Alliances between ecommerce companies and banks on the horizon

Reserve Bank of India’s (RBI) Deputy Governor, H.R. Khan has revealed that India’s central bank is working on effectively merging ecommerce firms and banks.

In a Banking industry event, Mr. Khan said, “One area which we will now be looking at very closely, which is emerging, is how to provide integration between ecommerce platforms and banks.” He added, “Ecommerce is galloping at a fast pace and we have to take cognisance of it. Just like we allowed telecom companies to apply for payment banks because the customers for both are the same…we are not averse to allowing ecommerce companies to form JVs (joint ventures with banks) or become banking correspondents.”

Outcome of this integration

• Seamless payment transactions

• Unified payment interface as opposed to different payment arrangements from bank to bank

• Opportunities for banks to make online shopping hassle-free

• Enabling ecommerce firms to offer financial services that are estimated to be worth Rs 4,500 crore

• Banks can use ecommerce’s vast reach even in remote cities to acquire new customers

It intends at creating ‘a system for ecommerce so that there is both competition and cooperation’ as Mr. Khan said rightly, “Some alliances are already happening between ecommerce and banks. Competition is desirable and the whole idea is that this should also lead to some amount of co-operation because nobody alone can achieve the optimal efficiency of technology and a business proposition.”

What do etailers think?

Etailers are happy with this move as it means easier access to a new category they can sell – financial services. Not to forget, online transactions are commercially viable for ecommerce companies as compared to cash-on-delivery.

Already a step ahead, Snapdeal recently set their foot into the financial services segment by acquiring RupeePower, a digital financial services platform. Their plan is to offer loans to consumers. Kunal Bahl, CEO of Snapdeal said, “Access to capital is an issue in India and via RupeePower, we can address that.  Before the acquisition as well, about Rs 1,500 crore in loans have been disbursed and there is a huge opportunity in this market.” Earlier this month Bahl had also said, “We want to create the largest financial services marketplace in India, where we can give quick, easy and cheap loans to consumers, through RupeePower.”

Considered as a progressive step, this integration can turn out to be beneficial for all the parties involved, be it banks, e-commerce companies or customers. How beneficial? That we will know once ecommerce companies is integrated with banking sector without any glitch.