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Thank you, Bangalore! Announcing Delhi NCR and Mumbai | Fintech Inside - Edition #74 - 1st May, 2023
Thank you, Bangalore! Announcing dates for Delhi NCR and Mumbai Fintech Happy Hour. Details on ex-Regulators joining fintech, NPCI and PhonePe's app store.
Welcome to the 74th edition of Fintech Inside. Fintech Inside is the front page of Fintech in emerging markets.
I hosted our first Fintech Happy Hour of 2023 and it fun! Thank you Bangalore. Excited to announce the dates of Delhi NCR and Mumbai Fintech Happy Hour. Delhi is on 11th May and Mumbai is on 18th May! More details in this edition of Fintech Inside!
This edition of Fintech Inside also covers some takeaways on fintech startups onboarding ex-regulators for various positions, NPCI making big strides in global payments and PhonePe’s odd strategy to launch an app store.
Raising funding for your early stage fintech startup? reach out to me at firstname.lastname@example.org
Enjoy another great week in fintech!
✨ Thank you, Bangalore!
We hosted our first Fintech Happy Hour of 2023 in Bangalore on 27th April. It was gratifying to see so many founders, senior product folks, builders, journos, investors and execs from incumbents, congregate around fintech! Thank you to everyone who came! Until next time, Bangalore.
✨ Announcing Delhi NCR and Mumbai Happy Hour presented by Falcon
Folks in Delhi NCR and Mumbai - your wait to meet the fintech community in your city is over!
Register now and block your calendar. I host these meet ups for founders and product builders to learn from each other (as opposed to star panel members) and define finance in India. It's gratifying when I hear that folks built products because they had a conversation with someone they wouldn't have met if not for the Fintech Happy Hour. People have been offered jobs at the Happy Hour, others met investors and some others met a potential cofounder! There's a lot of magic that happens at these Fintech Happy Hours - come be a part of that magic!
3️⃣ Fintech Top Three
1️⃣ Fin is (finally) coming to Tech in a big way!
(this news is from some weeks back, but indicates a broader trend)
Razorpay set up an advisory council with former senior leaders of regulatory bodies. Similarly Slice, Jupiter, BharatPe, Paytm, EbixCash, KrazyBee, QwikCilver and other fintech startups appointed former senior leaders of regulatory bodies on their board, advisory council or some other internal body.
Indian fintech is coming of age: Indian fintech startups have grown in scale and maturity over the past decade. Fintech startups are also becoming materially important to the fabric of Indian financial services. The timing of Ex-RBI Executive Directors, Deputy Governors and such other leaders being onboarded by fintech startups could not have been achieved anytime in the past. This is how the game should be played.
Regulation se regulation tak (from regulation to regulation): The onboarding of ex-regulatory leaders means Indian fintech startups could finally have a proper strategy on how to anticipate regulation, how to approach regulatory bodies and how to shape regulation for the customers benefit. This has been my biggest gripe with fintech startups for years now (Edition #23 and #47) - we've never known what we want from regulators. This time, with help, we might have a shot!
The next decade of fintech will look dramatically different (in a good way): In the past decade, fintech startups captured the market with brute force, a brash attitude and slick interfaces. This next decade, founders are realising they need to embrace regulation, partnerships and licenses to win in financial services. The ambition has only become bolder.
2️⃣ National Payments Corporation of India (NPCI) is at it, again!
UIDAI and NPCI are setting up an eKYC aggregation platform. PPro, a global payments infrastructure company, signed a strategic partnership with NPCI International to offer UPI payments as an option to its global merchants. VISA paused single-click checkout for ecommerce transactions.
e-KYC aggregator is a significant product in the works that went unnoticed: UIDAI and NPCI planning to link Aadhaar (digital ID) and payments for onboarding to financial platforms - is big! It has multiple rammifications (good and bad), including potentially frictionless onboarding, issues with data integration between Aadhaar and NPCI and many more.
e-KYC will potentially let product managers sleep better: The current and constantly changing regulations around KYC, e-KYC and all the other flavours of KYC for financial services give product managers sleepless nights (save the fintech product managers!). More importantly, there's a lot of churn for digital onboarding of customers to financial products. An e-KYC aggregator is just what the doctor ordered.
Cross border UPI transactions made simple: The PPro partnership with NPCI International is important in that global merchants with international payment gateways integrated with PPro, can now accept UPI payments at checkout, in Indian Rupees, on their own merchant platforms without having to be incorporated in India. They'll have to upload invoices on PPro to get these payments processed. It's complex but an impressive feat, that many startups are trying to solve for. This is another way NPCI is making VISA and Mastercard obsolete, but it's not going to be easy.
3️⃣ PhonePe is entering Google's territory
PhonePe, Walmart-owned Flipkart's fintech arm, is launching an app store.
PhonePe is a clear leader in UPI, but what's next? PhonePe has 400mm customers and 25mm merchants on its platform and commands >40% of market share for UPI payments. PhonePe processes a total payment volume of $160bn per quarter! PhonePe has gone out and acquired several other licenses in financial services to start lending, distributing insurance and wealth products and many more. It made $234mm in revenue for the period 1st Jan, 2022 to 30th Sept, 2022 and I assume a majority of its revenue could have come from advertising but not payments itself. So, what's next for PhonePe? It launched an ONDC product - Pincode, and now it reportedly plans to launch an app store to rival Google's Play Store and Apple's App Store.
PhonePe app store seems to make little sense: PhonePe is excellent at financial services and obviously winning at it too. In search of greener pastures, is it wandering too far? Google, a search and phone OS company, came at PhonePe to play the payments game. Is this PhonePe's way of getting back at Google and thinking it can win that game too? It possibly could, but there's still a big market in financial services for PhonePe to capture.
Is the Indian app store market large enough for PhonePe to compete in? I'm a noob at analysing this, but from the little time I spent researching, it seems that total app store revenues in India are expected to be $2.7bn ($701.70mm from in-app purchases, $33.37mm from paid apps and $1.95bn from advertising). That doesn't seem like a big market to get distracted by when you're building financial services. Another angle could be that Indians contribute 27-30% of global Android app downloads! According to Deepak Abbot, That's a total of 4bn downloads in 2021. Given advertising is big for PhonePe, it could be that the App Store and Pincode apps just give PhonePe better advertising real estate while capturing an assumed large chunk of the app store market revenue.
A word to the wise: never bet against founders: While I reflect on the above, I remind myself to never bet against founders building hairy businesses in complex markets. PhonePe is a business that generates $250mm+ in revenue a year, I, on the other hand, can only dream of generating $250 with this newsletter! Sameer, cofounder of PhonePe, seems to have some incredibly laser sharp focus and clarity of thought - the kind I haven't seen in majority of the other people. That's someone you'll find hard to win against.
👋🏾 That's all Folks
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See you in the next edition.