Unlike payment bank accounts, Kotak Mahindra Bank’s customers can use the 811 account to not only transact, but also avail loans and manage investments.
Payment banks could be staring at an even more uncertain future with the launch of Kotak Mahindra Bank's 811 digital banking service. On Wednesday, the bank unveiled its ambitious digital, paperless savings account called 811 which can be opened in five minutes.
The 811 account would be pure-play digital account through which consumers can avail all services that a regular savings account offers.
Uday Kotak, Vice-chairman and Managing Director of Kotak Mahindra Bank, called it Indian banking segment’s WhatsApp moment as this is the first time a bank would use Aadhaar-OTP authentication to open savings accounts on mobile phones. The procedure wouldn't entail any cost for customers, he said.
Unlike payment bank accounts, Kotak Mahindra Bank’s customers can use the 811 account not only to transact, but also avail other services like loans and manage investments.
Since 2015 when the Reserve Bank of India granted in-principle approval to 11 players for payments banks, Tech Mahindra, Cholamandalam Distribution Services, Telenor, IDFC and Sun Pharma’s Dilip Shanghvi have withdrawn from the race.
Kotak Mahindra Bank’s launch of ‘811’ could further hamper the prospects of payments banks. Interestingly, Kotak Mahindra has a 19 percent stake in Airtel’s Payments Bank, which launched operations late last year.
When asked about the purpose of launching ‘811,’ which would directly compete with Airtel’s Payments Bank, Uday Kotak said: “We are investors in the Airtel Payments Bank and have a 19 percent stake in it. We believe there is enough room for growth, so they will be complimentary.”
The bank believes the consumer profile for its 811 account is different from that of payments banks.
Besides, with the new service, the bank is targeting a larger audience —two-thirds of Indian masses which fall under the age of 35 years. The bank is expecting to double its current 8 million customer base on the back of 811 in less than 18 months.
Calling it a "creative disruption" in the banking space, Kotak Mahindra Bank is hoping to ride the mobile broadband wave that has been unleashed with the launch of Reliance Jio’s 4G services.
Kotak Mahindra Bank’s digital savings account does not intend to stop at just being a bank account. The mobile app will offer an ecosystem on which the customer can shop and spend through an array of partnerships the bank intends to forge.Calling it India’s first paperless, real-time, app-based account, Shanti Ekambaram, President, Consumer Banking at Kotak Mahindra Bank, said: “811 would be an integrated experience of process, product and platform. And the account would be zero balance with zero transaction charges for digital payments.”