In conversation with Vishwas Patel, Joint Managing Director at Infibeam Avenues Ltd

Our country is still the fastest-growing major economy in the world, and there is a world of opportunities available for fintechs to continue their growth and scale even faster, affirms Vishwas Patel, Joint Managing Director, Infibeam Avenues Ltd

What factors contributed to the remarkable success of the company in Q3FY24, enabling it to achieve its highest-ever quarterly gross revenue of Rs 912 crore, reflecting an impressive 120 per cent year-on-year growth?

Our third quarter (Q3) experienced robust growth in digital payments CCAvenue, as consolidated gross revenue stood at Rs 9,120 million, accompanied by a Profit After Tax (PAT) of Rs 421 million, which we attribute to a few factors including the festive season demand, a consistent increase in the number of merchants using our CCAvenue payment solution, and the growing adoption of the CCAvenue Tappay mobile application which replaces the investment in traditional Point of Sale solution by merchants.

The festive period witnessed a surge in financial transactions, leading to a substantial increase in the total transaction value (TPV). This growth was particularly notable in the hospitality, travel, telecom, airline travel, and hotel sectors. Year-on-year, the TPV increased by an impressive 75 per cent, reaching Rs 1,810 billion. Payment TPV increased by 32 per cent to Rs 709 billion, and platform TPV surged by 134 per cent to Rs 981 billion during the third quarter.

The continual rise in the merchant base also played a pivotal role in the Q3 growth, with approximately 228,000 merchants added during the quarter, averaging around 2,500 daily. We proudly attribute this growth to the strengthened relationships with our banking partners and the impact of the RBI licensing regime, which has set high standards for fintech players and created substantial entry barriers for new participants.

Another crucial factor contributing to the company's consistent growth and profitability is our commitment to high compliance standards, continuous technological innovation, a policy of discouraging discount races with competitors, and being an early adopter of the international expansion of the CCAvenue digital payment solution.

Can you shed some light on the company signing a Rs 2,000 crore MoU with the Gujarat Government, to be implemented by the financial year 2030?

We strongly believe that artificial intelligence (AI) will not only take centre stage globally but will also significantly impact various industries. The extensive applications of AI in our business operations present immense growth opportunities. India, in particular, stands to benefit greatly from widespread AI implementation across diverse sectors.

Our primary focus will be on the retail sector, aiming to enhance sales and improve customer experiences through the integration of vision AI technology. Thus, we have invested in establishing an AI hub named Phronetic.AI, marking a milestone as India's first AI hub at GIFT City, Gandhinagar.

In alignment with this vision, we recently signed a Memorandum of Understanding (MoU) with the Gujarat government during the Vibrant Gujarat Summit 2024, held earlier this month in January. The agreement involves providing cutting-edge visual AI solutions with plug-and-play onboarding to retailers with AI models under the hood. It integrates with the existing camera setup for seamless and actionable insights to identify inventory in-store and allow merchants to publish across channels, including ONDC, for additional demand as well as customer insights.

The government will facilitate obtaining necessary permissions, registrations, approvals, and clearances from relevant state and central government departments in compliance with existing policies, rules, and regulations.

The AI hub is poised to play a crucial role in fostering collaboration among the government, private enterprises, technology companies, startups, AI developers, and retailers. Although the company's visual AI solutions initially target the financial and business sectors, there are plans to expand into other industries that inherently require visual AI solutions, including the lucrative defence sector, by 2030.

How will the company's strategic entry into the capital markets and digital lending software sector, marked by the decision to acquire a 49 per cent stake in Bengaluru-based Pirimid Fintech, contribute to its long-term growth?

Pirimid is a company specializing in the development of capital market software and frameworks for lending. Their expertise extends beyond India, having successfully provided such frameworks internationally. Notably, they excel in developing zero-latency frameworks within this domain.

We have identified compelling opportunities for collaboration with Pirimid. Firstly, integrating our payment technology stack CCAvenue in capital market software and lending solutions, synergy could offer significant advantages. The demand for real-time settlements extends beyond payments to capital market transactions, presenting an area where we see potential collaboration.

Secondly, exploring the application of safe and secure Artificial Intelligence (AI) in processing billions of transaction volumes within the capital market framework to identify risk is another avenue we aim to build with Pirimid for their Clients.

Lastly, we are actively exploring opportunities within lending frameworks. Our evolving thesis in this area is gaining strength, and we anticipate sharing more details in the coming weeks regarding our plans and initiatives in this space.

What are the top three strategic priorities currently being focused on by the company?

Currently, our top three strategic priorities revolve around enhancing our products with a strong focus on fintech security innovation through the integration of AI technology. This initiative aims to elevate the intelligence and effectiveness of our entire payment and platform product portfolio.

Secondly, we are dedicated to developing Vision AI models across several business verticals. This endeavour seeks to empower retailers with advanced visual intelligence capabilities, contributing to improved operational efficiency and customer experiences.

The third strategic priority involves the expansion of our business into the international arena or better say, we have a strategy of ‘not to put all of our eggs in one basket’, and thus we have spread our businesses in multiple geographies. Having achieved success in the UAE, Saudi Arabia, and other countries in the Middle East, we are now setting our sights on the US market. Our approach includes exploring potential tie-ups or partnerships with banks, hotels, and entertainment players to facilitate our entry and growth in the US market.

What is your perspective on the future of the fintech industry in India?

The India Fintech addressable market opportunity is a USD 5 - USD 6 trillion value of transactions by 2026. There is a huge opportunity for fintech to scale and capture that opportunity. If you see today, cash still accounts for 72 per cent of total consumer spending. We need to make our country a less-cash society and bring cash consumer spending to a single digit. In addition, there is a huge opportunity for credit as our country is credit-starved, with household debt at 11 per cent of GDP compared to the US at 84 per cent. While on the other hand, 40 per cent of MSME credit is via informal channels.

Fintechs have a huge opportunity to capture the credit space. Even cross-selling on a lot of related opportunities like wealth management. Less than 3 per cent of our population invest their savings in equities and mutual funds. Also, in the insurance space, India has very low coverage, with premiums at just 4 per cent of GDP compared to the US at 11 per cent of GDP.

Our country is still the fastest-growing major economy in the world, and there is a world of opportunities available for fintechs to continue their growth and scale even faster.