Banks have been closely watching the e-commerce sector evolve, sitting at the fence. The only participation was about processing payments (that too partially). But, with the growth in the e-commerce sector at an all-time high (especially in some regions), banks wanted a bigger pie of the transactions. So how do you do more in an area where you don't have expertise? By setting up stores online?
In a move to ensure that the transactions are not routed through any third-party website (payment gateways, other competitors), banks are trying their hands at housing mini online stores. By setting up a platform for online stores, the banks themselves act as payment gateways and keep the transaction within their house. Banks get the opportunity to leverage the interchange fees charged by payment gateways on other e-commerce websites. Listed below are some examples of banks which have explored e-commerce as an opportunity:
Banks in China have already forayed into the e-commerce space by setting up stores online. In June 2012, China Construction Bank launched its e-commerce platform buy.ccb.com to further its presence in the Internet finance sector, while Agricultural Bank of China rolled out similar e-commerce marketplaces in April 2013. In addition, Bank of Communications launched an e-commerce site called Jiaobohui that has built a presence of its own on Tmall, China’s largest e-commerce site and a unit of Alibaba.
The RBI’s thought of linking e-commerce platforms to the banking sector has boosted banks to move into the c-commerce sectors in India. HDFC Bank has already announced its venture of setting up SmartBuy, a platform through the bank’s website where customers can buy groceries, shoes, clothes, and other products from other e-commerce sites displayed on the bank’s website. The bank’s online platform also aims to provide the best deals to its customers from other e-commerce players such as Snapdeal, Flipkart, and Amazon.
HDFC Bank’s SmartBuy is a platform for displaying offers extended by merchants to HDFC Bank's Customers. HDFC Bank will not earn fees or commissions on customers viewing or purchasing the products sold by the merchants. However, the bank merely facilitates the payment to its customers by providing payment gateway services.
Bank of America has also set up its Bank of America Store, which offers various products from clothing to office supplies. Washington Trust Bank sells products from its own brand like bags, wallets, t-shirts, and accessories on estoresbyzome.com.
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