SBI Pitches YONO As ‘The One’ Banking App
(Photographer: Xaume Olleros/Bloomberg)

SBI Pitches YONO As ‘The One’ Banking App

When State Bank of India launched its mobile banking application in November 2017, it named it YONO —an acronym for ‘You Only Need One’. If the idea back then was that SBI customers will only need this one application to do all their transactions, the bank’s ambitions have now grown in the hope that YONO can become a bigger standalone play.

SBI plans to hive off its mobile banking application YONO as a standalone platform and will share the underlying technology with other banks through a ‘plug and play’ model, SBI Chairman Rajnish Kumar told BloombergQuint. Work is on in this direction and hopefully in a year or so you will see it as a separate subsidiary, he said.

The news was first reported by The Financial Express on Tuesday.

YONO will follow a BaaS—or a ‘Banking as a Service’—strategy. Right now for our international customers, YONO is running on the Infosys platform, while for India it is working on another platform. This proves that it can run smoothly across different platform providers.
Rajnish Kumar, Chairman, State Bank of India

Using application program interfaces, or APIs, SBI will allow smaller banks like cooperative banks, rural banks and others to use YONO’s underlying technology to build their own apps, Kumar said. “This way you don't need to worry about developing your own tech.”

Once YONO platform becomes a separate subsidiary, SBI will also pay a fee whenever its customers use YONO just like any other client, Kumar said. “Services won't be limited to transfers or lending. We are also developing a B2B product where smaller businesses can seamlessly discount their bills. It is much more than what SBI Pay or the cards business do today.”

SBI’s Big Bet With YONO

SBI will be the first large bank to hive off a mobile application and technology platform in order to create a separate business.

According to a June 2020 investor presentation, the bank through YONO added 75 lakh accounts, 1.6 lakh cards and has disbursed Rs 19,500 crore worth of loans till date. In the first quarter of this year, it issued 21,000 new cards, and garnered Rs 200 crore for its mutual fund arm through the platform.

According to data compiled by BloombergQuint through a Google Android Play Store scrapper, a web-based tool used to extract data, SBI’s YONO is the fifth most downloaded mobile banking or payments application.

While most banks have used the mobile banking route for cross-selling financial products, SBI has also placed an emphasis on e-commerce through YONO, terming it as a “lifestyle and banking” application.

During the pandemic, the bank sold products worth Rs 46.2 crore by gross merchandise volume on its YONO marketplace, it said.

CS Setty, managing director at SBI, said that when YONO was developed, the idea was to address customer convenience. Later, SBI added new services and created a B2C marketplace, which now has 80 merchants. So, there is great potential as a BaaS entity, he said.

Today, I can offer pre-approved loans based on consumer data and account data directly on the app, so the marketplace is used as a way to provide options for financing. Right now, there are 2.7 crore YONO users, and almost 30% are the borrowers of SBI. So, as more customers come onto YONO, there is greater potential.
CS Setty, Managing Director, State Bank of India

According to Gautam Chhugani, director for India financials and emerging fintech at Sanford C. Bernstein, mobile banking apps help in digital cross-selling, and reduce branch and phone interactions, helping save costs for the bank.

“Banks in India seem to be borrowing the AliPay and WeChat model. It is hard to see them as open market fintech products with network effects since it is not really possible to build an app separate from the bank and monetise it. However, pursuing an open market strategy with YONO, on the technology side, could be interesting if SBI can extend its capability to other state-owned banks and smaller rural banks,” he said.

Other Banks Also Building Super Apps

While SBI leads with YONO, other lenders like Kotak Mahindra Bank Ltd., ICICI Bank Ltd., RBL Bank Ltd. and state-run banks have also integrated payments, lending, account opening and shopping features in their respective apps.

Deepak Sharma, president and chief digital officer at Kotak Mahindra Bank, said the bigger the role a bank can play in a customers’ shopping experience, the bigger the opportunity to provide more financial services on top.

Kotak Mahindra Bank launched ‘KayMall’ a few years ago, on its app, to enable frictionless payments for high-frequency transaction categories like e-commerce, travel, hotels and groceries. The other use case was to integrate lending options, enabled through the app, directly at various customer touchpoints, he said.

It is not about bringing profits and margins through this channel but providing customers a convenient way to manage their money. And with analytics we can pass on merchant benefits directly to customers, offer affordable EMI offers and cross-sell other financial products. It is about finding out how to be more relevant in a customer’s life and deepening the relationship.
Deepak Sharma, Chief Digital Officer, Kotak Mahindra Bank

By overlaying many services, integrating merchant services and shopping with the app, customers can complete the transaction journey and payment checkouts without the hassle of entering personal and payment details, said Bijith Bhaskar, head of digital banking, partnerships and e-commerce at ICICI Bank.

“We have seen encouraging customer engagement on these services as it offers immense convenience to our customers as they get a speedy and personalised banking experience,” he said.

HDFC Bank and Axis Bank representatives were not available for comment.

According to Ankur Joshi, co-founder and chief executive officer of Nuclei, a bank technology provider, customers are using these apps not just for their banking needs but also to access non-financial services. “The funnel conversions, or the rate at which customers execute a shopping transaction on bank apps, is the same as for third-party websites. Which, in the case of flight tickets, for instance, stands at around 1.2-1.4%,” he said.

Also Read: SBI YONO Has A Valuation Of Over $40 Billion: Chairman Rajnish Kumar

Banks are building their applications in order to push greater engagement and tie down the customer to their application for a universe of products and services, Bernstein’s Chhugani said.

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