The success story of Bank Bazaar

Bank Bazaar.com was founded in 2008 by a group of young engineers, who had worked in some of the leading companies in the United States like Deloitte, Amazon.com, Capital One and Microsoft.

The founders who were alumni of some of the most reputed universities in India and United States - Guindy Engineering College, REC-Trichy, BITS-Pilani, Columbia University, Georgia Tech and Virginia Tech –  decided to make life easier for people who faced delays in getting loans sanctioned from banks.

From disbursing loans to the tune of Rs 200 crore (Rs 2 billion) in the first year, today, after four years, annual disbursals have touched Rs 3,000 crore (Rs 30 billion).

In just two years, Bank Bazaar.com was chosen as one of the 'Hottest Startups' in India by 'Business Today'. The company which started with a capital of Rs 45 lakh and 6 people has 130 employees and 60 consultants today.

Adhil Shetty, the Founder and CEO talks about the amazing success story of Bank Bazaar.com.

You did your higher studies in the US and then were working there. Why did you decide to come back to India to be an entrepreneur?

My brother Arjun and his wife Rati had come to Chennai and were trying to take a home loan. They went through all the difficulties Indian consumers go through while trying to take a loan.

Three major difficulties were, agents promise a lot but when it comes to approval for a low interest rate, they don't deliver. Second, it is a very opaque market that you do not know what different banks are doing. So, you can't bargain.

Third is, it's a very paper intensive process. You need to submit bank statements, pay slips, etc of six months and sign in 30 different applications.

This made Arjun and his wife Rati think of an idea that can make the lives of those who want a loan, easier.

Photographs: Sreeram Selvaraj

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How long did it take you to come to the decision that you would come back to India and start a company based on the idea?

It took me 2 weeks. We thought about the idea, spoke to a few people, and in two weeks, we moved back to Chennai to start a company.

Why did you choose Chennai?

We studied in the Guindy Engineering College, Chennai. So, a lot of our seniors and juniors showed interest in joining the company. We were familiar with this city. That was how Chennai was chosen.

How did you come with the name Bank Bazaar?

We wanted a catchy name that people would remember. We thought Bank Bazaar was a nice name. It's a name people can relate to across India. The name signifies a choice of banks and a comparison of banks.

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How much capital did you invest to start the company?

In 2008, we put in an initial capital of Rs 45 lakh and started Bank Bazaar with a small team of six people.

We approached people who were either with us or seniors at Guindy or worked with us in the US. Approaching them was almost like pitching the idea to an investor.

We had to answer a lot of questions but the good thing was, we could bring together a great team. Today, we have 130 full-time employees and 60 consultants.

As all of us had worked for big companies and with this background, we organised ourselves as if we were a big company.

We built the product with the capital and got a few banks to sign with us.

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How difficult was it to convince the banks to sign with you?

It was very difficult because it was a new idea for the banks. But we were fortunate to meet the banks who were slowly realising the power of the Internet.

We went to them with the prototype of the website and showed them the benefits they could get. We also told them that we might be a new company but our team had a good exposure working with big companies. We also had some stalwarts in the field as our Board of Advisors.

The first contract we signed up was with ING Vysya and soon after that, HDFC Bank. Yes, the first client was the toughest to get but after that, it becomes easier with each client.

Like it is the hardest to take the first step but once you take that step, the rest of the journey becomes easier. HDFC Bank is our longest standing client as ING stopped lending during the financial crisis.

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How were the first few months?

It was very difficult. We were starting from scratch with no support system and no source of income and expenses going up. It was a very, very stressful period.

What kept you going when things were really tough?

In the beginning, it is the idea, and you want to succeed no matter what the difficulties are. The shift happens after a couple of years.

Today, I feel good because we have one of the best teams. They are the most skilled people. It shows we have a team and the process in place to deal with issues. So, nowadays, it is not that stressful.

Today, when a problem comes up, we look at the process to deal with the problem; it's not about individuals any more.

Earlier, the confidence came from the idea and passion but today, the confidence comes from people and the process. 

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How does Bank Bazaar.com work?

The idea was to change the huge paper work in India. Our idea was to start an online website that will be integrated with banks. Because of the electronic processing, we could give a comparison of say, five best deals in the market.
If a person wants to apply, he can do so online and also get it processed online. That was the basic idea.

We have a product wherein a customer can run a search for a loan that he needs and we show him the five best deals in the market. You can choose one deal, apply for it and get the approval in 7 minutes! The process which usually takes 7 days is done in 7 minutes. He will get an approval from the bank saying that your loan has been sanctioned.

We are fully integrated electronically with 6 banks like HDFC, ICICI, Axis, etc. We get commission from the bank and we don't charge the customers.

How did customers come to your site in the beginning?

We advertised aggressively on the internet. Our initial customers were from advertising on Google.

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You also could raise funding soon after the company was launched. How did you manage that?

We started with Rs 45 lakh in February 2008. By July-August, we raised our first round of funding of Rs 4 crore (rs 40 million) from AVT Infotech. It is the belief in the idea and the team that made them fund the company so early. 

In March 2011, we had our second round of funding of Rs 28 crore (Rs 280 million) from Walden International.

This time, it was because of our growth and the size of the business that we were doing that we got the funding.  At that time, we were only 50 people but after this, we scaled up much more rapidly.

Though we are a small company, 17 graduates from IIT Kharagpur joined us last year.

What is the profile of your customers?

Our customers are from urban areas in the age group of 30-45 years and predominantly men. 

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How was the company's growth every year?

Typically, we were growing by 2-3 times. We haven't grown less than 2 times in any year.

This year, we are slated to disburse Rs 3,000 crore (Rs 30 billion) in retail loans in the loan market of Rs 300,000 crore (Rs 3 trillion) a year. You can say we have 10 per cent market share in India.

The first thing we want to do in the next few years is, make people think of us when they think of a loan. Then, we want to introduce other financial products like insurance.

What will be your advice to young entrepreneurs with new ideas?

The most important thing is to find a good team. They must remember that starting maybe easy but execution takes a long time. It takes 5-10 years to build a world class company. So, be patient.