BankBazaar.com is an online platform that helps people in choosing financial products like loan, credit card, insurance policy, mutual fund among others. Since, its inception in 2008, the firm is on growth trajectory – it has grown significantly in the last one year, doubling visitors and more than doubling revenue year to date. In 2017, the company received an average of 70 million visitors per quarter and now it aims to achieve 100 million visitors per quarter in 2018. “We are working on closing FY18 with 100 million visitors per quarter. We are investing heavily by hiring talent for our ‘PaperLess' program to ensure consumers can get instant and paperless access to loans, mutual funds and insurance. With this long-term approach of growth with positive unit economics bearing fruit, we are set to break-even by mid FY19,” said BankBazaar CEO Adhil Shetty in an exclusive interview with TechObserver.in Sanjay Singh.
How was the year 2017 for BankBazaar and what are your plans for 2018?
2017 was a great year for BankBazaar. In the just concluded Oct-Dec'17 Quarter, our operating revenue witnessed a whopping 168% growth while total expenses grew by only 53% as compared to same time last year. In Q3 FY17, the number of visitors to the site has touched 70 million visits per quarter, a 115% growth year-on-year, with 25 million visitors for the month of December. The company's performance over the course of the year has been largely supported by the organic growth of our business. Free transactions have doubled between Q3-FY17 and Q3-FY18, due to repeat of customers buying across loans, credit cards and mutual funds. Currently, more than 75% of the traffic is organic.
We are focusing on bolstering the same trend in 2018 as well. We are working on closing FY18 with 100 million visitors per quarter. We are investing heavily by hiring talent for our ‘PaperLess' program to ensure consumers can get instant and paperless access to loans, mutual funds and insurance (via BankBazaar Insurance). With this long-term approach of growth with positive unit economics bearing fruit, we are set to break-even by mid FY19.
What are the three key trends that will have significant impact in 2018 in the areas that BankBazaar functions?
Fintech is evolving rapidly, and these innovations are fuelled by regulatory initiatives as much as customer demand. There are two key reasons for this. In the first place, finance is a highly regulated sector with some of the biggest information security and privacy concerns. At the same time, the role of technology in everyday life is undergoing a huge shift and is redefining the way people interact. This dichotomy between consumer demands and compliance has been at the helm of the changes driving Fintech, especially in India. Broadly speaking, Fintech trends in India can be summed up in three points:
Paperless: Move from physical, paper-based procedures to online, digital, paperless procedures to increase customer convenience, improve efficiency, and reduce costs. In the coming years, we will see this expand and grow even more rapidly to include 100% ‘PaperLess' onboarding of accounts for all financial products through adoption of eSign, e-NACH and DigiLocker technologies along with eKYC.
Instant: Adoption of new technologies like Aadhaar online authentication and India stack services like eSign to reduce service delivery times from many days/weeks to instant service. We have seen this happen in case of cashless transactions in 2017, in the form of eWallets and UPI. In the coming years, we will see this expand and grow even more rapidly to embrace every aspect of personal finance, especially investments and unsecured credits.
Data-driven: Use of more data and better data mining for better services to customers, reduce NPAs, and to reach vast set of people who do not have previous financial history.
What are the key verticals that are driving the demand for your services?
Growth has been across all product categories: Credit product have grown 178% and Insurance transactions have grown 146% during the same period last year. PaperLess mutual funds on BankBazaar including SIP, One Time, ELSS, and Liquid are very popular with existing customers and BankBazaar is signing up over 100 new retail investors per day (interestingly 75% of whom are new to Mutual Fund).
Currently, we provide a completely paperless process for accessing several products including unsecured credit products, insurance, savings and fixed deposit accounts, and mutual funds. We foresee a lot of demand in both unsecured credit, i.e., personal loans and credit cards in 2018. The other area where we see a lot of traction is in the Mutual Fund category. With interest rates plunging, people are looking at alternative investments. The internet and mobile is equipping people with practically unlimited amounts of information and the online model is easing the entire transaction. This has led to more number of people exploring Mutual Funds and as a marketplace that allows them to pick the right fund from a multitude of fund houses, we are becoming the default choice for investors looking to invest.
What are your expectation from Union Budget 2018?
The Union Budget is one of the most looked-forward-to financial event in the country as this is the time several of the key financial initiatives are announced. The Government of India has given tremendous impetus to cashless finance. The year 2017 was the year of cashless. With the readiness of IndiaStack, 2018 can be year of paperless access to financial products. Some of our key asks from the government are:
Increasing the limits on affordable housing: The government is providing interest rate subsidies on home loans to Middle Income Group households. Households earning between Rs.6-12 lakh a year can claim a 4% subsidy on home loan amounts up to Rs.9 lakh. Households earning between Rs.12-18 lakh annually can receive a 3% subsidy on loans amounts up to Rs.12 lakh. The property rates in urban India are much higher than these. We hope these caps are raised so that they are in tune with the ever-escalating costs of property ownership in urban areas, so that more people can fulfil their dream of owning their own home.
For the common person, taxation remains a key concern. Currently, the maximum tax exemption via Section 80C of the Income Tax Act is Rs. 1.5 lakh. This includes investments in insurance premiums, PPF and EPF contributions, ELSS investments, ULIPs, NSCs and more—essentially contributions towards protection and investment products. One of our asks from this budget is for a separate exemption limit for premiums paid towards term insurance. Term plans help people insure their lives adequately at low premium costs. A separate exemption limit for premiums paid towards term insurance can encourage people to ensure better protection for themselves and their family in case of eventualities.
One of our key asks is to bring FD taxation at par with debt mutual funds. Millions of Indians prefer to invest via the humble fixed deposit which, though safe and reliable, is highly tax-inefficient. If you're in the 30% tax bracket, a 7% FD actually earns you 4.9% which wouldn't beat inflation or aid wealth creation. Therefore, our request is to bring the taxation on FD returns at par with debt mutual funds, wherein an investor is taxed only upon redemption and if redemption is after three years, the tax is calculated on the Long Term Capital Gains at 20.6% with indexation benefits, which significantly reduces tax outgo.
Paperless access to financial products has the potential to increase penetration and reduce costs of at the same time. In addition, digital can be a great leveler, reaching personal finance to a much larger section, and increasing financial inclusion. This budget, we are expecting a big push from the Government of India to encourage paperless access to financial products. Our ask is for an increase in monetary limit for paperless e-KYC via OTP which will remove the need to collect physical copy of PAN/Passport and a push for widespread usage of e-Sign to sign documents digitally. This will enable 100% paperless onboarding of accounts for all financial products, especially when coupled with e-NACH, and DigiLocker technologies.
Is there some wish of the past budget that you would like the government to address this time?
All taxpayers are looking for some tax relief in the form of higher tax slab limits across all categories of taxpayers in a way that helps reduce the tax liability of individuals. This would mean they have more disposable income, which could boost consumption in the country. We hope the government would think about it this time round.