India’s banking landscape has undergone a seismic shift over the past decade — from the days of manual passbooks and crowded branches to today’s reality of biometric authentication, mobile-first experiences, and instant digital transactions. This evolution was not just technological — it was transformational, extending the reach of financial services into the remotest corners of the country.

A pivotal moment in this journey came in 2015, when the Reserve Bank of India introduced payments banks as a new class of institutions designed to foster financial inclusion. These financial institutions could accept deposits (now up to INR 2 lakh), enable digital payments, and operate without physical branches—making them ideal for a country as vast, diverse, and digitally inclined as India.

At the time, there was considerable skepticism about whether the model could be sustainable. But that debate is no longer relevant. As the dust settles, the Payments Bank ecosystem is now defined less by ambition and more by execution. The initial rush has passed, the hype has cooled, and what remains is a resilient group of challengers that are not only fulfilling the original inclusion mandate but are starting to prove their business viability in real terms.

Of the 11 licences allotted, now 6 remain operational — Airtel Payments Bank, India Post Payments Bank, Fino Payments Bank, NSDL Payments Bank, Jio Payments Bank, and Paytm Payments Bank. With the first three having demonstrated that inclusion-driven financial models can achieve financial sustainability. But among these, Airtel Payments Bank, launched as the first-ever payments bank in November 2016, has carved out a distinctive role. Over the years it has built a technology first low-cost model that serves customers digitally and through a network of banking points.

How did Airtel Payments Bank build this model? Before delving deeper into its strategy, it is worth tracing the key shifts that shaped the country’s banking landscape in the last decade.

A Payments Bank Model That Worked For India

In the past five to six years, payments banks have established themselves as a critical component of India’s digitally driven financial infrastructure. Reaching an estimated 15-20 Cr users each month, these institutions now serve a broader customer base than the country’s small finance banks (SFBs). However, they operate under tighter regulatory constraints and with far less fanfare.

Often labelled as ‘non-digital’ entities due to their cash-intensive customer base, payments banks have effectively digitalised transactions at the grassroots. By partnering and onboarding local kirana stores, pharmacies and mobile outlets as banking outlets, they brought banking services at the doorstep of underserved users and enabled seamless mobile transactions even in rural belts where cash is king.

In the absence of a full-fledged digital banking framework across the country, Airtel Payments Bank has emerged as a functional proxy, a telecom-backed, tech-led institution operating under a payments bank licence but behaving like a digital-only bank. Its success stems from three strategic advantages — deep rural reach, sharp urban segmentation and a decisive monetisation model.

Its business strategy hinges on serving three distinct customer segments. In rural India, Airtel Payments Bank is solving the problem of access and trust. The Bank has built the world’s largest banking point network, with over 5 Lakh active banking points, offering assisted access to banking and other financial services near to the homes of rural underserved customers. With customers at heart, the Bank creates products and solutions that serve the evolving financial needs of the customers. This allowed Airtel Payment Bank to scale quickly and efficiently at 1/30th of the cost of traditional banks, sidestepping high overhead costs and entering markets where legacy banks often found their operations unviable.

In digitally savvy urban markets, it positioned itself as a secure, digital-first secondary account for daily payments. The Bank’s Safe Second Account enables customers to keep their primary savings protected, while they freely use the Airtel Payments Bank savings account as their second account for everyday digital payment needs. This way, the main savings remain insulated from fraud. A user can easily open a Safe Second Account within minutes through the Banking section on the Airtel........

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