Millennial users will help design our neo-banking features: Siddharth Mehta from Freecharge
SIDDHARTH MEHTA, MD and CEO of Freecharge, talks about the payment app’s transition to a full-fledged digital financial services platform, the benefit of having Axis Bank as a parent, and the expectations of the next launch of the neo-bank
How have you seen the fintech space evolve during your career at CITI Bank, HDFC Bank, Axis Bank and at Freecharge since 2018? What are the main trends that you have noticed and what have been your lessons in the field?
The fintech space has evolved over the past 3-5 years, but most of the scale and innovation has happened around payments, which were at the heart of the rapid growth in digital adoption. Over the next five years, as payments continue to grow steadily, most of the innovation will focus on loans to consumers and SMEs and we will see rapid scale in this space with the availability of Indian stack, account aggregation services, digital solutions from KYC, etc. Additionally, businesses will need to strike the right balance between scale and risk when embarking on lending.
How did having Axis Bank as the parent company help Freecharge? What is the brand’s USP vis-à-vis the competition?
Being part of Axis Bank has given us a competitive advantage within the fintech ecosystem. This helps us roll out our digital offerings at a much faster rate and also helps us with internal testing. If you are a standalone fintech player, it becomes difficult to convince banks and NBFCs for integration and launch. With Axis Bank as the parent company, we have tested so many products in the past year like home loan, two-wheeler loan, gold loan, etc. We have also launched a digital FD (Express FD) product in partnership with Axis Bank to provide consumers with a secure way to save and invest their funds; this investment option combined with mutual funds and digital gold products, offers consumers a comprehensive set of investment solutions on the Freecharge platform. The other benefit is Axis Bank’s learning, experience and expertise in risk and compliance, which delivers long-term value and also becomes our USP.
About 200-250 million people make payments through digital modes in India. With 1.3 billion people in the country, that number can easily grow to 400 to 500 million over the next two years. So, there are enough possibilities and opportunities for everyone. You just need to deliver a great customer experience and a great product, and we’re focused on that. We have an extensive portfolio of products ranging from FDs to credit cards and now the latest is the Pay Later offering and the upcoming neo-banking launch.
Also, with Axis Bank developing digital capabilities and digitizing most of their banking services, Freecharge acts as a catalyst in the process, by helping the bank acquire more new age customers and through offers such as digital loans and neo-banking services.
Tell us about your launch of neo-banking and your foray into co-creating products for millennials. What does the landscape look like for this demographic and what potential do you see in it?
Neo-banks are the neighborhood’s new disruptors, offering convenience and personalization. The neo-banking feature will be designed in collaboration with our users and will focus on next-generation clients who want a simpler and hassle-free financial planning experience under one roof. This will allow them to co-create a unique banking experience rather than imposing existing solutions on them.
We see a lot of young entrepreneurs, who want to take control of their finances rather than just working to make money. With a digital and mobile vision first, this segment is very interested in fintech products compared to other segments, which is also expected to continue in the years to come.
What are some of the Freecharge solutions deployed for small and micro businesses and merchants during the COVID environment? Which products were adopted the fastest?
For our small business partners, we have deployed remote payment collection solutions to provide remote contactless payments, allowing them to continue to operate their business seamlessly. In partnership with Freecharge, a small business today can accept payments by cards, UPI and netbanking, using static and dynamic QR codes and / or personalized payment links. We’re actually increasing over 20% quarter over quarter, on digital payments on the small and micro business side, using payment links and QR codes. Our products like Paisa Plus, Khata and Payment Link have been designed with the needs of small traders in mind. With Paisa Plus, merchants can issue their own digital vouchers to customers either as a reward or as a discount coupon. All of these efforts have led to continued growth on the trader side over the past couple of years.
We also recently launched our small note lending product for SMEs, with loans ranging from Rs 5,000 to Rs 1,000,000 to merchants digitally. We deduct a small amount from the daily payments we make to merchants for digital transactions through Freecharge, reducing the burden of the EMI due date. We are also planning to launch a neo-banking platform for SMEs where they can access all of their financial needs in one place.
How did Freecharge fare in FY20-21 in terms of growth?
Over the past year, we’ve taken important steps on our journey to move from a pure digital payment platform to a comprehensive digital financial services platform. Previously, we mainly focused on B2C clients, but now we co-create financial products for B2C and B2B clients. In the merchant market, we are seeing an adoption of remote payment solutions in the offline ecosystem and this company is growing by almost 20% + Q-on-Q. The pandemic has pushed us to reinvent ourselves. It was only recently that we launched various cashback offers and mega-offers for the holiday season, where users have the chance to win great prizes using Freecharge Pay Later services with partner brands.
How will your strategy be different in 2022 compared to the previous year?
Our three main focus areas for consumers and SMEs are payments, loans and neo-banking. Our strategy for the next 12-18 months will not change from what we followed last year. We plan to offer our customers and business partners the full range of services including payments, loans, investments, savings and insurance. At the same time, we will focus on the development of the lending activity led by the Freecharge Pay Later solution and the merchant cash advance solution.
What are the challenges facing the brand and the industry?
As a brand, we are reinventing ourselves as a digital financial services platform. Make Freecharge a trusted financial services partner for consumers and SMEs will be one of our biggest challenges. Elsewhere, as digital payments continue to grow at a rapid pace in terms of both transactions and adoption, the margins are tightening and this has an impact on the ability to invest. In addition, with the adoption of digital, cyber fraud has increased and this has an impact on customer confidence. In partnership with Axis Bank, we are continually strengthening our systems and processes to deal with it.
What is a principle or rule that guides all of your actions as a business leader?
The ability to communicate and connect with the team. This not only allows you to engage on a personal level, but also keeps you up to date with what’s going on around you.
IN THE WORK ZONE
Siddharth Mehta started his career at Hyundai Motors, then joined HDFC Bank in the retail asset sector. After spending a year at HDFC Bank, he moved to Citi Bank and began his journey into the world of payments. Since, he has worked on a diverse set of innovative solutions for cards, merchants, wallets and public transport. He joined Freecharge as a commercial director responsible for payments and merchant activities and, a year later, was elevated to the role of CEO of the company.
“I am generally a very warm person and enjoy spending time with my family and listening to soft music when I am at home. But I love to travel and I love to drive for vacations whenever I get the chance ”, says Siddharth Mehta.
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Posted on: Monday October 25, 2021 12:01 am IST