‘See no merit in becoming a payments bank’: MobiKwik’s Upasana Taku

In an interview with TNM, MobiKwik co-founder Upasana Taku talks about the effect of KYC norms, competitive landscape in India and the consumer fintech market.
‘See no merit in becoming a payments bank’: MobiKwik’s Upasana Taku
‘See no merit in becoming a payments bank’: MobiKwik’s Upasana Taku

The $1.2 billion fintech market in India has seen explosive growth in the past few years. In 2014-15, mobile wallets were the talk of the town. Nearly every startup was launching one. But as the market matured many bit the dust, including Freecharge, which eventually got sold to Axis Bank.

One mobile wallet startup that managed to brave the storm and give tough competition to market leader Paytm has been MobiKwik. With its user base having doubled to 65 million in the last 12 months, investors too have been seeing opportunity in MobiKwik.

In an interview with The News Minute, MobiKwik co-founder Upasana Taku says that the secret to succeed in this market is to be a neutral and independent payments player.

Here are some edited excerpts:

How do the RBI norms mandating KYC affect you in terms of increasing costs? Also, is the December 31 deadline feasible?

KYC is a time and cost consuming exercise, and increases our cost of compliance for sure. But I think that the government trying to push companies like ours to do full KYC is a good sign. It impresses upon on us that it wants to increase digital transactions and digital financial services, and if we want to deliver that we should get KYC done. So I believe the mandate is correct.

But the applicability and timelines offered are quite stringent, and I believe some leniency should be offered by the regulator. Three months is an awfully short time to convert millions of users into one of the KYC brackets. It is almost an impossible task. A longer timeline such as 6-9 months would be more apt.

Speaking of costs, let’s say if I want to convert 40-50 million of our users into KYC users, the cost for doing KYC is at least a dollar per user.

How do you view the competitive landscape in India, given that even large players such as Google are launching payments apps in India? In this scenario, where is MobiKwik positioned?

The competitive landscape is much better today than what it was many years ago. If you look at 2014-15, everyone wanted to have a mobile wallet – banks, ecommerce companies, payment gateways such as Citrus and PayU had wallets. It was almost an impossible task for us to explain to investors, especially to international investors, where we are in the landscape. We had to make complex charts to explain to them what we are good at and what competitors are good at.

Today the picture is relatively simple. Of the three top banks, no one has any interest in developing their own mobile wallet. A lot of internet players who had aspirations have quit. Some of them still have them but I think the offtake of those services is limited to their own products. For example, Ola money is used only on Ola. Same is the case with Amazon payments. So these are not competition to MobiKwik.

If you want to run a payments network, one thing to keep in mind is that you can’t be selling all products and services which compete with your competitors. You need to be neutral and independent.

From that point of view, we are the largest independent payments network. A lot of fashion retailers work only with us. And I think that from the market point of view, a lot of consolidation has happened and our position has only strengthened in the market.

Other large payment platforms are expanding beyond being just a mobile wallet. Paytm, for example, has an ecommerce arm and a payments bank. In that sense, are you also looking at expanding beyond being a payments app?

We have been categorical in saying that we don’t want to become a bank. Therefore, for us, the focus continues to be on fintech. We have gone from being a consumer payments brand to being a consumer fintech brand. That means insurance, payments, lending and investments. That’s what we want to do because all these areas have immense opportunity.

We don’t see any benefit in becoming a bank. In fact, that would increase our cost of compliance. We believe there is merit in working with select financial partners, be it banks, NBFCs or insurance companies. Let them be OEMs, we’ll tell them what kind of customised products we want and then we will deliver those products through and through.

These products are yet to be launched. Some of them have been piloted but they haven’t been launched fully yet. We are looking at launching one service in December and the next in January 2018.

Are you looking at collaborations and consolidation?

Collaboration is definitely on our mind. In the last few months, we have announced a virtual card with IDFC Bank, and co-branded wallets with IndusInd Bank, Bajaj Finance and BSNL. These have all been strategic partnerships. So collaborations are definitely a part of our strategy where we take users of a brand and help them go digital via our app.

Coming to consolidation, there are areas where we are also looking at potential investments. That will be where some companies have significant leverage in terms of transactions and merchants that they have been aggregated, so we will look at making investments of that nature. Then there are also some companies we may look at for immense Intellectual Property (IP) that they have built and will continue growing in different sectors.

What is the next big step for growth for MobiKwik? Where do you see the next big avenue for growth coming from?

We are growing aggressively. We have doubled our numbers in one year and are looking at continuing that doubling every year in terms of users and merchants.

At the same time, we are also looking at increasing revenues significantly because we do look at profitability and revenues as a very important metric and not just spending money as a metric. So next year you will see lending having some revenues to contribute, insurance will also have some revenues to contribute. And then you will further see investments being made by MobiKwik.

We are looking to turn profitable by 2019-20.

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