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We are looking at customers with income levels of Rs2-6 lakh a year

LiveMint logoLiveMint 24-07-2017 Vivina Vishwanathan

Recently, India’s fourth payments bank—Fino Payments Bank Ltd—started its operations. Airtel Payments Bank Ltd, India Post Payments Bank Ltd and Paytm Payments Bank Ltd have already started their banking operations. Payments banks cannot lend. They can only take deposits. However, these banks can work with other banks to sell third-party products. Currently, Fino Payments Bank has partnered with ICICI Bank Ltd—country’s largest private-sector bank in terms assets—to provide third-party products. Rishi Gupta, the bank’s managing director and chief executive officer, spoke to Mint about the launch of the payments bank and its products. Edited excerpts:

What will the partnership with ICICI Bank Ltd bring to the table? What kind of products can we expect from this tie-up?

There are couple of things for which we are working with ICICI Bank. It is our knowledge partner, which means we will spend time with them to understand business management, risk and treasury. Wherever we want to understand and take a look at systems or want to validate, we will approach them.

ICICI Bank will also help us with infrastructure. For instance, some of our branches will have ICICI Bank ATMs. Hence, we use their ATM network. Eventually, we may have our own ATMs. As of now, we have started with 10-15 ATMs. We are also looking at currency chests and other things from them. We will also get some of the third-party banking products from them. We will be offering fixed deposits and home loans from ICICI Bank but not from day zero. Based on the experience, these products we will launched in the next 6 months. Those are the three or four areas we are working in partnership with the bank.

You have also tied up with Bharat Petroleum Corp. Ltd (BPCL). What will this partnership offer your customers?

BPCL has 20,000 outlets across the country. The plan is to get these under banking as touch points. We will convert some of these outlets into Fino Bank branches.

We will offer everything that we offer through the bank branch at the BPCL outlets. The services would include opening accounts, cash-in and cash-out, bill payments, recharges, insurance and remittance. The people managing these outlets could be a mix of Fino employee or their own (BPCL dealers’). One of the big things for any payments bank would be a good distribution network and a good customer base. Currently, BPCL has both, plus it also wants to diversify and offer multiple financial products for its customers. 

What products and services are you currently offering to your banking customers?

From day one we will only offer CASA (current account savings account), insurance, remittances, mobile banking, recharges, debit cards and business correspondence lending. We are currently offering physical debit cards and soon we will also provide virtual debit cards. We won’t be offering third-party credit cards right now. 

What is the interest on savings account?

We are offering 4% interest on savings account deposits. Most of the commercial banks offer 4%, so we don’t expect to offer more than that because in our model, we can only invest at 6-6.5%. Plus we want to differentiate more in terms of services and simplicity and convenience and not on interest rate. I think the market opportunity is big. In normal commercial banking also there are banks that offer 6-7% but everyone is growing. Maybe they are growing a little shade better but everybody else is also growing. 

Who are your target customers?

We are looking at more of a mass market customer segment—people with income levels of Rs2 lakh to Rs6 lakh per annum. Geographically, as a payments bank, we are starting with Maharashtra, Madhya Pradesh, Gujarat, Bihar and Uttar Pradesh. As a payments technology firm (Fino Paytech Ltd), we already have presence in 14 states. We have covered all major cities in most of the states. Right now, in our payments bank network, 65% of the branches are in rural areas and 35% are in urban areas. 

Can consumers currently open bank accounts online? What is the KYC process?

Currently you can’t open a bank account online. You can only get an e-wallet online. For accounts, you have to do your KYC. For e-wallet also you have to do KYC. People can call us and our person can visit the customer and do the KYC and open the account, or they can come to our branches. Some of the BPCL outlets can also be used to open accounts. We are only doing eKYC. Over a longer horizon, we are looking at 50 million customers. But in the short term, in the next 1 year, we are looking for 3-4 million customers.

How much will it cost for customers to use ICICI Bank ATMs and branch services?

ATM charges will be as per the Reserve Bank of India’s guidelines. If you are going to cash-out from our branches, there are no charges. But if you go to a third-party channel, then there are charges because then I have to pay him some money. Hence, there are some charges. But at the bank there are no charges. For instance, in BPCL, if I have my branch, then there will be no charge. But if it is a third-party place then there will be some.

What digital products do you plan to offer? 

We provide BPay—our mobile banking app. ‘B’ is for Bharat Pay. Everything was built in-house. It is a mobile app that will do e-wallet as well as mobile banking. Customers also use it for services like NEFT and RTGS. We don’t have UPI right now as we have just launched the bank. We will now start testing UPI. For us, digital includes the BPay app, e-wallet, internet account and physical branches too. We don’t have any differentiator from other banks when it comes to digital banking. The only thing is that this one app can do everything. We don’t have any fintech partnership when it comes to digital banking. We are working with PayU for the payment gateway.

What insurance products are you offering?

Currently we are looking to offer life insurance policies from two insurance companies—ICICI Prudential Life Insurance Co. Ltd and Exide Life Insurance Co. Ltd. In the life insurance category, we will soon go live with both endowment and term plans from ICICI Prudential. Exide Life Insurance’s endowment and term plans have already gone live. We are also providing non-life insurance policies. For this, we have tied-up with ICICI Lombard General Insurance Co. Ltd and we are live with hospital cash and family floater. We are also offering personal accidental covers and it is part of our debit cards. It ranges between Rs1-2 lakh and comes as free accident cover. In the term plans, depending on premium, the cover can go up to Rs50 lakh.

When it comes to investments, are you planning to offer third-party mutual funds to your banking customers?

As of now, we haven’t started offering mutual funds. We are first trying to understand the market for this product. Only after we understand the market well will we start offering mutual funds to our customers. Even if we start offering it, we will begin with government securities or debt-based instruments.

We don’t want to start with equity-based mutual funds because our mass market customer segment may or may not completely understand equity. Debt at least gives you protection against the principal in a way and is giving you 6-7% return. So at least you are safe. Capital protection is the most important thing for us when we look at mutual funds. We will start testing the product in a month and it is likely to be launched in about 3 months.

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