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Surviving Downturns and Bootstrapping a Fintech Giant | Sameer Mathur (ROINet)
40 Plays17 days ago
"You cannot grow the country's GDP if a third of your population is not a part of the financial inclusion piece."
Sameer Mathur highlights the critical link between financial inclusion and national economic growth, emphasizing the vast untapped potential of serving the underserved in India. This isn't just about business; it's about societal impact.
Sameer Mathur, Managing Director of ROINet Solutions, is a former Country Manager at HP who transitioned to entrepreneurship, driven by a desire to make a difference. He co-founded FIA Technology before starting ROINet, which has scaled to 70,000 Customer Service Points (CSPs), generating ₹350Cr in revenue, and employing 500 people. His story is about resilience, strategic pivots, and building a sustainable business in the challenging but rewarding fintech space.
Key Insights from the Conversation:
👉The "Assisted Model" Endures: Digital adoption in rural India is growing, but the need for human assistance at physical CSPs remains strong, driven by trust and familiarity.
👉Founder-Investor Synergy is Vital: Sameer's experience underscores the importance of having investors who are aligned with the company's long-term vision and provide support during challenging times.
👉Bootstrapping is Viable: ROINet's initial growth was fueled by internal resources and leveraging existing relationships, demonstrating the power of bootstrapping.
👉Product Diversification Fuels Growth: Expanding beyond basic banking services to include travel, investments, and lending is crucial for scaling in the financial inclusion space.
👉Hyperlocal approach wins: Creating a large business is about winning multiple, smaller battles. Having a hyperlocal strategy helps.
👉Social impact is a business advantage: ROINet's focus extends to the triple bottom line.
Chapters:
0:00:00 - Introduction: Sameer Mathur's Journey from Corporate to Startup
0:03:44 - The Pivotal MBA and the Financial Inclusion Opportunity
0:07:52 - Founding and Scaling FIA Technology: The BC Model
0:18:08 - Strategic Differences and the Decision to Leave FIA
0:20:28 - ROINet: Building a Diversified Fintech Platform
0:27:10 - The Technology Behind 70,000 Banking Points
0:32:52 - Scaling Sales and Reaching Rural India
0:41:44 - Key Leadership Lessons for Aspiring Founders
0:47:06 - Weathering the Storms: Downturns and Resilience
0:53:54 - Validating the Customer: Biometrics and Trust 0:56:27 - The Future of Fintech and ROINet's Expansion Plans
0:59:37 - Expanding Access to Credit: ROINet's Lending Strategy
#Fintech #India #FinancialInclusion #RuralIndia #Startup #Entrepreneurship #Bootstrapping #VentureCapital #Banking #ScaleUp #Leadership #DigitalIndia #Innovation #ImpactInvesting #SocialImpact #MSME #Lending #Insurance #Investment #BusinessGrowth
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Transcript
Introduction and Background of Samir Mathur
00:00:00
Speaker
Hi, I am Samir Mathur, co-founder and CEO of Royal Net Solutions. Our firm's prime objective is to ensure that we can provide financial services to millions of people in rural India.
00:00:12
Speaker
We were in existence for the last 10 years.
00:00:27
Speaker
ah Samir, you're the managing director or let me say the founder of ROI Net Solutions. um How did you get into entrepreneurship? I believe you became an entrepreneur fairly late in life. You're not like the the the the typical mold of an entrepreneur in most people's mind is a 20-something guy who ah starts off, but that's not the case with you. ah Take me through your journey.
00:00:55
Speaker
Yeah, so um I basically, my my last role, I've done a about close to about 15 years of experience in the corporate world. My last role in the corporate world was when I was working as a country manager with Hewlett Packard, and I was heading there, personal computer and the printing business in India.
00:01:13
Speaker
ah It was at that point of time that I'd done about 10 odd years with HP and I was in in a state of mind that I wanted to explore something different. wanted to look at moving to the US to to be a part of an HP worldwide team at that point of time. This is way back in 2009-2010.
00:01:32
Speaker
and So i one of the things I explored was I said, if I'm going to the US, then it possibly makes sense for me to maybe add an educational degree there. So it also kind of prepares me for bigger and better roles while I'm there.
00:01:46
Speaker
And that's how the idea of doing an MBA kind of came in. And I then kind of applied for the and one-year MBA program at MIT Sloan. And in 2010 is when I kind of ah left HP to do this particular program.
00:02:04
Speaker
ah It was a one-year program. but One question before the MBA. When you say country manager for printer and PCs, essentially it's a very sales-heavy role. a comprehensive role in the sense that it also included category, marketing, operations. So it was like a mini-CEO role of sorts.
00:02:30
Speaker
But you are most of the multinationals in India, US-based multinationals, the India the india arm is more an execution arm. ah You're right about the fact it's more sales heavy um because most of the product development and the strategy piece happens way back in the US. So yes, to your ah to your point, I would say yes, it's predominantly more sales heavy.
00:02:51
Speaker
HP, almost 90% of the business was B2B. So it it really did business through instead of partners, the B2C piece was quite small. um so So I think the e-com thing was just kind of kicking in then.
00:03:06
Speaker
But at the time when I was there, I would say 90% was still ah through partners. Okay, and understood. so So that gives me an idea of your skill sets, what you must, i assume you must have been good at ah enterprise, opening enterprise accounts and things like that. Got it.
00:03:22
Speaker
Okay. Building up, building up the channel network and those kind of things. Yeah. Okay. Okay. Okay. So yeah, your MIT journey. Yeah, so so the the the the the agreement had with HP then was that I would ah do this MBA program at MIT and ah post that I would transition into a global role ah in the US. So that was the way the journey was kind of a massage for me.
00:03:44
Speaker
ah oh So during the during my program, I think six or seven months into the program, I reached out to the HP global team and They kind of offered me a role of the global lead for a new set of products where they
Journey Back to India and Entrepreneurship
00:03:57
Speaker
were launching. They were getting in the world of mobile phones and world of tablets. And that part of time, HP was exploring of doing its own operating system, which I kind of found exciting. I said, you finally, we're trying do something within the company, which is which is unique, differentiated.
00:04:11
Speaker
You're not typically relying on the Microsofts and the intels of the world to drive your business. And so that's that's what the discussion kind of kind of initiated. And my idea was post the program, moving to Palo Alto and I cannot be a part of the global team.
00:04:26
Speaker
ah But as luck would have it, um these guys did launch, I think, somewhere in the December-January timeframe of 2009-2010. And unfortunately, those products bombed.
00:04:39
Speaker
They don't do well in the marketplace. The mobile mobile phone reception, the marketplace was terrible. ah The tablets didn't do well and the operating operating system wouldn't work. so um So things started just kind of falling by the wayside and it kind of also made me jittery. I said, I don't want to land up into a team which possibly could get disbanded in a few months time.
00:04:59
Speaker
So, yes, luck was habit. um I suddenly realized that that option was closing down and I had to explore ah there other avenues. So the thing was, I thought I'd come back to India.
00:05:11
Speaker
So while i was while I was studying there, I had two of my colleagues. There was one of my colleagues from who was studying at the Harvard Business School, a Pakistani guy by the name of Hiraj, solid tech guy, fantastic technology guy.
