State Bank of India and MakeMyTrip.com signed an agreement today which will see the travel portal make use of India’s biggest bank’s infrastructure to meet its finance and banking related requirements related to its online travel portal.
“SBI aims at becoming a “One Stop” solution provider for the entire range of financial needs of e-Commerce players as well as our customers in the market,” said Arundhati Bhattacharya, Chairman, SBI. “In the digital era, it is very important that we stay ahead of the curve and such strategic alliances are steps towards the right direction.”
The move is similar to other such efforts by SBI to ‘keep up with the times’ and not be left behind by more nimble private sector players like ICICI Bank and Axis Bank.
While ICICI and Axis had a early start in offering such tie-ups with various companies, SBI has been going aggressively after such deals in the last one year. It recently announced a tie-up with Reliance Industries’ Reliance Jio to offer payment and other services to the telecom operators’ customers.
SBI is India’s largest bank and has presence even in the most remote parts of the country, a distinction that makes it attractive for prospective partners.
“This strategic association will enable both partners to capitalize on the opportunity presented by India’s burgeoning internet economy that is driven by boost in adoption of e-commerce and m-commerce,” the bank said.
The two partners will seek to unlock the array of business opportunities available in this segment across various spheres.
SBI wants to be the “go-to” bank for all of customers’ needs, while MakeMyTrip wants to expand via offline-to-online adoption in the Hotels & Packages business.
The two will target hotels, travel agents, tour operators besides end-consumers and SBI’s bank customers.
Deep Kalra, Chairman & Group CEO – MakeMyTrip, elaborated, “We already command nearly 50% of the online travel market-share in India. The key lever of future growth will be offline-to-online, or rather, offline-to-mobile shift.”
MakeMyTrip deals with over 24,000 hotels and offers Rail & Bus bookings. It is hoping to expand into small towns with the help of the tie-up with SBI.
They will offer EMIs on purchase of holidays & international travel, customized travel products like Forex cards and travel products that inspire SBI customers to travel. MakeMyTrip customers will also be able to access special offers from SBI on debit/credit cards and personal financing.
MakeMyTrip will facilitate 2-3 star hotels, franchisees, Trade & Travel partners to get access to SBI products, loans, bank guarantees, PoS payment instruments at preferential rates.
With increasing disposable household incomes, consumers are undertaking more frequent travels and vacations.
In addition, with growth in e-commerce and smartphones, the online travel segment is expected to grow at a much faster rate.
According to PhocusWright, India is forecasted to have 1 billion online users by 2030. This growth, led by one of the youngest global populations who love their smartphones, is expected to add 300 million new online shoppers in the same time frame.
At the same time, India’s travel market is forecasted to grow to US$ 27.5 Bn by 2016 (at a CAGR of 12% from 2014-2016), with growth of online markets at 1.5x the total market. PhocusWright also estimates MakeMyTrip’s market-share at 47%.
Domestic travellers are expected to contribute around 84.7% of total tourism revenue by 2024 according to a report by Corporate Catalyst (India) Pvt. Ltd.