SBI To Roll Out Standalone Digital Bank ‘Only YONO’ To Serve Tech-Savvy Customers

India’s largest bank, the State Bank of India (SBI), is planning to create a separate digital entity. As part of the plan, it is completely overhauling its banking app, YONO, to create a digital bank called ‘Only YONO’.

The change will come within the next 12-18 months, and SBI will move the existing YONO customers to Only YONO.

A notice by the bank read, “Only Yono is envisaged as the next generation of Yono which will make SBI ready to launch a completely digital bank with a leaner and modular architecture, more streamlined journeys, sleek and personalized customer-centric design and capturing value from ecosystems.”

The move comes as a part of the bank’s decision to be future-ready, as part of a notice issued by the bank.

“Though YONO has been adopted by customers at a very high pace, in order to consolidate its leadership position, it has been decided by the bank to give YONO a revamp as Only YONO not only in terms of features and functionality but also in terms of ease of use and customer experience,” the bank added.

The phenomenon of digital banks is nothing new – banks around the world have been playing around with the idea of having a separate digital entity to cater to the upcoming generation of tech-savvy customers. 

Currently, there are neobanks that operate as a layer 2 entity with a bank. While the neobank offers banking services to customers, in reality, it partners with a bank to actually handle the operations.

For example, Jupiter, a neobanking startup that recently raised $87 Mn, operates with Federal Bank as its partner. That means that a customer opening a bank account with Jupiter will actually have a bank account at a special branch in Federal Bank.

Currently, it seems like SBI will take a similar route with Only YONO, with the app being a neobanking entity with all the features of a digital bank while relying on SBI’s infrastructure to provide banking services such as accounts to the app’s customers.

A paper released by NITI Aayog in November last year recommended full-stack digital banks, a new class of regulated entities. However, there are no licencing regimes in place from RBI for the time being.

The paper had also presented a template for the regulatory framework for digital banks in India.

A McKinsey paper on digital banks noted, “The digital-only bank can operate at very low cost, up to 70% lower in steady-state compared with traditional operations. Creating such a separate entity often allows it to be launched faster, with fewer constraints related to legacy technology, and it allows banks to test concepts at lower risk before attempting to transform their entire business”.

Launched in 2017, SBI YONO has crossed 70.5 Mn downloads and has a user base of 37.09 Mn.

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