00:05:24
Speaker
And he was he and a couple of us were working on a project of looking at and addressing the issue of financial inclusion in the developing countries. At that point of time, we're looking at Africa and Pakistan and those kind of places.
00:05:38
Speaker
So it an academic project and I was part of it and I never thought that the project would lead anywhere. ah so So I remember the last day when I was kind of, everything was done, the convocation ceremony was done. I was kind of, Hiraj gave me a call and says, let's have a cup of coffee.
00:05:55
Speaker
I said, sure. and he said, dude, why don't you look at, why don't we look at setting up an enterprise of our own and do something ah for in this space in India?
00:06:07
Speaker
Of course, I wasn't too serious. I'd never thought of entrepreneurship as an as an as an avenue where mindset is all about working in corporates and getting a fixed salary at the end of the day. So I kind of parked it back over my mind. But I said, you know take that let's go explore an option and go back to India.
00:06:24
Speaker
So ah when I came back to India, I a few months with me. I was still discussing with the HP India team and the HP Singapore team for options. And i started meeting senior people in the financial services space, banks, etc., on this concept of financial inclusion. I'd heard about this model of business correspondence and how ah the government of Blake Arbiya was looking at having private players coming in and kind of being a part of the banking you know expansion system in India.
00:06:52
Speaker
So the general feedback which I got is very encouraging. um you know Most of the senior people said that there's a great time for people to set up enterprises of their own. And, you know, with... Yeah.
00:07:06
Speaker
and And, you know, this could be a good opportunity. The right timing, good opportunity. Government then had, n peace along with NPCI, created this JAM framework, which is Jandhan Aadhaar, the mobile framework, the JAM framework. And there was a bit of method to the madness of the structure which was being created.
00:07:25
Speaker
Jandhan was a bank account opening drive. Yeah, the basic savings, basic, yeah, the basic savings, basic deposit account. So, so It started, I mean, that's not interesting to I said, you know what, it seems to be a good space. It could be a space we could construct something large.
00:07:43
Speaker
ah The opportunity also seemed pretty pretty impressive because that point of time, almost 60-70% of the people in India did not have banking accounts and they don't have access to basic financial and services.
00:07:54
Speaker
And so it seemed to be a good problem to get into. I said, you know, it's a good problem to get into and try to to address. So we started speaking again. And the only thing that part of time, which was factor which I was cons considering was that, and I told these two please don't mind that I'll only come in if I get a fixed salary at the end of the day, because I also spent lot of money during that last 18 odd months. So I said, listen, I don't mind jumping in, but I need a fixed salary.
Understanding the Business Correspondent Model
00:08:24
Speaker
So if you can find an investor, I'll jump aboard. as luck would have it, we found an investor, we were putting the first check and hey presto, January 2000, we initiated the company and we started this entire expedition.
00:08:41
Speaker
like Did the you also have equal equity as the other two or because you were taking fixed salary so that... we we So what really happened was that Hiraj at that point of time, while he came to India, we realized he also realized that given the kind of equation that, you know, challenges there are between Pakistan and India, he did realize that it would be difficult for him to be but very seriously engaged into the India project because it's interesting. He came and he stayed in my house for 15 days.
00:09:10
Speaker
And when we would go and meet bankers and he would introduce himself and saying, I'm Hiraj from Pakistan. Suddenly, the you know everyone would be like, but you know who who are you and how do you come inside our office? you know well it was it was And i think he obviously felt the he felt the strain, he felt the friction, he felt the potential challenges which would come in if he comes with board.
00:09:35
Speaker
So, it's all yeah, we had a conversation and we said, okay, fine. I mean, as far India's concerned or for that money, even us going to Pakistan is concerned may not be a great idea. If at some point of time you do something global, then we could all kind of circle back.
00:09:48
Speaker
So he came up and obviously decided to stay away. it was me and my other colleague and two of us and the investor. And i was the largest shareholder then. It was all sweaty, pretty.
00:10:01
Speaker
And of course the others, the other two shared the balance. Okay. Okay. Okay. And what did you build over there? So FIA was predominantly, again, like I said, business gone in space. We we had types of multiple banks, more focused on public sector banks. And so we built up the VC infrastructure at that point of time. And ah it was it was an interesting journey because oh the banks were excited. were a lot of push from the government. So we got a lot of tailwinds to support our business.
00:10:35
Speaker
And I would say that part of time, we possibly one one of the most fortunate firms to have operationally broken even in the span of what, maybe eight, nine months. We were making money. Yeah, and we were over the moon because, you know, having a startup which breaks even in eight, nine months is something which is, you know, founders dream of.
00:10:53
Speaker
um Let me recap my understanding of the business correspondent space and you tell me if I understand it correctly. So it's a like a PPP, that public-private partnership kind of a model where you would want for financial inclusion, you would want banks to be present in every small village, town, e etc. and have ATMs, but it is prohibitively expensive to do that.
00:11:18
Speaker
So the business correspondent model is bringing in a private player to build distribution points for a bank. And how the business correspondent makes money is that for every transaction, the business correspondent charges the bank some service fees for that, which could be a fixed rupee value or a percentage of transaction.
00:11:41
Speaker
And typically, the BC is not it's not an exclusive thing. You can be a business correspondent from multiple banks, which then allows you more profitability.
00:11:52
Speaker
And typically, you... tie up with small entrepreneurs, retail shops, typically, who are your point of sale ah distributors who actually do the transactions for them, it's an additional source of revenue. So they get revenue from the tech company, which is done the tie up with the bank.
00:12:10
Speaker
So for them, it's an additional source of revenue, allows them to monetize better. For you, it is distribution points without any fixed investment, because the person already is running a store, he's already known in that area. So the customer acquisition cost, the distribution cost is all ah taken up by the the the distributor on ground, that the entrepreneur who's the the at the last mile.
00:12:35
Speaker
Is this correct? Absolutely. so You heard the nail on the head. think the starting point of the entire issue at hand was that this is way back in 2010, almost 60% of the population India
00:12:48
Speaker
did not have bank accounts and to that extent they don't have extra financial services. And ah if you look at the mathematical equation, if there are 6.5 lakh villages in India, only 50,000 villages had a bank branch of let's say a state bank of India and those kind of things.
00:13:03
Speaker
So, and the challenge with banks were having is that they did not have, they do not find it viable to move into a smaller location and set up a bank branch because it turned out to be loss making. So I think RBI really conceptualized the model saying that the way to crack the code is to tie with ah with a private player who could construct a mini bank branch kind of a model at a real fraction of the cost.
00:13:24
Speaker
so So the model worked out fine because then we worked on a model where we tied with Kiran Astor and those kind of players and at a fraction of the cost, to build up a banking infrastructure. There is one cost till you have like a customer acquisition cost, which is acquiring the entrepreneurs who are the point of sale people.
00:13:44
Speaker
Does it work out economically, the cost of having a sales? Because you need a sales team which goes out to these places and signs up people and all that. So so does the economics work out in terms of your customer acquisition cost versus the long term value of that acquiring that point of sale?
