Paytm Payments Bank's Satti: "Create new use cases and innovate to grow"

• Satti believes demonetisation created a momentum for long term change and transforming Indian mindset towards digital payments
• The payments bank aims to serve 500 million unbanked customers
• Collaboration is an important component of the bank's strategy to transform the industry

Up until May this year, Renu Satti was a vice president of business at One97 Communications (One97), one of India’s leading and largest digital and mobile commerce platforms that is also the parent company of Paytm, arguably the country’s most iconic payments company that operatesits largest payment wallet business.

When the company announced in May that its long-awaited payments bank licence has been approved by the Reserve Bank of India (RBI) and that Paytm Payments Bank will begin operations later that month, Satti was introduced as the new CEO.

Shinjini Kumar, the former central banker who was hired in February 2016 to head the payments bank was no longer in charge. Paytm had earlier announced in January that it had received final approvals from RBI and had expected to start operating the payments bank by March but that launch was scuppered.

Satti has been with One97 for the last 12 years and started out in the human resources department. More recently, she was involved in several projects at Paytm, including Paytm marketplace and the wallet business, and is evidently someone whom founder of CEO of One97 and Paytm, Vijay Shekhar Sharma, trusts and has confidence in to lead the bank.

“It takes lot to be Renu. I am yet to meet someone (who) is equally sincere and committed. She has never let me down,” he wrote on her Linkedin page.

One97 was one of 11 payments bank applicants that received in-principle approval in November 2015. However, Airtel Payments Banks, a joint venture between

Bharti Airtel Ltd and Kotak Mahindra Bank and India Post beat it to become the first payments banks to launch, in January 2017.

Of the 11, Paytm Payments Bank is only the third to launch, three others including Tech Mahindra, Cholamandalam Distribution Services and Dilip Shanghvi had officially dropped out, while the rest have been relatively quiet.

Continuing the momentum

In anticipation of the launch, One97 restructured its business in December 2016, transferring the payment wallet business to the payments bank. Under RBI’s rules, Paytm must allow wallet users who do not wish to transfer their accounts to the bank to opt out through a written request. Wallet accounts that have been dormant for six months and have zero balances will only be transferred to the bank upon notification by the users.

Paytm currently has over 240 million wallet accounts, which it has migrated to Patym Payments Bank’s current and savings accounts, with balances of up to a maximum of INR100,000 ($1,540) each. Much of the growth of Paytm wallet business can be attributed to the government’s decision to “demonetise” and withdraw from circulation all INR500 ($7.80) and INR1,000 ($16) banknotes in November 2016, forcing consumers and businesses to turn to cashless payment modes such as Paytm’s mobile wallets.

During that period, it grew its user base from 150 million to over 240 million and saw its gross merchandise value reportedly hit $3 billion for the year, averaging over seven million transactions worth $18.5 million (INR1.2 billion) daily. Most significantly of all, it almost doubled the number of small merchants it acquired to over 4.9 million. Satti felt that demonetisation helped to transform Indian mindset towards digital transactions, payments in particular. More importantly it created a momentum for long term change.

“Demonetisation extended reach of digital payment modes to a large number of users who had hitherto relied on cash payments for most of their purchases. These users experienced the convenience of digital payments for the first time. Most of these users continue to transact digitally even after cash came back in the system. Overall it helped in transforming Indian mindset towards digital payments,” she explained.

“Paytm has been digitising payments throughout the customer consumption cycle including enabling small and medium businesses in unorganised offline sector. Demonetisation accelerated our growth rate and provided boost to adoption of Paytm among consumers and merchants alike. There was a big pull factor where merchants, in large numbers proactively came to us to accept payments through Paytm. There were lakhs of volunteers who collaborated with us to educate, enable and empower small and medium businesses with digital payments. These customers and merchants continue to transact with Paytm today and avail benefits of digitisation,” she added.

Serving 500 million unbanked customers

She wants Paytm Payments Bank to build products and services that can provide banking services to millions of unbanked and underbanked people in India. She shared that the payments bank is targeting to serve 500 million customers. And it intends to do so by being “the most trusted and the sincere bank”.

“Paytm has 240 million registered customers who use Paytm for various use cases – mobile recharge, utility bill payments, travel bookings, entertainment ticketing, toll payments, school fee payment etc. Paytm Payments Bank is being built on this strong foundation of payments business.

Our bank does not have any minimum balance requirement. There will not be any charges on digital transactions as we want our customers to use their bank account for all their transactions instead of using cash. An extensive distribution network is being built to serve customers who need assistance in availing banking services,” she said.

She believes that it needs to focus on solving problems that a customer faces. Products and services will be built with extreme customer focus. One example is an opportunity to invest in gold through Paytm. She explained that Indians love to put their savings into physical assets such as gold.

However, there are some challenges like minimum amount requirement, purity of gold etc. and hence its difficult for many people to afford it. Seeing this as an opportunity, Paytm partnered the Metals and Minerals Trading Corporation of India (MMTC) and Switzerland’s PAMP to launch the “Digital Gold” account which allows customers to open one with as little as one INR ($0.02) and have their gold kept in a vault. Within two months of the launch, Paytm has transacting over 300 kilogrammes of gold to more than 100,000 customers.

Notwithstanding the restrictions of the payments bank licence, the way to reach its 500 million customer goal is to provide a wide range of products and services beyond savings and payments.

Transforming the industry

Collaboration is an important component of strategy for the Paytm Payments Bank. It is in discussion with various other banks and financial institution to offer additional services like credit, wealth management and insurance to its customers.

“We want to work closely with these financial institutions and banks in India to take financial inclusion and digitisation forward,” she commented.

Following the launch of the bank, Paytm also secured its largest ever fundraising of $1.4 billion from Japanese investor SoftBank for a 20% direct stake in the company. With the latest investment, Patym’s strategic stakeholders now comprise Softbank, China’s ecommerce giant Alibaba which owns 40% of its parent One97 and private equity player SAIF Partners.

In addition to financial muscles, these strategic partners also bring enormous technical and professional knowhows and experience to the table. With a current valuation of close to $7 billion and on a trajectory to hit as much as $100 billion by 2025, Paytm will have tremendous firepower to build and perfect the necessary eco-system and platform to reach and serve 500 million customers.