SBI YONO - India’s largest neobank

Hi friends 👋,

Happy Wednesday and welcome to the 6th edition of Weekly Olio.

Many thanks for all your support and feedback so far, we hope it continues the same in the coming days and weeks. 😊 

Today’s, Publisher’s Parmesan covers SBI YONO, an integrated banking solution which can be accessed across devices, allowing one to plan, manage, grow and address all financial needs.

For context, YONO is State Bank of India’s latest mobile banking offering - an extension of its trusted banking legacy. It offers India’s largest range of products and services i.e., a one-stop shop to fulfil all the banking, insurance, investments, and daily shopping needs.

Let’s get to it.

The Quote󠀢 💭

The Tweet 🐦

After less than a year in business, the Mark Cuban Cost Plus Drug Company is growing at 10% week over week (!!) and over 1.2 Mn people have created accounts. Through a powerful personal brand and a thoughtful business model, MCCPDC is building one of the most promising new startups in pharma. 🤞🦄

The Infographic 💹

We just got done with the FIFA World Cup 2022! ⚽🏆

Argentina won it after a gap of 36 years! 36 years, let that sink in. 💭

Fans were out on the street, celebrating and rejoicing their team’s victory. But are there any cheers for Qatar’s finances? Probably not! 🤔

It helps FIFA, perhaps the economy, but is surely not profitable for the organizers!

Between 1964 and 2018, of 14 World Cups, only Russia generated a relatively meaningful surplus of $235 Mn. Though, RoI was a meagre 4.6%. ❌💵

The Short Read 📝

Bitcoin’s last stand - by Ulrich Bindseil and Jürgen Schaaf 

Amid the widespread fallout in crypto markets following the collapse of a major crypto exchange, The ECB Blog takes a look at where we stand with Bitcoin.

The financial industry should be wary of the long-term damage of promoting Bitcoin investments - despite the short-term profits they could make (even without their skin in the game). The negative impact on customer relations and the reputational damage to the entire industry could be enormous once Bitcoin investors will have made further losses.

The Long Read 📜

In the Rain, in the Cold, in the Dark - by Angel Di Maria

While the 2022 FIFA World Cup was Messi’s swansong, there were at least ten other players that helped realise Argentina’s dream. One of them is Angela di Maria - he scored the second goal in the exciting final.

Written in 2018 but especially relevant given last weekend’s events, this autobiographical piece is the story of grit, resilience and the desire to push for greatness despite all odds.

Publisher’s Parmesan 🧀

SBI YONO - India’s largest neobank

Neobanking has been a hot sector globally with multiple players coming up in each country claiming to transform the archaic banking networks. Be it Revolut/ Monzo in the UK, Nubank in Latin America, Chime in the US, or Jenius in Indonesia, you name the country, and you will have one there.

India was no different but with one major catch - getting a banking licence is not an easy process. RBI, the country’s central bank, has strict guidelines and issues licenses at an excruciatingly slow pace.

But this is India, and we have our ‘jugaad’ 😁 (loosely means makeshift). So, startups started tying up with banks to create neobanking frontends or to venture into ancillary services like forex cards to build beachheads for growth. Basically, traditional banks handled the banking while startups focussed on what they knew best - creating top-class user experience using state-of-the-art tech.

With this playbook, Indian neobanks managed to raise more than $750 Mn in the last couple of years with Open, an SME focussed neobank, emerging as India’s 100th unicorn. Despite the funding rush, India’s largest digital bank emerged from an unexpected corner - the century-old government-owned bank, the State Bank of India (SBI).

SBI, a listed behemoth with a market cap in excess of $65 Bn, is a global Fortune 500 company employing more than 250,000 people and generating more than $50 Bn in annual revenues. It has 450M users and boasts of the deepest distribution network across India. At the same time, it is also notorious for its poor customer service, long waiting times and creaky tech infrastructure. It is ironic that India’s largest neobank emerged from within the SBI system.

What was SBI’s vision behind this venture? 

SBI’s digital banking app YONO (You Only Need One), was born out of their initial idea of creating an ‘Online Marketplace’ to attract millennials. Several consultants and external advisors were invited to share their thoughts on how to build this marketplace. A team from McKinsey proposed the following:

• Focus on building products for the bank’s entire user base of 450 Mn, instead of only trying to attract new millennial customers. This had two tenets:

  • Ensure that the sales of both core banking products and JV or subsidiary products should happen through this platform.

  • Build an online marketplace for meeting needs of customers ‘beyond the financial services’.

• Next was to improve productivity and to reduce cost–income ratios through a complete redesign of the customer journey. All user flows in the app had to be at least 100x better than the offline experience. For instance,

  • The existing account opening journey at the bank branches took about 60-70 minutes and required the customer and branch staff to fill in 58 fields. Leveraging Aadhaar, the new journey on the app could perform the entire task in 8-10 minutes, and reduce the number of manual fields to 14.

  • Payment flows that required more than ten clicks to complete earlier were re-designed to be done in three clicks.

YONO: The Success Story

Given its roots as a public sector enterprise, there were doubts about SBI’s ability to execute on its grand vision. But with help from McKinsey and IBM, the YONO app was launched in 2017.

Today, the YONO platform has more than 54 Mn active users, making it bigger than Nubank, the world’s largest venture-funded digital bank. It is one of the largest digital lenders in India, disbursing an average of INR 1,500-2,000 Cr ($200-250 Mn) in loans every month.

In fact, YONO has become the first digital bank in the world to break even in less than two years, and has also started contributing to the bank’s profits. And not just banking, the e-commerce marketplace built into the app, does an annualised GMV of $200 Mn!

As per some estimates, if YONO were a standalone startup, it would be valued between $40-50 Bn - a decacorn in its own right.

YONO 2.0

Despite having built the largest digital bank in the country, SBI is still not done. As part of the YONO 2.0 vision, it wants to roll out a leaner tech architecture and further streamline customer journeys, with hyper-personalized customer-centric design while continuing to capture value from the ecosystem. It is also working on extending YONO’s capabilities to business users.

Some argue that this initiative will further bring down the costs, by upto 70% in the steady state, compared with traditional operations. Given fewer constraints related to legacy technology, it will allow SBI to test concepts at lower risk and then attempt to transform their entire business.

That’s all for this week. If you enjoyed this edition, we’d really appreciate if you shared it with a friend, family member or colleague.

We’ll be back in your inbox 2 pm IST next Wednesday. Till then, have a productive week!

Peeyush and Mohit

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