00:14:01
Speaker
Yeah, so so so um today, I mean, if you look at our sales infrastructure today, we've got about 250 people, salespeople on the ground, and we've got about 70,000 banking correspondent points.
00:14:13
Speaker
So typically, every guy manages close to about 300 points. So yes, from a cost-benefit analysis, it works out fine ah because those 300 points not only end up doing banking services, but they end up doing non-banking services, which which kind of ensure that at an individual level, you kind of broke in even and you make profits. So the model, is I think, conceptually allows for profitability at the end of a table.
00:14:40
Speaker
And the new products and services coming in, that's where the profit ah so-called oh opportunities lie. Okay. Okay. So as in like you could distribute digital gold or mutual fund investment or insurance policies through these point of sales.
00:14:58
Speaker
yeah point of saying Absolutely. Absolutely. That allows you to make more margin. Okay. Okay, understood. ah and This is a space which has a few fairly large companies in it already, right? like ah and And because it seems to be a place a space in which you don't necessarily need a lot of VC money to build scale.
00:15:23
Speaker
so So the first question about the number of players in the space, of course, the number of players, regional players, etc. But I would say are there are about four five reasonably large companies who are all participating in this space.
00:15:39
Speaker
um But the thing is that while at a core level, which is basic banking services, so there is commonality in terms of the the model. But every company over a period of time is taking a position on a certain category.
00:15:52
Speaker
which kind of differentiates them from the others. So a company X, for example, could say, listen, I want to look at addressing the issue of low penetration of insurance. A company Y could say, i want to I want to look at the wealth management piece of people. How can I ensure mutual fund penetration in the country goes up?
00:16:09
Speaker
countries, ah companies you could be focusing on, let's assume, looking at an e-commerce model of reaching out to a smaller town. So, while at a core level, you might say that there is there is this commonality, but I think every company is now differentiating by the position it's taking on various candidates.
00:16:24
Speaker
And I think that that space is is it's a huge opportunity for each the organizations. Okay, okay. Can you tell me which company is doing what? Like,
00:16:35
Speaker
For example, something like Spice today. Spice today would be, you know, I think they've taken a good lead on the e-commerce side. ah think they're playing on the e-commerce side pretty well. Paynebhai, I think, has done a pretty good job in taking a lead on the insurance side.
00:16:50
Speaker
um Yeah, and of course, various regional companies take you know take leadership on one category. other But I would say the top two players would be, I think e-com could be one category and insurance could be the other.
00:17:03
Speaker
So you said you have 70,000 point of sales. yeah Yes, active point of sales, yeah. Okay. What is the similar number for say a Spice or a Paynear by? Spice would be, I think, almost active, would say almost three to four times our size.
00:17:18
Speaker
Okay. Okay. Yeah. Got it. Okay. But you would broadly be in like the top three, top five in this space? I would say top top top three to four, yes. Top three, i would say. okay okay okay Okay, interesting. Got it.
00:17:31
Speaker
So let's continue with the journey. So today you're not running FIA technology. ah What happened? and We worked together for about three years between 2011 and 2014. And eleven and fourteen and I think, you know, and that's, of course, a learning I had when we kind of do the journey itself that if at a certain level there are there are strategic differences in terms of the way you want to run a business, the way you want to manage people, like there is a strategic disconnect.
00:18:01
Speaker
Invariably, challenges emerge. And, you know, while, of course, founders do try to solve some of the challenges, but at times it best makes sense for one of the partners to kind of move on.
00:18:12
Speaker
ah So 2014 is when i but I decided to kind of part off with FIA because I was realizing that the partnership was just not working and I thought for the best interest of FIA, Oblique, even for my own mental space,
00:18:30
Speaker
ah it is important that I do something which gives me that freedom, space and flexibility to do something on my own. And having kind of played a pivotal role in building... Is this agreement over, if I can ask?
00:18:42
Speaker
This agreement was in a lot of things. I think it's about the way you want to run the business, the way the culture you want to set in the company, ah the way you want to mean manage people. build up teams, the way you want to look at moving the next level of investments, where do you want to invest, which product categories you want to invest.
00:19:00
Speaker
So i think I think that's where the disconnects happen. And again, I'm not saying I was right or she was right or she was wrong, I was wrong. But, you know, there were, there were you might say, differences which we just could reconcile.
00:19:12
Speaker
And it made sense for at least one of us to move on. I took that this decision. Okay. ah Did you monetize your stake in that? So, we're in the process of closing that piece and hopefully I should be able to... Wound up.
00:19:29
Speaker
Yeah. it's it's kind of Hopefully and that should get closed in next
Pivot to Private Sector Banking
00:19:33
Speaker
few months. Okay. Got it. Okay. So, then what? Like 2014 you moved on? Moved on. Started Roigate Solutions.
00:19:41
Speaker
oh And... um Initially, we were in the same space. So we worked in the same space for the first few months. And then we kind of took a pivot to moving towards the private sector banking space.
00:19:53
Speaker
And we moved into a number of new categories. ah We moved into travel. ah And travel was one interesting category we moved into. And so so so ah since then, if you look at FIA and us, I would say the difference issue would be in terms of where we've kind of taken our organization to.
00:20:12
Speaker
Today we are more product heavy. We're moving to newer spaces, newer categories. um And, you know, kind of not just the BC infrastructure, but also ah you might say we become a strong products-based company.
00:20:25
Speaker
And that's what our focus is going to be going forward. Okay. So at FIA, you started with the PSU banks, like the nationalized banks, being the BC for them.
00:20:36
Speaker
Okay. any benefit of going with private banks as opposed to nationalized banks? um oh So in the the case of private banks, the advantage you have is that private banks have lesser restriction in terms of setting up points. So for example, just to give a sense of perspective, if you've got 70,000 points right now, we have just about 5,000 points of public sector banks.
00:20:57
Speaker
And we have about 65,000 points of... So public sector banks tend to be far more rigorous, far have more process-oriented.
00:21:08
Speaker
So if fact if you could open up 100 points of a private sector bank in a month, i could open up a thousand in a private sector bank. There are far less restrictions. So your ability you scale moving to move into newer territories is far higher in private sector banks.
00:21:21
Speaker
But public sector banks bring with them the advantage that ah you know you can really carry the tag name of the bank. So if I titled Banker Brother, can actually walk into a village and you'll have a Banker Brother point.
00:21:33
Speaker
And plus the bank offers its own set of products and services, account of opening and those kind of pieces. So therefore the productivity of the of the public sector bank tends to be higher than a private sector bank.
00:21:45
Speaker
In private sector bank, you can't put the signage or offer account opening and all? See, private sector banks play more of a a tech role. So they provide you a tech platform. And... ah So if if you're going with a Yes Bank, you just provide a basic tech platform. You do put a Yes Bank signage, but the reality is in you know in smaller locations, it's a public sector bank signage which has significantly higher value.
00:22:07
Speaker
Right. So the brand appeal is significantly higher. Okay. okay okay And your point of sales are also responsible for opening up the Jandhan accounts.
