Ranking: 1

Table 1: About Airtel Payments Bank

Scaling a business with minimal capital expenditures

Airtel Payments Bank (APB) is an Indian Payments Bank that operates as a subsidiary of Bharti Airtel. Leveraging the vast retail network and brand trust of its parent telecom company, APB is able to achieve high banking penetration in the rural unbanked regions. With the parent company’s existing base of over 270 million customers and over 500,000 Airtel retail outlets serving as banking points, APB could gain the scale required at a rapid rate.

Product Strategy: Supporting the cashless revolution in India

APB aims to popularise the usage of digital payments through its accounts, with a targeted focus on India’s rural, unbanked regions. To help achieve this goal, Airtel Payments Bank is developing a nationwide merchant ecosystem of partners that accept digital payments from its customers over mobile phones. In addition, a wide variety of services offered by APB makes banking convenient and seamless for its users. APB levies a minimal cash withdrawal fee of around 0.65% per transaction to encourage digital payments over cash on its platform.

Overview of the product stack at Airtel Payments Bank

There is a concerted effort to make the retail and business banking as well as payment and travel features as comprehensive and seamless as possible. APB is also able to take advantage of the telecom services portfolio of its parent company to offer users more entertainment options than other mobile wallets. While insurance and wealth management were not part of its initial strategy, the bank has sought to expand its offerings in these areas and is seeking partnerships to support this. Due to its status as a payments bank, APB does not offer lending services. While it lacks an online marketplace, APB offers a unique cashback rewards scheme, 123Rewards.

3 Key Product Innovations

1. 123Rewards

Rewards 123 is special savings account that rewards users when they make digital transactions with the bank account. Customers receive benefits of up to USD13. These include:

1. 1% Cashback on loading of USD 13.5 or more via UPI.
2. 2% Cashback on spends of USD 13.5 using a Platinum Debit Card.
3. A flat USD0.40 cashback on payments for Prepaid, Postpaid, DTH, Landline, or Broadband.

Customers can easily open or upgrade to Rewards123 through the Airtel Thanks app using Video KYC and receive a premium Virtual Debit Card.

2. Airtel Thanks App

Airtel Thanks is an all-in-one app for UPI Payment using BHIM UPI, Wynk Music, Bank Recharge, and Money Transfer. Users can manage all Airtel services from this app and enjoy exclusive Airtel offers. Airtel Thanks distinguishes itself from its contemporaries by allowing its users to make cashless payments and providing entertainment options through Airtel Live TV and Wynk Music. Customers can purchase Airtel XStream Fiber plans on the app to enjoy high-speed internet.

Apart from that, users can use the app to transfer money to friends and family via Instant Money Transfer and BHIM UPI, as well as send eGift cards such as shopping and travel vouchers. Online shopping and food ordering are also available through this UPI platform. In addition, customers can make payments for credit cards, utility bills, insurance premiums, and loan EMIs via the app. Furthermore, users can enjoy up to 6GB of free data alongside quick online recharges on their prepaid numbers. Finally, the e-wallet on the app offers up to 6% interest on the savings account.

3. DigiGold

Airtel Payments Bank has partnered with Safe Gold, a provider of Digital Gold, to launch its DigiGold service.

With DigiGold, customers can invest in 24K gold using the Airtel Thanks app. There is no minimum investment value requirement set. Customers can also gift DigiGold to their family and friends that hold a savings account with APB.

Table 2: Selected Partners

Recommendations

1. Offer Lending Services

APB does not offer credit services, which means it lacks the opportunity to earn high-interest income from customer loans. Currently, its revenue stream is not sufficient to offset its high operating costs. Airtel Payments Bank should seek to upgrade its payments bank license to a small financing bank or seek a lending license for small-ticket retail loans which could enable lending and large deposit sizes. The bank can also partner with a traditional bank to exclusively launch customised loan products for its customer base. This move will allow it to attract large depositors and, more importantly, gain access to a potentially lucrative new revenue stream.

2. Improve Security Features

With 200 million people not using digital payment and 300 million people in rural areas still lacking banking services, APB can do more to increase banking penetration in these areas. Many Indians are still holding cash for fear of digital fraud during transactions. Thus, one way for Airtel Payments Bank to increase the confidence in digital banking services is to tighten up security features further. Its recent SafePay feature is a step in the right direction.

3. Expand Payments Ecosystem

Another way to encourage further migration to digital banking services is to expand on the bank’s payments ecosystem further. Currently, insurance and wealth management offerings remain relatively unexplored. APB should seek partnerships related to these specific segments/areas. For instance, partnerships with microinsurance providers would allow Airtel Payments Bank to offer greater protection for low-income customers.

Our case study of Airtel Payments Bank shows the advantages telcos can have in operating banking and financial services, especially in rural regions. Being ranked the first in our “Top 5 Telcos to Champion the Financial Services Product Stack” report, the successes and challenges that Airtel Payments Bank faces will undoubtedly provide important lessons for every telecom service provider to learn from.

Endnotes

Airtel Payments Bank, (n.d.). Rewards123 – Simple, Secure and Rewarding.

Bharti Airtel Ltd, (2020, December 31). Group annual report.

Google Play Store, (n.d.). Airtel Thanks – Recharge, Bill Pay, UPI & Bank.