Paytm will be launching its stock-broking services over the next few weeks, the company’s Founder and CEO, Vijay Shekhar Sharma announced today at the Global Fintech Fest.
In discussion with Rajan Anandan - Managing Director, Sequoia Capital, Sharma said, “We started to build our financial services stack, we have insurance and hope to do lending, we are doing good in mutual funds and we hope to do stock brokerage soon which we will be launching in the next few weeks,”
Paytm has already received the go-ahead from the Securities and Exchange Board of India to get into stockbroking.
The company had started with payments which is one of its largest revenue generating markets. It had then forayed into -commerce and lending. In a bid to build a “full-stack payment business,” the company had recently acquired Raheja QBE General Insurance.
“Payments is the largest revenue for us, and then we started to build different commerce stacks like ticketing and then came the e-commerce business,” Sharma said. Despite payments being its largest markets, Sharma said that digital payments are still witnessing resistance from consumers.
“(Digital) Payment still has a huge amount of resistance from consumer sides driven by like I said trust confidence and use cases,” he said.
Raheja QBE acquisition
Talking about Paytm’s acquisition of Raheja QBE General Insurance, Sharma said the company’s foray into insurance is due to the segment’s potential revenue pool and profit pool and its capacity to aid lending.
“In fintech, every revenue model lends into the door of lending,” Sharma said.
“If you were to look at large pools of capital that is kept in a bank available to be deployed, it is ultimately insurance. And insurance can extend that like, you know, in lending,” he said.
Opportunities for growth
Sharma further said that financial institutions in India are currently not prepared to catch up with economic growth as proposed by the government.
“In three years, we’re talking about trillion-dollar lending. I don’t think that our current financial institutions are prepared to be able to deliver trillion-dollar lending,” he said stating that this could be a huge opportunity for upcoming start-ups.
Other possible opportunity areas for fintech start-ups, according to the Paytm CEO include forex and lending for underserved markets.
According to Anandan, the Covid-19 pandemic has improved the quality of start-ups as businesses have been pushed to innovate to survive and no longer need huge capitals to grow.
“The quality of the ecosystem is going to improve dramatically and the great thing about high-quality companies is high-quality companies don’t need to raise insane amounts of capital,” Anandan said.
“By the end of 2021, I think the underlying health of the Indian start-up ecosystem is going to be 10 x better than what it is today, right for all these things. And as a result, I think Indian start-ups will generally require less capital, but whatever capital that they need, they’ll be able to get,” he added.
From the government’s perspective, it will need to aid SMEs by providing easier access to loans according to Sharma.
“If India’s economy has to grow, we have to give loans to SMEs and SMEs restrictions and definitions that they can be labelled a priority sector are not in tune with the market requirements,” said Sharma.