Paytm learning payments bank biz from Alibaba
It is at Alibaba’s boot camp in China that the top brass of Indian digital wallet-turned-e-commerce firm Paytm is learning the finer points of how to set up and run a successful payments bank.
According to Vijay Shekhar Sharma, founder and CEO of One97 Communications, the Chinese e-commerce giant is training the top executives of Paytm ahead of its much-awaited payments bank launch in India. Alibaba Group is the largest shareholder in Paytm’s parent company, One97 Communications, with investments worth $680 million.
Ant Financial Services, an affiliate of Alibaba Group, runs MYbank, an online bank in China.
“We are studying how MYbank works and trying to see how those things can be fitted into our payments banking system here,” Sharma said.
Paytm plans to spend around $250 million (Rs 1,659 crore) next year on payments bank business. The company is waiting for a nod from the Reserve Bank of India to start the payments bank in 2016.
It is on an overdrive to hire banking correspondents to expand its reach to smaller towns and villages.
Alibaba’s MYbank has registered capital of 4 billion yuan and gives out loans to small businesses, entrepreneurs and consumers in China. It operates on cloud computing platform and big data is used to calculate the loan amounts.
“We have learnt a lot from Alibaba’s experience in payments banking. Our senior management as well as other key members of our payments banking arm have made frequent trips to China to learn from functioning of Alibaba’s MYbank,” Sharma told Business Standard.
According to sources, Jack Ma, founder and chairman of Alibaba Group, is likely to visit India when Paytm launches its payments bank business.
Vikas Purohit, who spearheaded Amazon India’s fashion business, is leading the payments bank team of Paytm. The Delhi-based company doesn’t want to open many branches and is instead focussing on hiring banking correspondents.
The company plans to start operations in Delhi/NCR as soon as get regulatory permission before moving to the hilly terrain of north-east where banking penetration is poor.
Paytm has set an ambitious target 100 million accounts within two years of launching the payments bank. “We have a strong base of 120 million wallets which we hope to transfer to the payments bank system,” Sharma added.