"Slice now matches HDFC Bank's scale in monthly account openings,” says founder Rajan Bajaj

The turning point came with Slice's strategic merger with North East Small Finance Bank (NESFB) in October of 2024, transforming the fintech into a full-fledged bank.

This move positioned Slice uniquely in the market, unlike most fintech players that rely on third-party banking partners, Slice now owns every element of its infrastructure, from core banking systems to advanced underwriting capabilities.

The merger appears to be yielding results. According to Bajaj, Slice has doubled its deposits since the October merger and is now issuing around 3 lakh bank accounts monthly, numbers that would place it among the top 5-7 banks in the country for new account openings, comparable to HDFC's scale.

Today, the company is launching India's first UPI-powered credit card and opening the country's first UPI-led bank branch in Bengaluru, complete with India's first UPI ATM offering cash deposit and withdrawal capabilities.

Also Read: Fintech Slice set to launch Rupay credit card months after merger with NESFB

In an interview with Moneycontrol, Bajaj shares insights into this transformation, the massive market opportunity he sees ahead, and how Slice plans to serve over a billion Indians through innovative banking solutions.

Looking back at your journey from regulatory challenges to now opening branches, how has it been?

We've always been a problem-solving company. We see problems in financial services and try to solve them. Being licensed was always important to us - we were among the first to get an NBFC license in our space and crossed five years, making us eligible to become a bank.

Being a bank comes with huge responsibility, but we're excited about the problems we can solve: savings accounts with higher rates and lower infrastructure costs, UPI credit cards for 300 million credit-worthy people who deserve access, and UPI ATMs for people who need cash services but aren't always welcomed in traditional branches due to low account balances.

If we analyze the entire Indian market, we can potentially service over a billion people by solving these problems.

Can you share some early numbers about Slice's credit card business and your experience in the market?

We have been in this space for the last nine years and have given credit to around 4.5-5 million customers. What's particularly encouraging is that 50% of these have been new to credit - we really understand the segment of India that we're targeting now. Our risk performance has been 30% better historically for these customers, so we've been able to underwrite them well while scaling to a large customer base.

How does your UPI credit cards work? Will this become your hero product?

UPI credit card is going to be a paradigm shift. You can't be serious about UPI credit cards unless you're serious about credit itself. What fundamentally needs to be done is solving for credit first to enable UPI credit cards at India's scale.

A credit card is a 75-year-old product, but the interface and scale are going to completely change. Previously, we had customers for whom the cost of servicing was almost impossible with traditional credit cards. Now you don't need to deliver a physical card, you don't need to stand in malls or airports to acquire customers. The cost of acquisition comes down because you can directly offer credit at the point of sale.

The mobile interface allows people to see which merchants they're spending with, how much they're spending, credit periods, due dates, and they can repay immediately or convert to installments at the point of sale.

What's the market opportunity you see?

If you just build a thin layer on top of existing credit cards and add UPI, you'll only reach the existing 40-50 million credit card users in India. But if you actually reinvent this product for the 300 million people who are credit-worthy in India, you can reach that entire market in the next 10 years. That's the opportunity we see.

These customers need very different ticket sizes - even Rs 10,000 limits should be available. While traditional credit cards average Rs 2,500 transactions, many of our target customers want transactions as low as Rs 500. They need credit for these smaller amounts.

How does Slice differentiate from other players like fintechs that offer co-branded credit cards?

Our experience of serving 4.5-5 million Indians over nine years, with 30% lower risk and acquisition costs that are almost 10 times lower than traditional credit card issuers, gives us a unique advantage. With UPI credit cards, we're further reducing costs, making the economics work for the larger 300 million market.

It's not about the existing 40 million customers adding UPI on top - it's fundamentally about providing credit access to hundreds of millions more credit-worthy customers in India who still don't have access.

Is the UPI credit card market crowded?

It's still pretty early. Interchange only started coming in late last year. UPI merchant spends are around $100 billion, mostly through debit, while credit card spends in India are around $25 billion. So merchant debit spends on UPI are 4 times larger than credit cards, and practically all of that is debit.

This is a high-growth merchant payment UPI network now open for credit, serving 300 million credit-worthy people, of whom only 40-50 million currently use credit cards.

Tell us about your bank account growth since the merger.

We launched the Slice digital savings account in January, and the numbers have been exceeding our expectations. Since the merger in October, we've doubled our deposits. We're now issuing around 3 lakh bank accounts to customers every month, which puts us in the top 5-7 among bank account issuances across the country - close to HDFC's scale.

Most importantly, we've achieved profitability as a combined entity, which was a key milestone we set for ourselves.

What makes your savings account attractive?

We offer 100% of the repo rate - currently around 6-6.5%. Our thinking is: why would you want a bank account that gives 40-50% of that rate when you're taking higher risk with the bank compared to giving money to the government? We wanted to give customers a bank account that provides the true cost of money.

The account comes without annual charges or minimum balance requirements, and we offer daily interest payments - something no other bank offers because we built our core banking stack ourselves.

How is your branch strategy different from traditional banks?

We're opening branches in all metros, but they're very different from traditional branches. Our Slice UPI ATMs are highly scalable, people can deposit money and withdraw cash without going to a banker. Money can go to any bank account using the same UPI flow customers already understand.

These machines will eventually become full banking points where bank accounts can be opened and debit cards can be printed. The cost savings are significant, and we pass these benefits back to customers - that's how we can offer 100% of the repo rate.

What does your customer base look like?

Most of our customers are salaried employees or freelancers, with 60-70% coming from outside metros. The average age is around 30-32. These are customers for whom it's hard to get a great bank account without paying minimum fees.

Our bank account appeals to digitally savvy customers since it's smartphone-based - you don't need to visit branches or deal with phone calls. Everything is self-service, but very easy to use, which is why we're seeing 3 lakh customers sign up monthly.

Any plans for fundraising?

We're very well capitalized right now. Our capital adequacy is well above regulatory thresholds, and we continue to grow. We'll keep raising capital from time to time as needed, but there's no official fundraising conversation right now.