YourStory in conversation with entrepreneur Adhil Shetty on the business idea behind BankBazaar.com.
Adhil, introduce us to BankBazaar.
BankBazaar.com is an online portal that offers consumers the lowest rates on loans through a totally online process, without having to actually go to various banks to compare loan offers and interest rates.
How is BankBazaar different from other bank loan information aggregators?
On BankBazaar.com, loan-seekers can instantly get lowest rates, including interest rate, all fees and customer service parameters, thereby dispelling fears relating to hidden fees. To make it easy to compare between different offers, customers are shown the ‘total cost’ of each eligible offer for the selected loan tenure and loan amount.
We ensure that there are no hidden costs by even exposing secondary fees, normally not incorporated into the total cost of the loan as they aren’t applicable to all customers. For example, we even factor in things like bounced cheque fees.
We believe we are among the cheapest distribution channels for financial institutions and our service enables them to offer loans on our site at a cost lower than they do at their own bank branches.
For the financial institutions, loan application and disbursement processing is an expensive process as they need to build branches, incur staff salary costs as well as pay the loan agents. For the loan-seekers, there is a need to understand all the terms of the loan, in addition to interest rate, and parameters such as fees and pre-payment terms.
By using technology, we cut physical transaction costs.
How did the business idea for BankBazaar come about?
We were looking for a home loan in Chennai in early 2007 and found it really hard to get a good deal. We had to go to bank offices during working hours, stand in line and fill in forms to get a quote. Once we got the quotes, we still found it hard to compare them as banks quoted interest rates in different ways and they never spelled out the various fees associated with the home loan.
Additionally, we learnt that banks didn’t usually start off offering us the best rate that we were eligible for. They’d usually try and charge us a higher rate and we had to bargain hard to get them to lower their rates. At the end of a week, we still weren’t convinced that we were getting the best deal on the home loan. Many people we spoke to had had similar experiences. Hence, we brainstormed on whether we could make this process more convenient and the more we spoke about it, the more we became convinced that we could. Thus, we founded BankBazaar.com.
Tell us about your background.
Prior to BankBazaar.com, I lived in New York City and managed Deloitte Touche Tomahatsu's US East alliances with the world's leading information management company. Before that, I worked with Cisco Systems as an engineer in Bangalore and San Jose. I have a Master’s degree in international relations with a specialization in international finance and business from Columbia University in the city of New York, and a Bachelor’s degree in engineering from the College of Engineering Guindy, Anna University.
What is BankBazaar’s revenue model? We understand that you have been funded. Can you throw some light on that?We charge the financial institutions a small fee for every loan disbursed through us. This is amongst the lowest in the industry. Using BankBazaar.com is completely free for customers today and will always remain so.
And yes, we are backed up by a fabulous group of investors. $1 million has been invested by AVT InfoTech and Walden International (WI) has put in $6 million.
What are the challenges that you faced while developing your solutions? How did you overcome those challenges?
The biggest challenge is to convince the financial institutions (FIs) that the Indian market is ready for loan applications online. We had to make them understand the growing trends that customers are increasingly booking flight tickets online, paying electricity bills online and finding their life partner’s online. We had to get the FIs to understand that the benefits of instantly comparing loan offers online will find acceptance among the Indian audience.
How big is the team behind BankBazaar? Are you looking at hiring?
Arjun Shetty, Rati Rajkumar and I are the founders. We are a team of 62. BankBazaar.com comprises of a group of US-returned and home-grown entrepreneurs from Deloitte, Amazon.com, Capital One, Kraft, Microsoft and includes alumni from College of Engineering Guindy, REC-NIT Trichy, Columbia University, Georgia Tech, Virginia Tech and BITS Pilani. Our job openings are available athttp://www.bankbazaar.com/careers.html.
How has the journey been so far? Let us know about your expansion plans.
BankBazaar.com is using online marketing strategies to build awareness of the site among the online population. Across all sites we get around1milllion visitors per month, 5000 transactions per month and 90% in urban areas. We currently have tied-up with HDFC Bank, Axis Bank, ICICI Bank, HDFC Limited, Fullerton, Standard Chartered Bank, ING and others across personal loans, home loans and auto loans.
Once customers start using our site and get a firsthand feel of the cost savings that can be generated through this online model, we expect that there will be a huge migration of consumers from channels such as bank branches and agents to BankBazaar.com. Five years from now, we see ourselves as the ‘MakeMyTrip’ of financial services.
We are targeting to partner with over a dozen financial institutions to get the best deals for loan seekers across the credit spectrum.
We at YourStory.in wish Adhil and the BankBazaar team much success. To know more about this venture, check outhttp://www.bankbazaar.com/. Also, let us know your views on this story by writing to us at firstname.lastname@example.org.