BankBazaar riding on India Stack to achieve faster profitability

Online marketplace for financial services BankBazaar is riding on the back of India Stack, the country's cashless and paperless technology platform, to woo consumers to buy financial products such as mutual funds and fixed deposits directly on their mobile phones.

BankBazaar is investing into e-KYC, e-Sign and will soon integrate its service with the upcoming Digi-Locker facility, allowing it to reduce the time it takes to process a new financial service from four to six days to just three minutes.

The company is also simultaneously working on integrating core banking and insurance systems, while educating banks to begin using the new paperless norms.

"Banks say for the past 30 years a contract had to be physically signed, but we are now telling them a contract will be e-signed. They have never done it before," said Adhil Shetty, CEO at BankBazaar. "So the challenge we face is building technology bank by bank and product by product, and then telling them that there are 18 million visitors on our site and if you don't provide a product, somebody else will."

Shetty says India Stack's capability will allow it to lower the cost of selling financial products, because it removes the need for deploying large teams of people to connect with customers. The major investments will be in technology, a one-time cost, but for which BankBazaar is planning to hire 400 people in the upcoming fiscal year.

While all transactions on BankBazaar today are unit economic positive, the company has some way to go before become profitable at an EBITA level. In the next one year the focus would be on this, by lowering the cost of acquisition of customers, and riding the wave of growing digital consumers in India.

"For now we are targeting those same estimated 40 million consumers who shop from e-commerce websites. It's a start. Today we are targeting 18 million visitors on our site in March, and it makes sense to target those discerning people who already shop online," added Shetty. "It's a natural progression.

While India Stack will allow for other marketplaces to build similar paperless offerings, Shetty says it only solves for one-third of the issues when it comes to building a paperless solution. The bigger challenge continues to be convincing banks and other financial institutions to buy into the idea while integrating into their core systems.

BankBazaar is also closely working with think tank iSpirt, which has been instrumental in the development of the India Stack, for testing the upcoming Consent Architecture that is being built. This will allow customers of BankBazaar to share financial and other data that will help the company provide better and more value-driven offerings to them, with full consent of where their personal data will be used.

Apart from the massive cost savings, BankBazaar says the conversion rates of paperless customers is three times higher than non-paperless buyers. Due to this, payouts from customers of paperless banking and financial services are higher, making sense for it to go after them before chasing offline buyers.