MobiKwik Is Looking To Woo Credit-Starved Indians With Digital Credit Cards And More

MobiKwik’s cofounder Upasana Taku, 40, is leading a transformation of her payments company by turning it into a fintech player that offers digital credit cards, loans, mutual funds and insurance products. The Gurgaon company, which she and her husband Bipin Preet Singh established in 2009, was just valued at $300 million in its latest funding round in February.

Having risen to become one of India’s top three players based on the number of payment transactions it processes, MobiKwik expects to close fiscal 2020 with more than Rs. 5,000 million ($70 million) in revenue. The firm has raised $90 million across five funding rounds that included marquee investors like private equity major Sequoia, payments giant American Express’ venture arm American Express Ventures and Indian financial services giant Bajaj Finserv.

Taku, who is chief operating officer at MobiKwik, says the company has been looking into the possibility of a public listing within the next two years. She’s also partnering with large financial services providers like Bajaj Finance and Aditya Birla Capital to provide its services to more of India’s credit-starved middle class. MobiKwik’s network already spans some 3 million merchants and more than 110 million users on its platform.

In a recent freewheeling interview, Taku, who was featured on the 2019 Asia’s Power Businesswomen list, talked about MobiKwik’s focus, growth plans, partnerships and the path to profitability. 

What are the top priorities for MobiKwik as a company?

We want to double our revenues and profits and we want to get listed in the next two years. We have been EBITDA-cash positive since August 2019, and we expect fiscal 2021 to be our first full year of profitable growth. Also, we are offering more financial services products and in the next one year it will be 50% of our business. We have done 1.2 million loans in the last two years. And we expect to close this fiscal year alone (ending March 31, 2020) with the disbursal of more than 1.2 million loans worth Rs. 15,000 million.

Can you describe the financial services opportunity that you are trying to tap?

India is a credit-starved country. We want to offer bite-sized credit services for the underbanked population in India. In a nation of 1.3 billion people, you have only 52 million credit cards. The Reserve Bank of India estimates that the monthly spends of these 52 million credit card users is almost the same as the monthly spends of 780 million debit card users in India. Given that we have more than 450 million smartphone users in India, the opportunity to serve this unserved and underserved populace is tremendous. We want to issue 100 million digital credit cards in the next five years. Everybody is targeting only the people who earn Rs. 100,000 ($1400) per month. We want to reach people who earn Rs. 18,000 ($250) to Rs. 60,000 ($845) per month.

What kind of partnerships do you have in place for this?

We partner with non-banking financial institutions like Aditya Birla and Bajaj Finance. We have the user data and the digital processes and they have the credit products. Similarly for insurance we have tied up with partners like ICICI Prudential, Bajaj Allianz and Aegon Life Insurance.

What was the reason for this pivot to fintech?

We had always planned to transform into a full-service fintech stack, but just after demonetization we saw a need and seized the opportunity to grow the merchant and consumer base. This happened sometime in 2017. Once demonetization was announced there was a huge push for growth. Crazy spends. Crazy budgets. Life was a blur. We opened 10 offices in one month. But we realized that we have added all these consumers, but are they really transacting? So we sat down and tried to chart our future at an offsite meeting in Faridabad in May 2017. We realized we had 65 million users but we were not making a lot of money. We looked at Kotak Mahindra Bank and saw that they had a smaller user base but they were so profitable. The payments business generates only 1.5% to 2 % in margins. That’s when we decided to include the distribution of financial services in our strategy.

What kind of products are on offer?

We have loans starting from Rs. 2,000 ($35) and going up to Rs. 200,000 ($3,500). And we can offer digital loans in five minutes with minimal paper work. We also offer insurance cover for premiums as low as Rs. 20 (28 cents) per year.

Plus, you can invest in mutual funds through us and even buy digital gold in rupees or in grams. We already have $60 million in gold assets under management. These are all sachet financial services products for the masses.

If you think about it, there is so much need for credit. Everybody has kids in school and people want to buy washing machines and TVs and refrigerators. Where do they go? And when it comes to insurance, we are highly under-penetrated. For starters, just look at all the Swiggy and Zomato guys whizzing around on their two-wheelers delivering food. Do they have accident cover? We want to reach out to all of these consumers.

What is the future course for your payments business?

We will continue to build out our payments business, and we hope to reach 250 million users in the next few years. But we are using the payments business as a base to build our financial services business. My largest asset is data. What can I do with this data? I have this user who is already doing these payment transactions with me. What more can I do to increase the stickiness? That’s where the financial services products help.

Can you describe your march to profitability?

Our overall focus is on the sustained and growing profitability of the business. We do not want to be carried away by vanity metrics like gross merchandise value or the number of transactions. We are looking at share of wallet with the merchant or share of wallet with the user or the average transaction or revenue per user.

We are going to be O.K. with not having the highest number of users. But we will be in the top two or three in every category that we operate in.

As a woman cofounder what is your view on what women can do to further themselves in the workplace?

I think more women need to work. They have to be socially conditioned to think that they have to work and be financially independent. Women also have to be more confident and more informed.

And we just don’t network enough. How many meetings do you do in a week just for the sake of knowing things or meeting people?

Also, we have very few female founders in India. If I get an opportunity to list MobiKwik, it will create another benchmark that this can be done.