00:22:19
Speaker
Jandhan accounts, by the way, the Jandhan accounts currently can only be opened in the public sector bank space. okay ah The private sector bank space is predominantly the just the transactions. It's basically deposits, withdrawals, money transfer.
00:22:34
Speaker
ah The account opening piece is predominantly through public sector banks. And of course, there are also now private sector banks today who are were coming out as separate you know ah BSBD accounts, which allow you to sell that across the various Soko Channel fraternity.
00:22:52
Speaker
Jandan account is basically, it's a basic account which allows you to transact only up to certain value. So for example, at any point of time, you cannot have deposits more than 50,000 rupees in a year. And number two, you cannot transact more than 100,000 rupees in a year.
00:23:06
Speaker
So, um and it's, you know, you can't, there's there's no check facility and those kind of pieces. So there are restrictions to the Jandan account. At the same time, a Jandan account also gives the customer access to subsidize personal accident insurance, health insurance, life insurance, and those kind of things run by the government.
00:23:25
Speaker
So, yeah, it's like a mini savings account, you know, obviously far higher restrictions. and And it's completely free, no minimum balance required, no charges. No, no. Okay. no And I assume the ah private sector banks don't offer it because of that. There's no money to be made. Yeah. So I guess obviously for them, every time you open an account, there's a cost involved managing account.
00:23:49
Speaker
So private sector banks are now coming out with their own versions, whether they're saying you keep a minimum of, let's say, 2,000 rupees or 3,000 rupees to justify their costs. But yeah, I would say...
00:24:02
Speaker
even though Even though, if you ask me, i experience, you know if you look at the public sector bank space, because of the fact they bank account opening, they've been able to build up a large larger corpus of what we call as the deposits. in So for the banks today, it's very interesting.
00:24:20
Speaker
I remember when I used to meet the banks way back eight, nine years ago, they the public sector banks used to treat This is a as a and just a tick mark on exercise they have to do. PSR, exact lying and all you have to do this stuff.
00:24:34
Speaker
But today, for the banks, this is for some banks like Bankable, it's a highly profitable vertical. I mean, the numbers are really, really, you know, when I heard the numbers last time, and they seemed like, wow, it's a very important piece of the business and profitable business for them.
00:24:53
Speaker
Okay, okay, okay. I'm assuming the deposits here would not be interest-bearing, which anyway in savings account, they are not very interest-bearing.
Scaling and Technology in Financial Inclusion
00:25:02
Speaker
Yeah. Okay, interesting. yeah You said some BESBD account or something, the private sector banks? Basic savings and basic deposit account.
00:25:11
Speaker
Okay, ah with okay, okay, okay. No, so your your question was deposits, are the other deposits, do banks pay the interest? Answer yes, they they do pay interest. It's treated like a normal.
00:25:22
Speaker
Yeah. Okay. Okay. Okay. Got it. Got it. Okay. How did you and reach to 70,000 point of sale partners with very little funding? I can see for the first two years, you didn't raise any funds at all.
00:25:38
Speaker
So, of course, in the initial phase, we kind of all bootstrapped. But the advantage I had is given my experience in FIA, we had the credence with the banks. We had credence with the partner fraternity. So we were to use that basic credence and get our initial licenses and contracts. the Banks had built up a you know we build up a trust with them.
00:25:57
Speaker
And we also had a basic channel infrastructure ready who was willing to kind of work with us because of the trust element. So, yeah, for the first, I would say, out three odd years, we were kind of bootstrapped.
00:26:09
Speaker
And post that, of course, we released our first round of funding. What do you need to start this business? Do you need a you need technology platform? You need relationships with banks? What all do you need? yeah so so um Yeah, so what you need, essentially, I think technology is an important element, especially if you're going into the private sector space.
00:26:28
Speaker
You need to create your own platform. You need to create your own integrations with various product suppliers. That's an important piece. And having a good tech team is very critical. It's very, very critical. um It is able to read balances and then make entries into the bank's ledger and it gives the point of sale, the store owner, like a mobile app where he can do authentication. On the tech side yeah the tech side, of course, currently we've got ah both a web and a mobile based platform.
00:27:00
Speaker
Again, since we're doing pure B2B, it's a platform created for enabling the partner to do transactions. So the tech platform essentially is, is you might say, it's the it's the linkage between the the partner and the banks.
00:27:14
Speaker
right So our all our integration with the banks, all our wallet management, all our basic transactional data, etc. So you might say that platform really manages it. ah and And all the other integrations which are required, for example, today if you're talking about recharge business, air business, rail business,
00:27:31
Speaker
We also got into mutual fund business and those kind of pieces. All those integrations get integrated into a single platform and with a single wallet. So for a retailer, today he just has a single wallet by which you can kind of do transaction across various production services.
00:27:44
Speaker
So the tech essentially you might say is that is really the middleware. it's the it's the It's the connecting between the banks and the retailer. And yes, obviously over a period of time, you reporting and MIS and those kind of pieces get added onto this.
00:27:59
Speaker
But to your question about what are the critical components, I would say technology is a very critical component.
00:28:06
Speaker
And the second piece, which is kind of also important when you're starting off this business is um is to have people who have connections and networks in the you the in the banking space.
00:28:18
Speaker
Because the the key challenge you face, especially dealing in public sector banks, is that you know it's like a chicken egg story. where banks insist that unless you've got three years of experience in this space, you cannot qualify for a... guard And and that's that's a question I used to have in the banks all the time, that boss, unless you give me a contract, how do get my experience?
00:28:38
Speaker
So it's it's it's it's it's it's a it's a bit of a challenge getting your first contract. um And that's where networks and relationships come in. So having somebody who's got a network with the banks and who can say, okay, fine, give us the first license and they know.
00:28:52
Speaker
becomes an important critical component. So i would say these two would be important for you to get started. And of course, third would be having people with channels, sales, development infrastructure becomes a a critical component.
00:29:03
Speaker
So you employed people who went out and signed up retailers or did you use some aggregator who can go and get you retailers or... Yeah, so so the starting point was to hire a sales team.
00:29:15
Speaker
So obviously we started small. ah So 70,000 has not happened happened initially. We started with one single state, invested in a few people, also used aggregator a model. People had their own networks.
00:29:28
Speaker
um And as as as the money started coming in, we started reinvesting back into newer states and newer territories. So a standard scale-up model. um But you're having the first set of salespeople was a critical point.
00:29:42
Speaker
These aggregators charge per signup or they have a revenue share? They have a revenue share. They have a revenue share. So typically, let's assume if... Like a master franchisee? Like a master franchisee or a distributor.
00:29:56
Speaker
Like a distributor. Okay. And then they further, from their network, whatever transactions are happening, they keep a share of that. Yeah. Okay. Okay. Okay. Interesting.
00:30:07
Speaker
Interesting. Okay. For a Kirana owner, how much extra revenue does he earn by signing up with ROI specifically? ah So obviously, it's like a parato, right? So the top end of the spectrum, a guy could be earning a lot of money and then there is a long tail.
