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It was less than three years ago that SBM Bank received a full-fledged Indian banking licence. Prior to that, it had operated solely as a branch of its overseas parent, State Bank of Mauritius. Its licence to operate as a scheduled commercial bank in 2018, though, has seen it go from strength to strength.

Today, SBM Bank claims to have customers in over 500 Indian cities, growing its assets under management (AUM) more than 3.5X to Rs 4,739 crore ($634 million) in the year ended March 2021. Incredibly, it did all this with just eight branches and less than 250 employees across the country.

While corporate banking has long been SBM’s bread and butter—representing nearly 63% of the bank’s deposits for the year ended March 2021—it has recently turned its eye towards growing its retail presence. But instead of deploying the good-old brick and mortar branches to achieve that goal, SBM has hitched its wagon to India’s burgeoning fintech scene. It has partnered with a wide variety of fintechs that do the heavy lifting of ushering in customers via their digital channels. 

Starting my own branch network will take years and is very capital intensive. A metro branch costs Rs 1.5 to 2 crore ($200,000-$267,000),” Sidharth Rath, managing director and chief executive at SBM, told The Economic Times in an interview interview Economic Times SBM India’s growth strategy centres on Fintech tie-ups Read more  while explaining the bank’s fintech partnership-led model. The bank currently works with over 30 different fintech firms, including lending platform Lendingkart, supply chain finance provider Drip Capital, and pay-later card providers such as Slice, Uni, and most recently, LazyPay.

The bank’s partnership with Slice, for instance, allows Slice to behave almost like a credit card by piggybacking on SBM’s prepaid payment instrument prepaid payment instrument PPI PPIs are bank account-like buckets that can be used to make payments using the money stored in them. (PPI) licence. The bank earns a cut of the transaction fee that is generated every time a Slice card is used.

“Small banks like SBM try to maximise these kinds of relationships,” a former executive at Yes Bank told The Ken. They said banks like SBM are aware of the limits of using relationship managers using relationship managers The Ken Banking relationship manager status: it’s complicated Read more  and don’t have endless capital to spend on customer acquisition.

AUTHOR

Jaspreet Kalra

Jaspreet covers banking, financial technology and digital assets. He is a graduate of St. Stephen’s College, Delhi and Columbia University’s Graduate School of Journalism. Jaspreet has previously worked with CoinDesk and Bank Automation News. When unoccupied with work, he can be found pretending to read hardbacks while listening to stand-up specials.

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