Paytm: Navigating the Transition from an E-Wallet to a Payments Bank
The case centres around the challenges faced by Paytm, India's largest e-wallet, in its transition from a mobile wallet to a payments bank. The shift was the result of a push by Reserve Bank of India (RBI), the central bank of India and regulator of the banking system, in 2015, pending the approval of the new Payments Bill. The transition from Paytm mobile wallet to Paytm Payments Bank had added to the complexity of business for Paytm. Paytm Payments Bank had a target to increase its customer base from 180 million to 500 million by 2020. The road to achieving this target was far from smooth. Paytm Payments Bank had come under the scrutiny of RBI for not abiding by the prescribed Know Your Customer (KYC) norms and for the cashbacks it had offered customers to bring them on board. There were other regulatory challenges that Paytm Payments Bank had to deal with as well. One, the Supreme Court of India had struck down sections of the Aadhaar Act that required the use of Aadhaar cards for online verification and transactions. Two, regulatory uncertainty prevailed with new payments regulation, namely the Payments and Settlement Systems Act, 2018, looming on the horizon. And three, in October 2018, RBI had released guidelines on interoperability among prepaid instruments and bank accounts, creating barriers for the adoption of Paytm Payments Bank. It was in this challenging environment that Paytm Payments Bank had to acquire customers and persuade them to transact actively using its services and to grow from an online financial technology (FinTech) firm in the payments space to a one-stop destination for a FinTech firm in India. The case revolves around the future strategy and marketing tactics that Paytm Payments Bank would have to adopt to become self-sustainable and profitable in the face of various regulatory and customer adoption challenges.