If you live in Chennai, chances are you have seen brightly painted autorickshaws carrying an advertising message for Bankbazaar.com, an online financial services intermediary. This is just one of the marketing strategies the company has implemented to create awareness on its product, and its co-founder and chief-executive officer Adhil Shetty promises more to come. “Furthering our marketing strategies, including building on our marketing team and strengthening our technology to add on more verticals are what we plan to do with the funding we have received,” he says. In March 2011, venture capital firm, Walden International India (Walden) invested US $ 6 million in Bankbazaar.com. Previously, A.V. Thomas Infotech (part of the A.V. Thomas Group) had made an angel investment in the company. “This time around, we made a conscious effort to find an investor with a specific banking background and we found the right partner in Walden,” says Shetty. Rajesh Subramaniam, managing director, Walden, likes Bankbazaar.com’s founding team’s approach of finding non-traditional solutions to the pain points of the business like refraining from monetizing on customer information. “In addition to the team, there is a large market for their product and the penetration of this market is low,” adds Subramaniam.
Building the product
The business idea came to co-founder Arjun Shetty after he went through the painful experience of filing paperwork and waiting long days at bank counters for a home loan. Post this process, he discussed the idea with his wife Rati Rajkumar and brother Adhil, who was then working for Deloitte Consulting in the U.S. In 2008, the trio got together and established the Chennai-based Bankbazaar.com.
“We were one of the largest startup recruiters at Indian Institute of Technology, Kharagpur in 2011”
Right from the start, the mandate was clear – to find a solution to the typical problems faced by a customer when applying for a loan namely, understanding a complex product and having the means to a like-to-like comparison between products, finding a good bargain and simplifying paperwork. The business model at Bankbazaar.com addresses each problem area through its technology platform. When a prospective customer visits the website, the information sought is to assess the person’s risk profile and accordingly provide comparative data on loan products. “We are not interested in collecting customer information that can be monetised,” says Shetty while adding that a deliberate attempt has been made to steer clear of this as it is viewed as one of the biggest pain points in this industry. Once the information is provided to the customer, he can choose from the list of products and having made a choice between banks, he can also submit his net-banking statements through Bankbaazar.com, directly to the bank.
Founders: Arjun Shetty, Adhil Shetty and Rati Rajkumar
Industry: Online financial services intermediary
USP: A business model that effectively addresses pain points of customers applying for loan products
A secure platform
For the last 18 months, Bankbazaar.com has run a secure electronic feature that allows a customer to submit net-banking statements online. This eliminates the cumbersome paperwork that it takes to apply for a loan otherwise. As for security, there are no compromises as Bankbazaar.com invests in several validation software such as eTrust, McAfee and VeriSign. “We are probably the most audited startup today as each bank we work with has audited us,” says Shetty. The process concludes with an e-approval statement that is provided to the customer. “One block that remains is the collection of KYC (Know Your Customer) documents which we are not authorised to collect online,” says Shetty, while adding that compliance-driven changes in this are likely to happen in the next two years.
Bankbazaar.com’s business model is a win-win for both its customers and the banks whose products it helps sell. “For the banks, selling through us is close to 60 per cent cheaper than selling at a branch as overheads are minimal and this allows them to share a greater portion of the savings with customers who in turn get good bargains,” says Shetty. Bankbazaar.com receives a commission from the banks it works with and does not charge the customer for its services.
Unlike most startups, the organisation structure at Bankbazaar.com is not flat. There are divisional heads for each function who report to senior management. “Even though we are only a 65-member team, we think like we are a 500 plus team,” says Shetty. This extends to its hiring policies as well since the company invests in the best in the business, especially on the technology front. “We were one of the largest startup recruiters at Indian Institute of Technology, Kharagpur in 2011,” adds Shetty. The idea is to make best use of the founders’ experience of having worked at big name companies such as Microsoft, Kraft Foods, Amazon.com and Deloitte Consulting, and incorporate best practices into Bankbazaar.com. The company’s expansion strategies will see a boost in hiring, especially at the senior management level.
At present, Bankbazaar.com’s product portfolio comprises home loans, car loans and personal loans, with home loans contributing to 50 per cent of the volume of business. “In the last quarter of this financial year, we plan on introducing insurance products in the automobile and health sectors,” shares Shetty. He also says that the company is looking to triple its top-line over the next three years. Ambitious, undoubtedly, but this is just the sort of challenge that Bankbazaar.com’s founding team thrives on.