00:30:24
Speaker
um But on average, i would say, if you look at an average kind of ah earning, I would say between 8,000 to 10,000 rupees is what a Kirana store can earn purely out of the services he's taking from you. ah The higher-to-the-spectrum guys could earn as high as 100,000 rupees. And then, of course, you'd have a long tail, you know, 500 rupees, one more days.
00:30:43
Speaker
But, say, average, I would say, 8 to 10,000 rupees would be an average earning which Kiran Aslo could earn in today's context. And what are the sources? Like, how much of this comes from, say, ticketing and...
00:30:53
Speaker
ah How much comes from the core money transfer deposit and stuff? but Yeah, so so so I think if you look at the payment space, obviously, is ah is a large piece of the pie. um But today, i would say, especially the last two, three years, we've seen that the non-payment product categories are are adding a lot of contributions to the entire portfolio.
00:31:13
Speaker
So today, for example, our non-payment portfolio adds almost 30-35% of our total revenue oh to us as a company. And that's increasing quarter and quarter. This may not how will be true at the retail level because retailers also work in specialization. So typically a travel partner might be a unique travel partner.
00:31:29
Speaker
like So um oh so payments partners are kind of unique, travel partner could be unique. um So it's difficult to say that at a retail level, at broad level, what kind of mix that would be because there are specializations of partners in that sub-community.
00:31:47
Speaker
Okay, okay. Got it, got it. Okay. So, you know, ah tell me about your journey. So you started with one state, signed up, ah built a sales team. You know, how did that progress over the last ah about nine
Funding and Expansion Strategies
00:32:00
Speaker
years?
00:32:00
Speaker
Yeah, so 2017 is when we kind of raised our first round of funding again. This happened through our network. It came from HP. um we had ah We had a ah bunch of investors and in in in HP Singapore.
00:32:16
Speaker
Through Common Connect, we we got meeting. And I kind of shared the plans with them and the main the main person, he comes from a very high level of credence in the financial services space and in in Singapore.
00:32:30
Speaker
He as matter fact was the chairman and CEO of DBS Bank and is the current chairman of the Singapore Stock Exchange. So he kind of liked the model of being able to provide banking services ah to consumers and that kind of model stick with him.
00:32:44
Speaker
And I still remember the first meeting we had, he looked at our presentation and he said, you know, you guys focus on the business and it leaves the headache of capital to me. So that gives a lot of confidence. And I think he signed a check within the first four weeks.
00:32:59
Speaker
and and And post getting that money, obviously, we we said, let's let's let's stay let's scale faster. And I think in the next 18 months, we pretty much covered ah most parts of the country.
00:33:11
Speaker
How much were you pre-fundraised? How many... point of sales and how much? I think we're close to about maybe what, set six, seven thousand points? Maybe 10% of what we are today. Wow.
00:33:22
Speaker
Okay. Yeah. Okay. Yeah. Yeah. And, uh, like when did the diversification into non-payment area start? what What was the journey over there?
00:33:33
Speaker
So, so, uh, The two pieces. Number one is, I think if you look at the banking fraternity itself, the public sector banks and private sector banks are now ah um ah looking at the platform and developing new products on top of it. So ah in the last, I would say, three, four years, the banks are looking at lending as loans as an incremental product line item.
00:33:54
Speaker
Recovery of loans as an incremental product item. ah Credit card sales an incremental product item. So on the banking side itself, new products were being added on. And my my thinking is that Now it's an established infrastructure. I mean, today almost 60 crore Indians have got the BSBD accounts.
00:34:10
Speaker
ah And from a government perspective too, they're seeing it like a established banking point of view. They now want to take it to the next level in terms of new products and services. So that was one piece. The banks itself were looking at a product portfolio change. And from our perspective, we realized that you know if you want to make the business exciting, both for the partners, but for ourselves, we have to develop categories.
00:34:31
Speaker
So the last three, four years, when we began the journey on travel, for example, but we directly tied with the railways for the IRCTC business. We tied up with various airline aggregators for the airline business. ah um and and And we've now kind of setting up separate forms, separate entities to look at each of the businesses in a very focused manner.
00:34:53
Speaker
So currently, if we look at Roanage Solutions, it's the main holding company. below that we build up our own securities arm which has got our now a license from sebi uh for ah creating ah for selling uh mutual funds and for selling securities uh stock options stock business uh we opening up our own separate company for the insurance business we're looking at a direct uh broking license from irda and of course a similar kind of thing on the lending side which is partner lending So we've realized that now that we go to infrastructure, we got close to our four-cropped customers. um it's it's it's
00:35:26
Speaker
And these four-cropped customers consume all these products and services. They consume or have a need for insurance. They consume and have a need for mutual funds. It's a good time for us to start building up ah businesses in a more serious serious way, not just a plug-and-play model, but develop solid products products and they would develop and really look at a separate line of business and de-bridging the existing infrastructure every we got on the go-to-market side.
00:35:49
Speaker
Okay, okay. How do you manage 70,000 point of sales? Like, for example, if you want to launch credit card as a product or you want to launch mutual fund investment as a product, how does... yeah i assume this would need a lot of on-ground training of partners to be able to sell it, right? So so how does it happen? How do you ensure efficiency in managing the whole distribution?
00:36:16
Speaker
Yeah, so one of the things we realized that if we have to look at increasing our penetration of new products, training but became a very important component of the whole pie.
00:36:27
Speaker
like So we we we build up a very strong training engine. So we build up training teams across the country. The other realization we had and the feedback we got was that while we say India is one country where reality is that you know if you look at languages and cultural minds, etc. is actually multiple sub pockets of countries.
00:36:47
Speaker
And we suddenly realized that when we developing our training programs, keeping only English and Hindi customers in mind, we actually were not addressing the balance 50%. So we built up training teams in Tamil Nadu, in Pradesh, in Thalingana.
00:37:01
Speaker
And so that was the first starting point of saying, hey, listen, we have to address that piece well. We also then developed our learning management system where we started investing a lot in developing modules and training training modules and training videos on new categories to ensure that we can back that training thing up with self-learn offline kind of models where people could pick up things.
00:37:24
Speaker
So the way the way we kind of manage things, for us, 70,000 is like one big large number, but we also then kind of segmentized to say that out of the 70,000, we have about maybe five thousand who could have good interest in credit cards. and More importantly, it could be in pockets where credit cards could be sold.
00:37:42
Speaker
ah So we sub-pocketize or sub-segmentize these channels and then kind of ensure that training and whatever support is providing them on the ground level. Okay.
00:37:53
Speaker
um Do you have a like a regional
00:38:00
Speaker
bias? like Like you're stronger in one region over another or is it like spread pan-India pretty... Two, three years ago, I would say, yes, we were obviously pretty north focused, strong in UP, Bihar, etc.
00:38:13
Speaker
But I think the last two, three years, the remaining part of the countries also started fighting really well. South India, South, I think we're pretty strong in pretty much, apart from Kerala, we're strong in most of the markets there.
00:38:25
Speaker
We've made good inroads into even northeast and west Pimol, etc. So I would say it's a fairly decent balance. ah we had we're not We're not strong in Jammu Kashmir, however. Somehow we're not going to crack the code there.
