Mumbai:
SBM Bank, a wholly-owned subsidiary of
State Bank of Mauritius, has partnered with 30 fintech firms as a part of its strategy to acquire customers using the ‘
banking as a service’ model.
Under this, the FinTechs provide an interface for customers, and the bank delivers the network effect by providing not just the banking platform but also access to other fintech services that it has partnered with.
SBM earlier operated as an Indian branch of its parent doing wholesale banking and did not have any electronic interface like internet or mobile banking. In end-2018, the bank got a full-fledged bank licence. “This enabled us to leapfrog in terms of IT and provide a new technology stack to the customer,” said MD & CEO Sidharth Rath. According to him, the bank took a call to build a liability (deposit) franchise first. “Building a branch network is expensive and it costs as much as Rs 1-1.5 crore to set up a branch. For us, the lockdown was a blessing as it hastened the move to digital,” he added.
The FinTechs the bank has partnered with include Paisabazaar, through which it issues innovative products like a secured credit card. Young people and others who are otherwise ineligible for credit cards can instantly open a fixed deposit online and get a secured credit card. Once they build a track record of paying bills in time, they are eligible for a regular card.
Similarly, through a partnership with PayNearby, the bank can get small recurring deposits through the ‘Bachat Khata’ offered by the FinTech, which offers business correspondent services on the digital platform. The bank can offer customers immediate cross-border payments through its partnership with Nium. Other partners include RedCarpet, EnKash, Karbon, Finin, Open and Kodo.
“While we are present in only eight cities with physical branches, we have opened accounts in 500 cities with these digital accounts. This will continue to grow because the relationships have just about started,” said Neeraj Sinha, head (consumer & retail banking). Another advantage that SBM is exploiting is that of its offshore parent, which enables the bank to facilitate remittances under the RBI’s Liberalised Remittance Scheme for purchasing shares or other assets through a foreign currency account. Additionally, SBM’s model gains from the fact that it is not capital-intensive. The bank, which started out with Rs 500 crore, has added another Rs 100 crore to its capital base and has managed to generate profits from its first year of business.