Paytm, India’s top mobile payments firm, gets approval to launch its own digital bank

India’s leading mobile payments company Paytm has announced that it has formally received permission from the Reserve Bank of India (RBI) to launch a digital bank.

The project has been a long-time coming for Paytm founder and CEO Vijay Shekhar Sharma, who today confirmed that he will “take a full-time executive role” in the venture. He didn’t provide a timeframe for the launch, but local media reported the bank could be introduced in just 30-60 days.

It’s been quite a ride for Sharma, who spun Paytm out of his original company, mobile content firm One97, in 2010. Paytm raised money from Ant Financial, the financial services affiliate from Alibaba, two years ago, before Alibaba itself invested itself some six months later at a $1 billion-plus valuation. The company has raised $760 million from investors to date, and it could be worth $6 billion according to reports of fresh investment.

The development of Paytm Payments Bank mirrors Alibaba and Ant Financial’s own course in China, where it is one of a number of top internet companies to expand into banking and financial services.

Alibaba’s MYbank came online in the summer of 2015 with the objective of serving those who are disenfranchised from the traditional banking system, and there’s very much the same aim of Paytm.

“At Paytm Payments Bank, our aim is to build a new business model in banking industry, focussed on bringing financial services to 100’s of millions of un-served or underserved Indians,” Sharma wrote in a blog post. “With power of technology and innovation-at-scale, we aim to become a benchmark in world of banking.”

In an interview in December, Sharma told TechCrunch that Paytm would lead on Ant Financial and Alibaba for its experiences in China, but it would plot its own course.

“Our bank is a very Indian affair,” he said. “But at the same point the learnings of their ecosystem [in China] tell us what we should do.”

Rather than disrupting the status quo, Paytm wants to make banking more accessible. Sharma said Paytm will work with traditional banks “to offer loans for lending [and] share data.” He positioned Paytm Payments Bank as a more user-friendly option for new customers, much like a friendlier funnel for customers, with a particular focus on modernizing the passbook and other systems for the digital era.

His ambitious longterm goal is for the bank to support half a billion people in India. Paytm is reportedly initially targeting 200 million banking and mobile wallet accounts within the next year.

“In India, [there are] only 200-300 million people with banking services,” Sharma added. “We should get aggressive on them then add services like lending, wealth management [in partnership] with existing players.

“It’s about new customers who haven’t been concerned with banking before [and] showing that there’s a business model based on transactions not just wealth management.”

Paytm had a breakout 2016, with its valuation rising to nearly $5 billion.

Already India’s top mobile banking service, it was the primary benefactor of the Indian government’s demonetization program — which saw 500 INR and 1,000 INR notes recalled — which spurred wider adoption among less traditional customers, including some key demographics that its digital bank will surely target.

Prior to the program, Paytm claimed some 135 million digital wallets in use, which, while a small number considering India’s billion-plus population, was double its nearest challenger and some 75 percent of all the country’s current digital wallets. Demonetization saw offline transactions jump from being just 15 percent of its volumes to 65 percent. With 12 days, Paytm had reached seven million transaction — $17.5 million in volume — per day. In an end-of-year wrap, the company said it had 177 million wallets by the end of December 2016.

“It’s the most incredible opportunity for any fintech company in India, not just us,” Sharma said. “The Prime Minister has kickstarted a digital revolution in this country.”

While it is well positioned, Paytm isn’t the only one moving towards digital banking in India. The company is one of 11 entities to be granted the RBI license while operator Airtel launched a digital bank trial back in November.