00:38:37
Speaker
And Kerala, we're just making our baby steps. But many parts of the country, I think we're pretty okay. and Okay. And what kind of revenue do you do now? ah So this year we'll close at about 350 crores.
00:38:50
Speaker
a top line yeah and what is the split in the so of this 30 percent you said is the ah ticketing and these newer initiatives and 70 percent is from the pure banking correspondent kind of a yes yes okay okay and how do the banks pay you is it a percentage of transaction or is it ah per transaction or like how does that work?
00:39:13
Speaker
They pay you on the on the value of the transaction. So it's a certain percentage of the transaction. Obviously it caps at a certain limit, but it's it's all a percentage of the transaction. Okay.
00:39:24
Speaker
Okay. And what percentage of risk do you distribute ahead? Like if a bank... We distribute close to about 75 to 79%. 75% roughly is what we distribute. to seventy nine percent seventy five percent i would say roughly what we distribute So roughly about 65% is kept by the retail channel, about 10% for the distribution channel, the balance
Building a Strong Team and Lessons Learned
00:39:47
Speaker
keep. OK.
00:39:48
Speaker
So that's 350 crore out of this. So some 70% is going to the distribution network that you have built up. OK. So you know help me with some leadership lessons for younger founders. Like you are managing a sales team of 300 people,
00:40:08
Speaker
70,000 points. I'm assuming the org strength would be much higher. How did you build the company? How did you scale the culture? you know Why are you in the top three players? Why are you not just a regional player?
00:40:23
Speaker
Because i mean it's not like you've raised a lot of money, which gives you the right to be in the top three players. So what what is what is your right to win? Can you help me learn that? um I think um the key learnings i've had in building up but initially FIA as well as building up Roinit is the fact that the first initial core founding team you've developed, that has to be something which you've got to spend a lot of time ensuring that that is a solid team.
00:40:52
Speaker
That's a solid team and with complementary skill sets. There's at times a bias to hire people you know from similar functions and similar zone. And I think from an organizational perspective, that could go against you.
00:41:05
Speaker
So looking at a complementary skill set of people, and it becomes an important consideration. So when what I built up Roanit, the first thing I said is I need a solid tech guy.
00:41:16
Speaker
A solid tech guy with shared vision. and And that's where we got one of our other co-founders to come in. And that to me was ah was to me the most critical thing which helped us build the business.
00:41:27
Speaker
um The other piece obviously is is is, and that's more judgmental than anything else, but the ability to build up the founding team becomes very critical. And to be honest with you, I've made mistakes in the past.
00:41:39
Speaker
You know, you give you get it wrong in terms of judgment of people. you get it wrong in terms of understanding you know who are the right people to be a part of that initial founding team. And that at times can also derail you because if you get the wrong guys in the boat, ah you know that could at times be the difference we make and break.
00:41:56
Speaker
To me, that was was an important learning piece in terms of who is going to be on your initial founding team that's important. ah the organization structured? How many people report directly to you? and Yeah. So we have a total employee base of about 500 people all put together.
00:42:11
Speaker
um I think currently we're close to about nine or 10 people report to me directly. So we have a country manager sales and he kind of manages the we have three sector managers below them.
00:42:23
Speaker
And then of course, these the regional teams. ah Yeah, so but nine or people report to me directly. ah For the payment space, ah while I'm leading the CEO of the company, for the securities business, we've got a separate CEO now.
00:42:38
Speaker
um And for the insurance business, a separate CEO. um And as the NBFC thing, license cover will separate CEO for the lending business. And the idea now is to really look at specialists, guys with great credence in that space, ah guys who've got great capabilities to build up businesses.
00:42:55
Speaker
My role really becomes more about you know working with them on the overall strategy and resource allocation. Okay. Okay. Fascinating. it what is you know you you made hiring mistakes what did you learn like how do you judge if a person is a good fit or not so I think one of the learnings I've had is that you know if somebody is coming into your if your conversation with the person is purely around money um look at the byalan How much money will you make? Can you make, let's say, X crores in three years time?
00:43:31
Speaker
Then that to me is an only one signal. Because ah obviously, at the end of the day, everybody wants to make money and everybody wants to have a bottom goal at the end of it. But that cannot be your starting point.
00:43:43
Speaker
you know So the mistakes I made is when I was and when I looked in retrospect, I said, you know what, the only conversation was having with this guy is about how do you become a billion dollar company and how does he become a 200 million dollar guy?
00:43:55
Speaker
And I think that that should have been a good warning signal for me that this guy is not in the game for the right reasons. So to me, that was an initial learning point. ah The second learning point is ah is the fact that I know it sounds a little this thing strange, but the guidance should have some quantum of financial stability.
00:44:17
Speaker
you know I'm not saying the guy is to need to be millionaire, but some call to a financial stability because typically what happens when you're going through startup journey, you don't number have rosy days from day one, you have ups, you have downs.
00:44:28
Speaker
And if the guy doesn't have financial stability, the last probability will jump off the bandwagon if you go through that down. you know So also having people with some level of financial security who've got the capability to say, listen, I'm with you through your good, your bad.
00:44:42
Speaker
The bad is going to happen, like you to leave it. But I have some level of shock absorbing capability to go through it ah in case of a downturn. So that to me would be the other piece that it's important that you have people with some quantum corpus because yeah, I mean, every that's an important piece for a guy to hang around or kind of leave you.
Overcoming Challenges and Economic Shifts
00:45:01
Speaker
So that I would say would be the second piece to look at. The third obviously is you know the concept of shared value systems or whatever you call it. And those are things which I guess over a period of time, each each founder develops his own set of comfort level there.
00:45:14
Speaker
But that to me is again an important piece. you know So in my founding team, I'm fortunate enough to have God guys who are wordsh shared value system, who are always game for the mid to long term.
00:45:26
Speaker
ah who all have this professional approach towards running a company. No shortcuts. We don't believe in shortcuts. We don't want to become this big company in two years time. ah so So I think there's a common understanding as to how we want to run a firm.
00:45:41
Speaker
And that to me is an important ingredient. But I guess each founder to his own. That's the way I see it. Okay. Have you gone through downturns? and of course in it of course i yeah like I don't think as a startup you can ever say my life's been one way to the top. Of course we've been through downturns. Of course we've been through tough times. What were of those moments?
00:46:00
Speaker
I think the initial period was very tough. The first three years I think was very tough. I used to tell guys like walking on broken glass every day. And there were days you weren't sure you'll see the next week or the next month.
00:46:14
Speaker
um ah we we We were bootstrapped. So we had working capital constraints. And at the same time, banks would take their time in releasing your payment. Banks would take their time. You know, your initial cost to revenue returns were significantly high.
00:46:31
Speaker
ah But here again, like i said, I was fortunate that i had I had people who said, listen, we believe in the vision. We believe we'll make it happen. And we're willing to sacrifice in the short term.
00:46:42
Speaker
um I mean, there were days when, you know, people did not take their months, but people did not take their salaries. and They said, no problems, we believe in the vision and we go through their tough time too. and I think that's what kind of kept us going.
