Airtel to lean on its 180 mn digital users to propel payments bank business

Bharti Airtel aims to leverage its 180 million plus digital service customers and its wide presence in rural areas to grow its payment bank business.

“We are well placed as we can leverage the 180 million plus customers we have across our digital assets.

"We offer a plethora of services such as lucrative interest rates, gift cards, FASTag, telecom recharges, payments and debit cards.

"Our large merchant base of more than eight million allows us to drive both engagement and monetisation.

"This is one area that is now seeing solid traction,” Bharti Airtel’s chief executive officer Gopal Vittal said in a post result conference call on Wednesday.

Airtel’s payment bank began operations in 2016–the first among the seven payment banks currently operational in the country.

Airtel Payments Bank has a customer base of around 115 million with a monthly transacting user base of 31 million.

Vittal said the payment bank's revenue is close to around Rs 1,000 crore on an annual basis and the bank made profit at both operating and net basis in the second quarter.

Airtel believes the payment banks business will be a significant growth driver along with its enterprise and digital businesses.

A surge in digital transactions in the country over the past few years and wider adoption of 4G-enabled smartphones is expected to drive digital transactions further.

Airtel’s presence in tier III areas also gives it an edge over its competitors, Vittal said.

“With 0.5 million business correspondents (retail agents engaged by a bank), we are well ahead of anyone else in the market.

"To put this in context our total payment bank distribution is two times that of the total ATMs and bank branches in the country.

"This allows us to offer a full stack digital account.

"It is this advantage that has enabled us to get to leadership in the remittance market.

"A second big opportunity is Aadhar enabled payment systems.

"This segment is expected to grow upwards of 45 per cent CAGR over the next four years.

"We are also driving financial inclusion by being a key player in the distribution of various government sponsored schemes,” Vittal said.

The payment bank’s take rate (rate of conversion of gross merchandise volume into revenue) is 0.74 per cent which is among the highest in the industry, he added.

While Airtel Payments Bank has leveraged its parent’s network of retailers and kirana shops, India Post’s payment bank has enabled post offices to provide payment bank services.

Fino Payments Bank has widened its network through its partnership with Bharat Petroleum Corporation Limited to use their outlets as digital banking centres.

Photograph: Sivaram V/Reuters