#6 | Naman — Millennial Banking — Part 1

by Soumitro Datta and Dharmesh Ba

Short Story

Naman is a fresh MBA graduate with 3 years of work experience in Sales. He is back home in Bengaluru after finishing his MBA in Mumbai and is currently looking for a job. Early into the first COVID-19 lockdown, the task seems challenging, but Naman is optimistic. He looks up to his father as a role model, respects where he has come from and is grateful for the lifestyle he has provided for their family. At this stage in his career, he hasn’t quantified success in his future in terms of salary or assets, but he has a desire to be financially independent with the ability to travel widely. He also enjoys reading and playing poker in his spare time and has devoted time and resources to both these interests, among others. In this story, we shall take a look at his financial journey in relation to his adoption of technology.

Banking

• Naman has 2 active bank accounts. He opened the first bank account with IDBI Bank. It primarily functioned as a salary account and was recommended by his first employer.

• He opened the second bank account with HDFC Bank. It is presently his primary account in terms of usage. He opened this account because of an interesting combination of constraints.

S: Why did you open another account with HDFC bank?
N: There was an issue with my IDBI debit card and I was supposed to actually go and get it fixed but the time that it would have taken for me to resolve that issue was higher than the time it takes to open a new bank account and get a new debit card. So I went to HDFC and opened a new account because I was going to Mumbai and I needed an active Debit card quickly. So for my IDBI account I do not have a debit card, I only use it with UPI. And for my HDFC account I have both Debit Card and UPI.

S: What was the issue with your Debit card?
N: I think the new debit cards came out with that electronic chip on it. So I had the old debit card and the magnetic strip had sort of worn off. So I had to apply for a new debit card and for that to come there was a manual process that I had to go through. So instead of that I just opted to open a new account because I was leaving within 2–3 days for Mumbai. I had kept putting it off too obviously, so eventually making a new account seemed like the best option in the time I had.

• UPI: He pays for most of his online purchases via UPI apps, including the purchase of his current smartphone on Amazon as well as the annual Amazon Prime subscription fee.
• Naman has kept HDFC as the primary bank account on his UPI apps.

• In a practice that started during his MBA, his father transfers a fixed amount every month to his IDBI account for his personal expenses. Naman started rationing his monthly expenditure using HDFC as his primary expense account when he was living in Mumbai, where he was paying rent as well —

S: Do you have a habit of budgeting your expenses?
N: Earlier when I was in Mumbai, apart from my rent I tried not to spend more than a fixed amount every month. Before that when I was working I think I wasn’t as prudent as I should have been possibly. But in Mumbai I was looking at my expenses a little more because I wasn’t earning.

S: How did you ensure that you did not spend more than a fixed amount?
N: I downloaded a few apps when I was in Mumbai, but then I could not go through the effort of manually recording everything so I just transferred a fixed amount into my HDFC account. Then I basically used that account for my daily expenses. So I could monitor and control my expenses a little better.

• After returning to Bengaluru from Mumbai while looking for his next job, Naman still uses this model to regulate his expenses —

Expenses

• Naman candidly admits that he does not have much expenditure at the moment because he is staying at home —

S: What are your major expenses these days?
N: Right now because I’m at home I don’t have too many expenses apart from the occasional Big Basket orders that I place and random groceries if I go and pick them up myself. I also play some online games.

S: Any other expenses?
N: I also pay the WiFi bill and do Mobile Recharges through UPI.

• Having embraced the convenience of UPI payments, Naman has also become its earnest advocate —

S: How often do you withdraw cash?
N:I think the frequency of withdrawing cash has reduced over the years.We even got our cook in Mumbai to start using UPI.

Savings

• Encouraged by a teller at the bank, Naman started an RD when he opened his bank account with HDFC —

S: How did the teller convince you to make a Recurring Deposit?
N: He just said why don’t you just sort of put away 3–4 thousand rupees a month and get it back with a nice interest payment at the end of the year? It made sense to me at that time. It was there for a year and the amount was auto debited from my account every month.

Insurance

• Naman has his own Health Insurance. His father is presently covering the annual premium.
• He purchased insurance for his 2 wheeler on policybazaar.com after his first plan had expired —

S: Why did you get your Vehicle Insurance from there?
N: It seemed very convenient to do that. Plus it does not require high involvement, I guess. It didn’t seem like too much of a risk to not think about it too much.

S: Why did you take a new policy instead of renewing the old one?
N: That insurance had expired and I got into an argument with a cop and I told him I hadn’t needed the first insurance I had. And he said you can’t do that, you need to have an insurance so I said okay fine, I’ll get an insurance. So I got an insurance.

S: Do you carry the policy document with you?
N: I have saved it on my email id

Investments

• Doing an MBA nudged Naman into thinking about various aspects of his own personal wealth and finances —

S: Are there any events you are planning for in terms of your investments?
N: In terms of buying a home and all, I don’t think I would want to buy a home because we have a home so I am lucky that way. Maybe saving up to buy a vehicle at some point. But that also feels like splurging so I am not sure. But yes I have considered buying a vehicle. So maybe I need to save up for that.

