Sachin Bansal has a new ambition—to build “a modern HDFC bank”. And laying the foundation for that is Bansal’s Navi Technologies, begun in December 2018.
Bansal’s aim is a strange one. He is, after all, best known for founding India’s largest home-grown e-commerce platform, Flipkart. But after his acrimonious exit from Flipkart, and brief flirtation with the venture capitalist life, Bansal scanned India’s business ecosystem and saw promise in financial services.
His confidence in the space stems from how, at least in his opinion, banks simply haven’t kept pace with the times. It’s not hard to see why. India hasn’t seen new banking products in two decades. “No other sector has gone without significant disruption for that long,” said the founder of a unicorn who did not want to be quoted.
Bansal believes this to be the case even with the country’s largest private sector bank—HDFC Bank, which has $100 billion in market capitalisation. In December 2018, HDFC Bank was down for four days, leaving its users unable to transact online. Bansal made his feelings known about it in public by tweeting about the issue, even calling for the resignation of HDFC’s chief technology officer. In December 2019, it happened again; HDFC Bank was down for three days, leaving its 49 million users stranded.
In addition to being largely static, the Indian banking system is also notoriously opaque. In fact, it relies on this lack of transparency to make money. Concepts like late fees for credit cards are not explicitly explained to the user, for example. Nearly 49% of the revenue for SBI Cards and Payments—the country’s second-largest credit card issue— comes from such fees.
State-run banks, meanwhile, are struggling to stem the tide of users migrating their deposits to the private sector. In 2018-19, they accounted for only 11% of the total fresh fixed deposits among commercial banks, falling from 79% in 2013-14.
“There are under 20 banks that are modern. You need at least 30-40 modern well-run banks in the country,” said a senior banker with a private bank. Match that demand with rising expectations. In tier-2 and -3 cities, internet companies like Ola, Swiggy, and Zomato have changed the level of service expectations from all kinds of companies.
With the banking sector out of step with the times and content to remain in the doldrums, Bansal intends for Navi to shake it out of its malaise. By making financial services “simple, accessible, and affordable”.
Navi intends to reimagine the space entirely. It has already acquired several firms on both the financial and technology sides of the business.