Paytm founder Vijay Shekhar Sharma
, armed with a Rs 20,000-crore investment plan spread over five years, launched the Paytm Payments Bank
on Tuesday. In an interview with Karan Choudhury
, he makes it clear that while Paytm Mall
would work with Alibaba on e-commerce, its payments and banking business partner would be the SoftBank Group, the company’s majority shareholder. Edited excerpts:
What has caused a delay in the launch of the payments bank?
A bank launch requires ecosystem integration. What we have learnt is that a bank is part of a nested financial services system. We have a long-term play on it and did not want to hurry. I do not think that we have lost the first-mover advantage because, ultimately, it is the product that matters.
How do you think the payments bank would change financial services in India?
India is either un-served or underserved. If we are able to give financial services at that level, we are confident that we would be able to bring in big business.
How big is the opportunity for you?
We believe there is an opportunity of offering 500 million people with bank accounts in the next four-five years. If each customer deposits even $100 with us, it would make it a $50-billion opportunity.
Airtel already has a payments bank and Reliance Jio might launch one soon. How big a competition are these deep-pocketed rivals?
While it is a technology, banking and financial services business, it is also a distribution business. There is no doubt that when it comes to distribution we have an edge over others. We have massive technology as well as an offering; and distribution advantage over others.
I think customers associate Paytm with financial services already…. The total deposits we managed in the ‘beta run’ over the last three months have been around Rs 1,000 crore. It tells us customers want our services. There is no doubt that everybody would play with their deep pockets, but we believe we are building something that customers want.
We will offer lending, insurance and wealth management services. The battle now has moved from being a financial service or telecom provider to a data company.
By when will you see profitability in your payments bank operations?
KYC (know your customer) costs, which is a vast expense, is incurred by Paytm. I think in the next three years we would definitely be profitable, let’s see if we can do it in year two of operations itself.
The first target is number of people, then amount deposited, then number of activities per deposit account. Right now we are clear that we are an investment-first company. We did the same in payments; now we are doing the same in banking.
Softbank or Alibaba, which company is more actively involved in Paytm?
We are very proud to be called a SoftBank Group, Japan-led company. As far as Alibaba is concerned it is a commerce play. For financial services our Japanese shareholder’s understanding is quite helpful for us. Direct and indirect, SoftBank has upwards of 30 per cent stake in Paytm, at a fully diluted level it has more stake than Alibaba.
What happened to Alibaba’s play in India?
I can only comment on Paytm’s play in e-commerce.
Are you disassociating Paytm from Alibaba?
Why should we? Our commerce business is significantly influenced by Alibaba, I think there is no secret there. Our Paytm Payments Bank
is domiciled India with Japanese capital and is a long-haul play; for commerce, it’s Alibaba for a global play.
What are your thoughts on competition from Flipkart?
It is long-term battle. In the long term, I am sure we would be there and so would Amazon. Rest I do not want to comment about anything.
By when would Paytm be the biggest e-commerce player in India?
This is not a two- or three-year battle. This GMV (gross merchandise value) race to be called a top player is too myopic. In the long haul — that is in the next 10 years — we are playing for the top spot and nothing else.
What are SoftBank’s plans for Paytm?
Having a deep-pocketed investor like SoftBank helps us a lot. It gives us access to a tonne of financial, lending and even insurance institutions. This is the time when such access would matter and make a difference.
SoftBank has formed this huge coalition that includes you, Flipkart, Hike and Ola, among others. Is it going to be SoftBank versus Amazon in the long run?
Masa (Masayoshi Son) is taking a big bet on technology at large. It is not just about India, commerce or Amazon. This is a bet on a large market called India, not against a large contender called Amazon.
You think SoftBank might orchestrate the next round of consolidation?
It is not an obligation of SoftBank to orchestrate a consolidation; it is the obligation of companies
to find out where they are. If they believe they can build the market individually and grow, they should do that; but if they believe it is time to move on from the market, they should so that. I do not think an investor would have such an influence when they do not own more than 30 per cent of the company. It is up to the entrepreneur to decide their future.