the model could work in India, also.

The company launched its payments and payment wallet business in 2013, which rapidly became India’s largest mobile payment service platform, growing to 150m wallets, and experiencing supercharged growth from November 2016, when the Indian government removed 500 and 1,000 rupee notes from circulation as part of an anti-corruption drive, and in an effort to digitalise banking in the country.

PayTM has also received investment from Alibaba Group, whose subsidiary Ant Financial has taken a 25% stake in parent company One97, of half a billion dollars, further investment from ICICI Bank, and a whopping $1.4bn from Softbank – the largest single investment ever made into an Indian company from abroad, according to PayTM’s wikipedia profile.

In January 2017, the Reserve Bank of India gave PayTM permission to launch a payments bank. In a blog post, Sharma wrote:

“This is our chance to build something that every Indian can be proud of. In this journey, we will keep our heads down, work harder, and remember these three guiding principles: No Fear. No Greed. No Entitlement.”

PayTM refers to itself as India’s “only mobile first bank – with zero balance, zero digital transaction charge accounts.” Each account comes with own debit card which can be used online or at ATM machines to withdraw cash; customers are only permitted to hold a maximum of Rs. 1 lakh – around $1,500 dollars.

PayTM has the Reserve Bank of India to thank for allowing it to launch the service; the Indian government are trying hard to find ways to engage with India’s “unbanked” community – and view mobile banking as a better alternative than encouraging the unbanked to open bank accounts the traditional way – because it involves too much red tape and the identification process is too onerous. Mobile bank accounts can be opened more quickly and easily and PayTM’s target market have far more familiarity with mobiles than they do with formal banking procedures.

There are restrictions, however. PayTM cannot offer their own supplementary financial products e.g. insurance, loans, savings accounts or investment products, but it can – and does –  recommend third party providers. PayTM’s accounts are also now regulated by the Reserve Bank of India.

In June this year, PayTM applied to the RBi for permission to launch a money market fund which would allow its by now 250m users to store cash and earn interest. Additionally, founder Sharma told Bloomberg that he had $1.6 billion to invest in the company to build out its wealth management, insurance and lending business.

In May 2017, PayTM launched its own gold trading service, and according to Bloomberg now has more users than India’s 4 largest credit companies combined.

It represents incredible progress for a “bank” that is clearly seen, by its domestic and foreign backers, from the Indian government, to Alibaba, to Softbank, as the key to unlocking India’s potential as a financial superpower.

And PayTM are not just all about banking and payments, either, it seems. PayTM Mall, also launched in 2017, is a slick, Amazon style online marketplace that nicely segues with the mobile wallet, debit card and bank account.

The standout fintech play in India looks set for more success in 2018, and are busy putting India on a fast track to a digital economy.

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