State Bank of India, the country’s biggest lender, is not planning to hive off its digital app, YONO [You Only Need One], into a separate fintech entity anytime soon. Instead, the bank is looking at shaping the digital platform, launched in 2017, more on the lines of a fintech super app. “YONO is a super app as it has three broad components: First, it offers pure-play banking, second, it is a financial superstore that offers products of our group companies and, third, it is a market place where our partner merchants can showcase their products,” chairman Dinesh Khara told Fortune India in an exclusive interview.
While Khara revealed that the bank has invested around Rs 400-500 crore as capital in YONO, it has not yet done a formal valuation of the venture. “We are not looking to monetise the investment as of now, but some time later,” said Khara. Incidentally, outgoing chairman Rajnish Kumar had commented in September 2020 that given the valuations the current breed of startups were fetching, YONO could easily be valued at $40-50 billion. Though Khara is mum on details, and nor does the bank’s FY21 annual report detail any numbers, the bank, according to a Credit Suisse report, has started preparing separate financials for YONO. In fact, the management expected YONO to post a profit of ₹1,000 crore in FY21, states the report. The reason behind the growing buzz around YONO is also because of the way SBI, which began online banking two decades ago, has successfully leveraged the app to offer asset and liability products across its three key segments: retail, business, and agri.
For instance, it offers KCC [Kisan Credit Card] loans and mandi related information under YONO Agri. In FY21, 2.89 lakh KCC accounts with aggregate limits of ₹4,972 crore were reviewed through the YONO Krishi-online process. Now it is looking at YONO Business as a means to tap into SME clientele by helping, for example, open letter of credit (LCs). Yono now processes around 85% of LCs, reducing turnaround time from two days to one. “Now our efforts are to streamline all our services and make it a comprehensive offering, and that’s when we will unveil Yono 2,” reveals Khara.
The bank is looking to launch YONO 2.0 over the next three to six months. Initially, launched as a vehicle for offering personal banking related services, YONO was later extended to overseas customers and, currently, operates in seven countries. “It has become a platform for raising liabilities in foreign geographies wherever our footprints were limited and customers spread out,” explained Khara. Last fiscal, the bank managed to onboard 40,000 overseas customers on the platform and is on course to enter Singapore, Bahrain, South Africa, and the U.S. by the end of the current fiscal. In FY21, YONO proved to be a blessing in disguise for the bank when the lockdown impacted branch operations. During the pandemic-stricken year, the bank disbursed ₹5,000 crore of personal loans over three quarters.
“The pace is almost the same this year [FY22] also. We would like to leverage YONO as a platform and sweat it well. We would rather use it to create a digital bank within the bank,” mentions Khara. The bank currently has a personal loan book of ₹2 lakh crore, of which 80% comprises employees from the Centre, state governments, defence and public enterprises. “We have tapped only 20% of our holders so, going forward, we have got a huge opportunity,” mentions Khara. In FY21, 13.57 lakh pre-approved personal loans worth ₹21,268 crore were sanctioned through YONO, while 51.81 lakh digital savings accounts were opened. In the near future, the bank is planning to extend Yono as a white label platform to other players.
For instance, small finance finance banks, rural banks and cooperative banks can build their suite of products on the YONO platform. Without revealing any specific time line, Khara said, “When we embark on the next journey of YONO 2 is when we will think of a white label offering. We would first like to fully exploit the potential of Yono and only then think of whether we can make the basic model available to the industry.”
YONO, as an independent open banking platform, will open its backend to other banks on pay per use model. However, according to Credit Suisse, while intended primarily for other PSU banks that lack good digital platforms, YONO could also enable private fintech companies to integrate banking features or build neo-banks on top of it. Currently, of SBI’s 450 million-plus customers, only 4 million have registered on YONO even as 90 million of its customers are engaged in online banking activity. Khara believes that eventually these 90 million customers would migrate to YONO. In fact, the SBI chairman feels the number of users will be much higher than the 90 million, as corporate customers, too, would migrate to the platform.
“Our corporate internet banking wasn’t as popular as our retail internet banking. But with YONO business, I think corporate clients will also come on board, so I expect that it [YONO user base] will go beyond that [90 million].” As of March 2021, YONO had clocked 70.5 million downloads, across Android and iOS devices, with 37.1 million registrations and 10 million average daily logins. In FY21, over 100 merchant partners were live on YONO’s B2C market place platform (including Mitra and Mandi), clocking 11.92 lakh transactions worth ₹641 crore in gross merchandise value.