Forbes India and AWS are partnering with each other to invite leaders from the new-age Digital Native Businesses (DNBs) to share their stories and the stories of their businesses. These conversations are being organized in association with Matrix Partners, India.
Series Theme The theme of the conversations is, very aptly, titled- The Mavericks. The series is planned as a year-long program, to have deep conversations with leaders of DNBs and get them to share their insights on the technologies that power their businesses and what they see as the likely trajectory for the growth of DNBs in India.
The series aims to examine how digital tech has come to be the go-to tool for businesses across sectors. The growth in data presents opportunities for firms to derive insights on customers, the competition, and their internal processes.
The pandemic-induced lockdown of 2020 accelerated the adoption of digital technologies across several businesses. Data analytics, cloud computing, and AI/ML technologies have taken center stage in helping businesses serve customers and grow their businesses.
Conversations The series of CTO conversations will examine how firms deployed tech solutions to scale their businesses and drive superior customer experience.
The series of founder conversations will take an in-depth look at business growth, leadership, and the founder’s views on business strategies, successes, failures, and the lessons learned.
Founder Conversation Chapter-3 The third conversation of the founder series featured Prashanth Ranganathan, CEO of PayU Finance and founder of PaySense. He was joined in this conversation by Sachin Chawla, Country Manager and Head DNB, India & South Asia at AWS. The conversation was moderated by Brian Carvalho, Editor, Forbes(India). They discussed the digitization of SMBs in India, guiding and educating Gen-Z consumers on their financial journeys, and the future of fintech in India.
The Beginnings The conversation kicked off with Prashanth talking about his journey, beginning with his founding PaySense - a consumer lending platform. He also talked about PaySense’s acquisition by PayU and the merger of PayU’s pre-approved credit platform - LazyPay with PaySense. Later in the conversation, he stated that the integration of the firms post the merger had been completed successfully.
Prashanth explained that the growth of e-tail, smartphone adoption, and the subsequent internet penetration at affordable rates in India in 2013-14 were the key factors that led to his sensing an opportunity for fintech and motivated him to found PaySense. He sensed the immediate imperative if e-tail was to grow in India, of the need to decouple payments and purchase. Hence, the need for credit, and the business logic for the founding, in 2015, of PaySense. Demonetization announced by the GoI in November 2018 and the resulting cash crunch further helped accelerate change in customer behavior and digital adoption for purchases and payments.
Fortuitously, for PayU Finance - PaySense’s acquisition and merger with LazyPay happened in early 2020 - just before the pandemic’s first lockdown. This further accelerated the Buy Now Pay Later (BNPL) approach to purchases among customers.
Sachin agreed with Prashanth’s assessment that digital adoption was accelerated by the pandemic. This was borne out through increased smartphone sales and higher e-tail transactions. He highlighted that more and more companies were now getting onto the cloud, and AWS was witnessing a surge in users. He brought out that studies show that companies already on the cloud when the lockdowns were imposed did better than those that were not.
Prashanth briefly touched upon the various credit solutions offered by PayU Finance for consumers who want to pursue the BNPL approach to purchases.
Sachin highlighted that AWS has been a cost-effective platform for PayU Finance. AWS’s expertise with the graph database platform has helped in fraud detection and in enhancing data security.
Prashanth highlighted the difficulties associated with underwriting new-to-credit individuals and SMBs. He highlighted the need to use alternate data for such underwriting. It is here that the power of graph database platforms such as Neptune is leveraged. He complimented PayU for having sensed early the synergies between payments and lending and having helped build the current ecosystem.
Digitizing SMBs When asked about his experience helping SMBs digitize their businesses, he said that here too, the pandemic accelerated the process since the business owners realized that this was the need of the hour. Having an online presence, the ability to accept digital payments, access to capital, etc., were necessities to succeed in the business. Digitization provided SMBs with tools to better manage their accounts, receive money, and extend credit. Digitization has helped gather data on the business’s run rate and build a 360-degree view of the business. This helps firms such as PayU Finance with their underwriting decisions - easing access to capital for the SMBs.
Adding to this, Sachin added that AWS provides SMBs with a digital suite - a collection of ISVs that makes them available to the SMBs: tools to manage their CRM, HR, and tax needs. AWS additionally helps in equipping the SMB workforce with the skills required to operate in a digitized workplace.
Leveraging AI/ML To a question on how PayU Finance is leveraging AI/ML in managing risk and customer experience, Prashanth brought out that the Gen-Z population just entering the workforce had no credit history. For such customers, AI/ML and the graph database, using alternate data, are deployed to assess their creditworthiness and induct them into the financial ecosystem. AI/ML also helps with fraud detection and in predicting customer wants.
Sachin highlighted that AWS leverages the power of AI/ML to help fintech firms with credit decision underwriting, insurance firms with claims processing, and other applications such as the conversion of text to speech.
Prashanth went on to add that PayU Finance works to educate new-to-credit customers on their obligations to the financial services firms. Commenting on ethical AI, he said PayU uses digital and data to build ethical AI to avoid biases. The model is continuously measured and periodically refreshed.
Data Security Regarding customer concerns on data security and regulatory concerns around data residency, Sachin brought out that AWS works with its clients to help them architect a solution that addresses all their security and regulatory requirements. AWS solutions also conform to all relevant data security and privacy standards.
Answering an audience question on eliciting good credit behavior from new-to-credit customers, Prashanth re-emphasized the need to educate such customers on their financial obligations and recommended a ‘low and grow’ approach to their education. He felt that education and communication through reminders, SMSs, phone calls, and, as a last resort, collection calls help.
Future of Fintech in India Finally, commenting on the future for fintech in India, Prashanth said that exciting times awaited customers. The young will have options other than banks to access finance. He opined that DeFi and crypto are gaining traction and are here to stay.
Sachin sees more digital banks coming up in the future. He predicted that the idea of challenger banks will catch on in India, all fintech will be provided on the cloud, all applications will be infused with AI/ML, and serverless computing will become the norm.