00:46:56
Speaker
The other piece, which is an important piece, which i I think that you've got to be fortunate. I won't say something founders can plan for. You've got to be fortunate is also who comes on your board and who is your investor in your firm.
00:47:10
Speaker
um so So I think I got it wrong on the fear side, but if you look it from a Roinet perspective, um I think it was very fortunate to have a bunch of guys who are professionals who want to look at the business in the long term.
00:47:26
Speaker
give you a very interesting story which happened in 2020 when COVID kind of stuck in and we were our full peak in terms of the team build up and we were doing well. And then we heard about this COVID thing building up.
00:47:38
Speaker
And of course, every day you're hearing about companies downsizing and those kind of things. And obviously, employees are very and late unsure about what we going to do. So I called up my investor and I said, hey, what do we do?
00:47:50
Speaker
What should we do? So he said, how much of money do you have in the bank? ah I said, I can pay the salaries on my team for the next 12 months without any revenues coming in. He said, do one thing, take a check from us and add another 12 months on it, which means if 24 months you get no revenue, we protect your team.
00:48:11
Speaker
right And now, now for that Post that, he got the entire team to come in and he gave a personal assurance that not a single guy will lose his job during their tenure.
00:48:24
Speaker
And so that to me was was ah was a tremendous masterstroke which really happened and the support we got from the board, which helped us keep that team together.
00:48:36
Speaker
Because you building up a startup, identifying good people, it's it's the most important aspect of building up a company. And if you build up a good team and suddenly because of these events, if you have to let go of them, you know, you you could really come back to square one. So so having a supportive board ah to me is, so again, a very important component of ah building up a company. Because you've got have good times, you're going to have your bad times.
00:49:00
Speaker
Don't even think about a situation when you will not have a tough time. But how does your board work with you becomes very critical aspect of where your company goes to the future. Amazing. Amazing. Did COVID impact revenues?
00:49:13
Speaker
Fortunately, I think, like they say, I always believe that while you know you can you can always talk about your strategies and all that stuff, reality there's somebody on top who's always guiding your ship. um And we were fortunate that that COVID actually turned out to be a blessing for us because the government then kind of said that these points were, you know, but important points because the government is essential services. So...
00:49:43
Speaker
uh it actually gave us a reverse boost so we had a pretty uh a business actually turned northwards during that point of time but still like i said that one one and a half two months was was uh was a period to we went through a lot of uncertainty and we're fortunate that things planned What about demonetization?
00:50:02
Speaker
Demonetization was was fairly chaotic, I would say. Not that it kind of questioned our business model, but I think demonetization was very chaotic.
00:50:12
Speaker
And we also encountered a lot of frauds on the ground. Because you know we had so-called fictitious CSP points being constructing, collecting money from ah from people on the ground and disappearing overnight.
00:50:26
Speaker
ah So there's a lot of fraud which happened in the ground. I think a lot of small consumers lost a lot of money. um And so for us, the pain was more around seeing a lot of our customers being taken for a ride and losing money. They're poor customers.
00:50:39
Speaker
But as far as we are concerned, I don't think it impacted our business that much. It wasn't wasn't something which kind of hit our business too much. how how How does the authorization happen here? I mean, it's a two-way problem of trust, right? The customer needs to trust that this is an actual bank correspondent to whom I'm giving the money.
00:50:56
Speaker
The bank correspondent needs to trust that this is the actual customer as per the records of the bank. How does that happen? So as far the public sector banks are concerned, they have a pretty rigorous identification process and they have you know things like police verification and lots of other checks being on the ground. The local branch manager goes and visits the place, does a due diligence on this guy, checks from this network, is a guy credible or not. So um for these 5000 points you got on the banking on the on the on the public sector bank space, these are highly rated at multiple levels.
00:51:27
Speaker
On the private sector side, typically um the network is created more on the basis of our aggregator recommendation or our sales team recommendation. ah Yes, so you know there is there is a churn which happens all the time. We do make mistakes in terms of at times quality people we hire.
00:51:44
Speaker
But then of course we do a big churn. so But what typically happens is that's that's the advantage of this model that you know trust is something which happens to experience. So as the CSP point starts off first with the first 20 customers and ads start building up and the customer goes in there every day, he transacts and he finds that his money is either being transferred rightly or there's a trust which builds up.
00:52:07
Speaker
It's slowly kind of, the word of mouth is is is obviously a very strong component and then start business starts picking up.
Digital Transactions and Credit Access in Rural India
00:52:12
Speaker
pretty strongly. So for us, most of the CSPs start peaking in the 9th to 12 month kind of ah the timeframe.
00:52:19
Speaker
The first six, nine months, think the customer also ah checking ah the local CSP. But as the trust builds up, you find peaking towards the 9th to 12. Okay.
00:52:30
Speaker
Okay. And how is the... ah How's the CSP validating that this is the actual customer? if If I want to withdraw money from my account, and um is it an audit? It's biometric. Everything is biometric. So your biometric becomes the, because of Adhaar, I think Adhaar has really transformed the whole thing.
00:52:50
Speaker
ah So Adhaar, your fingerprint becomes your identification. So you have a fingerprint device, you go and plug it in there. It does a check from Aadhaar, it does a check from the bank and then you can transact.
00:53:02
Speaker
So your fingerprint becomes your identification Okay. Okay. Like what if there's a dispute? Like a customer says, I deposited 2,000, but I only got an SMS that 1,500 is deposited in my account or whatever. It could be genuine reason, whatever. so So what happens in such case?
00:53:18
Speaker
If you look at it, most of the CSPs realize that, you know, for them to do business, the credence they have with that so-called customer is very important. And most customers also, they all work in like it's like a tribe thing. They all work together in groups in a particular village.
00:53:32
Speaker
Everybody knows each other. So if a single transaction is done and there's dispute, it quickly spreads. So the CSB realizes that I can't you know do this because my business could get typically wiped out if just even a few people were to.
00:53:47
Speaker
Not that we don't have instances of but frauds being perpetrated, but if you look at the number of frauds which which we've seen in the last two, three years, is very minimal, very, very minimal. um And we rarely get customer complaints of people saying I deposit $2,000, I only got $1,500 or whatever. So I think to that extent, I think it's the power of the social network on the ground which kind of protects the average customer. Okay, okay, okay.
00:54:13
Speaker
understand. Is rural India still a cash economy or is like UPI, that does, I mean, is UPI prevalent? Yeah. so So we've also been seeing a change in the pattern of the transactions. So earlier was pure cash, but now it's cash.
00:54:29
Speaker
UPI is now kicking in pretty strongly. Cards are coming in. Debit cards are kind of... Now, of course, every ah with every bank account, the government gives gives ah gives a debit card.
00:54:40
Speaker
So credit cards have become a pretty important piece of the pie. So then cards, UPI, and of course, cash is still still a large component, but we are seeing ah seeing a mix in...
00:54:51
Speaker
in in the in the in the in the and the profile of transactions the last two, three years. So I'm just wondering, as people in rural India get more comfortable with transacting purely through mobile, like UPI means like cashless, so why would they need a physical place to go and buy a ticket or to do a bank transaction? It could all happen through UPI.