S: Any other goals?
N: I don’t have any savings right now. You need to have your savings and plan for when you retire and stuff like that. I don’t have a number in mind yet, but I do have the means to arrive at that number. I just haven’t sat down and done it yet.

• Although Tax Saving wasn’t a priority in the 3 years he was working before his MBA, the course made him consider it more seriously —

S: Have you discussed investments with family and friends?
N: Not family, with friends because in MBA we had subjects related to this and so we discussed it. There was a subject called ‘Wealth Management’ where they talked about tax saving.

S: While you were working, did you think about tax saving?
N: Not too much because it was only in the third year (of my employment) that my salary crossed the threshold where you had to look at tax deductions but before that the salary didn’t amount to that much where I had to worry about it. But when I had a job offer from my college then I started thinking about tax savings and started reading up about Mutual Funds and all.

• Once he starts earning, Naman plans to start his investment journey with Mutual Funds, specifically SIPs —

S: Do you have any short term goals about your personal finances?
N: Short term goals in case of my financials would be to start investing soon because I don’t really have any investments yet. So I think I have to do that as soon as possible. I want to sort of get into SIPs so once I start earning I’ll look into that.

S: Why SIPs in particular?
N: Because it takes away the part where you have to actively invest. It is a more passive form of investing. It auto debits and there are different funds you can decide and allocate different budgets for different funds and all that.

S: Have you checked them out online?
N: When I was working between 2015–18 I did see SIP Calculators that you can use to estimate returns and think about how much to invest.

• Naman has taken a small step in this direction by installing the Zerodha app on his phone —

S: Do you have any apps on your phone related to investments?
N: I do have a Zerodha account for investing on that kite app. I have that for the stock market thing which I recently started. I made my account there roughly 3 months ago. So I have put money into the Zerodha account for investing in stock markets but I haven’t actually placed an order yet.

S: What nudged you into checking it out?
N: I saw a few of my friends doing it and when I was trying to read about the financial aspects I thought that maybe I could give it a shot.

Credit History

• Naman has accessed credit in 3 distinct forms and in correspondingly diverse circumstances as illustrated in the first half of the diagram below

• On using the Pay Later (LazyPay) on Swiggy —

S: When did you start using LazyPay?
N: I used LazyPay extensively in Mumbai when I used to place orders on Swiggy. It is more convenient — you can pay after 7 days and it saves you that minute or 30 seconds that it takes you to go into your UPI and pay.

S: Did you make those payments every week?
N: I should have been doing that but I wasn’t. They send you messages so based on that I used to pay them on the due date. I did incur their late fee a few times, actually quite a few times, at least 5 times actually.

• On the Shopping EMI Loan he took while buying a product on Amazon —

S: Why did you go for the EMI payment option?
N: It was costly and I didn’t have enough balance in my account

• On the Emergency Personal Loan he took when he missed a flight at the Airport —

S: Have you taken any loans from friends?
N: I borrowed money to book a flight. I missed my flight and I did not have enough money in my account to book another ticket so I requested my friend to transfer money through UPI so that I could pay for the new ticket.

S: How did you repay him? Were any terms of repayment discussed?
N: No there was no discussion of terms and all. I paid him back within a few months in small instalments.

• He is open to availing larger amounts of formal credit from multiple sources (as shown in the second half of the above diagram) for future needs like a Vehicle Loan. However, he has reservations when it comes to borrowing from NBFCs in particular , although the reason isn’t very specific —

S: Would you consider taking a loan from an NBFC?
N: I don’t think I would take a loan from a Non-banking Institution although I can’t say exactly why…

S: Why wouldn’t you consider taking one if it is a well established brand?
N: Fair question I guess…actually I could just take the loan wherever its cheaper.

Technology Adoption

• Smartphones: Naman has been using them since 2013. He has used 6–7 phones since then and purchased his current phone from Amazon during a Diwali Sale where he got a good discount. He has been using it for 2 years.

• Amazon Prime: He has had an active subscription for 4–5 years. In addition to making a bulk of his eCommerce purchases on Amazon, he is also an active user of the Amazon Video and Amazon Music apps.

This is Part 1 in a series of 2 articles about Naman.

In Part 2, we will examine his experiences, models and thoughts when it comes to sharing his Personal Data and his privacy. We asked Naman what kind of personal data he was willing to share in order to obtain a Personal Loan, like the one he is thinking about taking for a 4 wheeler in the future.

This new focus comes from a project D91 Labs is presently undertaking called The Future of Data Sharing. We will be sharing more from this project in subsequent articles and material. You can follow us here on Medium and also on Twitter, Linkedin and Instagram for weekly updates.

Credits

• Questionnaire by Dharmesh Ba & Soumitro Datta
• Interview, Transcription & Story by Soumitro Datta
• Edited by Dharmesh Ba

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About the Research

This documentation is a result of the in-person interview, along with the participants’ consent. The interviews might be conducted in their native languages and translated to English in the best possible way to reach a large audience.

Disclaimer: The identities of people and places in this documentation have been changed to honour the privacy of the participants.

About D91 Labs

This research was executed and documented by D91 labs. D91 labs is an open-source initiative by setu.co to help Bharat build great fintech products. We organise and publish user research, insights, and frameworks for fintech in India. Please follow us on medium for more exciting stories and insights on Bharat.

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