Driving paperless personal finance

Fintech & Financial Services

Amazon India funded Bankbazaar.com, an online marketplace for loans and financial products, aims to reach a monthly visitor base of one crore in the next nine months

ADHIL SHETTY, CO-FOUNDER, BANKBAZAAR.COM

Over the last couple of years there has been a tremendous uptake on digital consumption of financial products and information.  And Bankbazaar.com (Bankbazaar), an online financial intermediary, is one of the beneficiaries of this surge.  “While during the first few years since our incorporation we had a steady growth, in the last couple of years, we have grown at a much faster pace,” states Adhil Shetty, who co-founded, Bankbazaar along with Arjun Shetty and Rati Rajkumar. To put things in perspective, since Sequoia Capital’s investment in the company in December 2013, the number of transactions in a month has increased five times with the site getting 40 lakh visitors (up from 10 lakh visitors in 2013) currently. What’s more important is, just like in the travel industry where online became a central channel for distribution, the trend seems to be repeating itself in the financial services sector.  “We operate in an environment where in every quarter a new database, a new tool or a new law is enabling paperless transactions and that is coming into play,” says Shetty, who is the CEO of the company.  For him and his company, the key highlight of the last two years has been the dramatic increase in digital consumer consumption, which is likely to increase further.

Recently, the company was funded to the tune of Rs. 375 crore by Amazon India with participation from Fidelity Growth Partners, Mousse Partners, Sequoia Capital and Walden International India. And this minority investment will help grow the company to the next level. “The interesting thing is that Amazon viewed this as a strong financial investment from its side. The way we are treating our consumers is a part of Amazon’s philosophy of how one builds a relationship and grows with the consumer’s demands,” states Shetty while adding that the synergies between both companies will be leveraged in the coming years.

Bankbazaar operates on an asset light and inventory free model by using technology to move money from one point to another. Today, it is an 800-member organisation up from 250 members in December 2013.  The team is spread across four cities and is virtually connected.

Understanding the market place?

Bankbazaar functions in a very competitive environment with specialists in a particular domain of the financial services industry, servicing any given customer. “What’s happening to the market is that everyone realises that the consumers we are selling to are the same set of people and a convergence is taking place. We believe that over the long term what will win is how efficient the product is and how much it changes the offline experience for your customer and not one’s marketing spends,” opines Shetty.  This apart, the company’s differentiation is its belief that automation or building a 100 per cent paperless process, will win in today’s market.

There is also an ecosystem of young companies building their market in India, each of whom is trying to capture a niche. “There are some startups that service sectors which a bank does not service. We are looking to partner with these entities that have an innovative product and we want them to lend via Bankbazaar,” says Shetty.

Public sector banks have also started to realise that their entry into this market is slightly behind the private sector institutions and they see Bankbazaar as a platform to get closer to the market. The company currently has 30 private sector banks and NBFCs as partners, up from 10 partners in December 2013.  It recently tied up with SBI. The company also offers data to banks, which tell them why they are unable to service a customer. This is new data to the bank as it is dynamically and readily available which will aid them to tailor products according to the online consumer demographics. “It is a very symbiotic relationship where we learn from each other and help in building a better product,” explains Shetty.

While, the ecosystem is taking shape and evolving based on the changing needs of the users, it also throws its own set of challenges. For instance, Bankbazaar is building a relationship with its users through a mobile app, which is a new space. Encouraging consumers to use mobile apps is something most companies struggle with in India. “So, the questions we are faced with are; how do we build an application-based relationship where they transact with us and have a ten year relationship and at the same time, stay in touch with us on a regular basis?” asks Shetty.

Becoming a companion

Bankbazaar wants to build a brand that has top-of-mind recall.  “Our focus is on how to become a trusted brand without burning through tonnes of advertising to get there,” says Shetty. He elaborates on its marketing philosophy, “As a brand we believe that we are a market place that offers our consumers all financial products and our approach is that of a companion where we only provide information.” The company taps both the digital and traditional medium and is grappling with effectively allocating marketing spends between them while sending out a message that gets amplified. “To make this happen we believe in tracking and optimisation. If we are doing a campaign in a particular channel we measure it using various digital techniques on how cost effective that has been. If it is effective we redirect our spends there, if not, we clamp down on these spends,” shares Shetty. Last year Bankbazaar spent about Rs. 50 crore on marketing and expects the number to increase significantly this year.

Content is central to the space in which it operates and, hence, maintaining a blog is a significant part of the company’s overall branding strategy. “What we believe is that one makes a financial product transaction only when needed. But we also want to be able to engage with the consumer on a more regular basis. And content is a great way to do that,” shares Shetty. The founders believe that in the current digital environment in which the company operates there is a premium for originality. This is perhaps why Bankbazaar has garnered about 2,000 original content pieces so far, which are either authored internally or by experts from outside.  The company also has a video blog called “Let’s talk about money” which is a series that presents content in an interesting way.

Going forward

The founding team believes that the company is moving to a mobile-first market where one manages data securely for a consumer who can be in their 20s looking to buy a car or 30s looking to buy a home. “What we convey is that we will be your personal finance companion who will help with what you want at different stages of your life. We not only give you information, but if you are proceeding with a transaction, we will support you end- to-end in working with that financial institution,” says Shetty.  Consumers always have the need to know what all the banks are doing. “When we did a survey, we found that if a 100 people are in the market for a credit product, 70 of them claim that they have researched online in order to get information. A year back the same data was 45 per cent and this clearly indicates an increase in the number of people researching online for information,” states Shetty.

Bankbazaar aims to evolve from a banking portal into a more holistic service provider, giving away information on various personal finance needs.  In fact, by the end of this year, it plans to get into the mutual funds comparison space.  In the coming years, the company sees itself playing a major role in the mobile –app driven personal finance segment. At present, 40 per cent of the company’s traffic is from the mobile device. The company is also building a lot of intelligence into the mobile app in order to be able to deliver paperless transactions.  With a vision of being the starting point for any financial decision of the consumer, Bankbazaar aims to reach one crore visitors per month by the end of this financial year.


HOW HAVE CONSUMER HABITS CHANGED? 

For certain product types, we have seen an increase in the self-employed category. For example, a couple of years ago, 10 per cent of the users were self-employed and 90 per cent were salaried. Today, we are seeing in some categories, upto 30 per cent are self employed.   

The percentage of mobile consumption has increased. Two years ago, it was 10 per cent mobile consumption, today it is at 40 per cent.   

The usage from Tier-II cities has increased  significantly. 

There is an increase in the percentage of women visitors though not in the percentage of women applicants. This is a trend we are trying to understand – are they researching and guiding the purchase decision, we wonder.

Poornima Kavlekar has been associated with The Smart CEO since the time of launch and is the Consulting Editor of the magazine. She has been writing for almost 20 years on a cross section of topics including stocks and personal finance and now, on entrepreneurship and growth enterprises. She is a trained Yoga Teacher, an avid endurance Cyclist and a Veena player.

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