00:55:15
Speaker
So the thing is that, you know, this concept of digitization um in the true sense of the word is still, I would say, a very urban centric phenomenon. ah Whether it's an issue of lack of education, ah where people are still not comfortable getting onto a mobile phone using a Make My Trip app to to book a ticket. i mean, they still find it difficult to link their credit card to the application and those kind of pieces.
00:55:38
Speaker
so So I think that given the, I think education is one barrier for a person to get totally digital. I think that's one issue. The other issue also is the fact that um um ah today a large portion of customers do not get access to things like credit cards ah because they don't have a CYBIL score they have a negative CYBIL score.
00:55:57
Speaker
So for them also to use some of these applications, but it's it's kind of constricted because of the lack of the fact that they cannot have credit cards linked to their applications. So the the you might say the basic premise on which I think rural India typically works is that they work on the assisted model where they are more comfortable walking into a store, they trust the guy and they say, listen, help me do this transaction.
00:56:19
Speaker
So our then focus becomes digitize the pipe which helps the consumer, right? ah Can this change? Will this change? Unsettled could change.
00:56:31
Speaker
You know, i think it would take a 5, 7, 10, 15 years, you know, as education level changes. ah But as of now, you mentioned say the model works in the fact that the customer still needs an assisted touch.
00:56:42
Speaker
And that's where we come in. Okay. Okay. How are you solving that access to credit problem? Like you're starting your own ah lending vertical as well. So how is that going to work?
00:56:54
Speaker
So so ah two few things. Number one is so ah we've kind of tied up various and NBFCs and we're kind of providing working capital support to our own set of partners, ah these 70,000 partners.
00:57:07
Speaker
And I think that's an issue at ah at a country level. So if you look at there's a demand X, X demand is not getting fulfilled because the the the retailer who's the middleman between the customer and the and the and the company doesn't have working capital to provide that kind of be quantum of action. It's all linked to his ability to raise funds.
00:57:30
Speaker
um So for example, one of our retailers, for example, does 5 lakh. He may have a demand for doing 10 lakhs of transactions, but the balance 5 lakhs he cannot do because he cannot fund the wallet. right so So we're working on a program we're saying, okay, we'll fund your wallet because we trust you.
00:57:45
Speaker
And because of the fact that now you've got a higher wallet cover, you can therefore do a higher number of transactions in your in your store. So the idea of this entire working capital support program we're running is is to really make sure the retailer can optimize the business in his respective territory and therefore to that extent grow further. And in the process, obviously, we also end up scaling our business.
00:58:06
Speaker
Okay. Interesting. Interesting. What will your own NBFC do? You're starting your own NBFC as well, right? Yeah, so our core of the NBST will be predominantly around looking at two, three things. Number one is looking at scaling up this entire thing. 70,000 points, I mean, multiplied by ah even 100, 1 lakh rupees is a lot of capital, right? So, and beyond a point of time for you to be doing that in a large scale, you need to have a license. ah You can't do it from your own books.
00:58:35
Speaker
So that's one piece. The other piece is that we are also seeing a very interesting opportunity with mutual funds as one of our business opportunities opportunities coming in. And as you'll be aware that mutual funds in tier two, tier three towns is now really on the on the way up. you know If you see the mutual fund space today, and almost like 20-25% of the total AUM, mutual fund AUM comes from towns beyond the B30, beyond the top 30.
00:58:58
Speaker
And it's growing much faster than the growth of mutual funds in the top 30. ah So we are seeing an opportunity of providing lending against, for example, mutual funds. So if you've got a mutual fund, lakh rupees, you know, maybe can do X some amount of money as ah as a loan against that without you having to break your mutual fund.
00:59:12
Speaker
So we are seeing that as ah as an opportunity opportunity going forward. So more collateralized options of looking at lending support towards yours. Okay. Interesting. Interesting. and What about credit cards? Is that a space you want to get into?
00:59:26
Speaker
Yeah, so credit card, as in fact, we're already doing our own aggregation model. So we have a company called Ruin It Flexi in which we are pushing our credit cards and our leverage loans business. oh We've tried with every bank in the country today on credit cards and we've made good traction the last 12 to 15 months.
00:59:45
Speaker
However, interesting product category, which I think we want to develop is securitized cards. We feel that one of the reasons why a large portion of the country today does not get access to capital or doesn't get access to loans etc is because the fact that they don't have a civil they don' have a current credit trading a digital credit rating.
01:00:03
Speaker
Now it's a chicken neck story. you know So I'm a consumer, don't have a civil name. I walk into a bank branch and say i want a loan of a lakh rupees. I say I don't have civil name, I can't give you a loan. so So technically what happens, he goes to the local money lender who today charges in 3, 4, 5% and you know captures most of the value value there.
01:00:20
Speaker
Now with a securitized card, what's happening is that you're offering the guy an option to say, the our big f and against that will give you 9,000 fees of credit card. Now the minute two you create a credit card and you start using it for six months, you automatically build up a civil score.
01:00:36
Speaker
so So we are tied up recently with with ah with with of the bank for the securitized card. and ah We got some amazing results in UP. I mean, I had i had consumers and retailers and consumers who said I had a negative simple score, but thanks to my usage of the card, now it's upwards of 800. Now it's gone to 800. I can walk into a bank branch and I can pick up a loan at whatever that 12, 13, 14%.
01:00:58
Speaker
twelve thirty forty percent So so ah we think that this is a very powerful category. And frankly, if I'm aware, I would love to speak to the government and say, you know what, institutionalize this.
01:01:09
Speaker
you know To us at a very macro level, if you want to grow the GDP of the country, you cannot grow the GDP of the country if a third of your population is not a part of the financial inclusion piece. You cannot. How can you... how can you How can you grow the country if today 30% of population is still having to go to money lender at 3% a month or 4% a month or 5% a month?
01:01:30
Speaker
It just doesn't work out. It just doesn't work out. So that's one category from our perspective we want to push pretty aggressively. Now we're working with banks to develop that particular solution. um And we think it could have a very solid socioeconomic benefit apart from whatever commercial advantages we we kind of derive.
Future Opportunities in FinTech
01:01:48
Speaker
Okay. Okay. Fascinating. What are the ah opportunities you see for young entrepreneurs in this whole FinTech, financial inclusion space?
01:02:00
Speaker
So um I still feel that as far as the space is concerned, it's and still evolving It's still evolving. I think the penetration, if you look at any of the space, you look at insurance, you look at lending, you look at um the wealth management piece, you look at credit cards.
01:02:18
Speaker
Especially for this space, it's it's all in a very nascent nation stage and it's all evolving. And I think for young, smart, bright of you know people who want to build up businesses, I think the number of options available is is is pretty large.
01:02:33
Speaker
you know The canvas is pretty large. ah So the opportunity is large. The gaps are large because not too many people have got solutions around this space. So I would say definitely this is a great space to be in.
01:02:44
Speaker
um um It's a great space to innovate and it has tremendous ability for scale up if you've got the right idea and the right ability to scale. Awesome.
01:02:55
Speaker
Thank you so much for your time, Sameesh. It was a real pleasure talking to you. All right. Thank you.