On Friday, Kamath was named an independent director to the board of Reliance Industries and also became non-executive chairman of the subsidiary that will house the group’s financial services business.
Clearly, after a slow start, a new Jio behemoth is about to roll out.
Historically, central banks, even in the United States, have been wary of large corporate groups getting into credit and lending. Walmart struggled. But data, as we know, is the new oil and smart technology, the new oil that has blurred the lines of business and the operational contours of companies. As Elon Musk struggles to make money from data, the Chinese have shown the world how the analytics that exist within companies can be profitably leveraged and then monetized. The influence wielded by Alibaba or Tencent because of this has instilled such a fear of God, even in the country’s communist party, that they went after these consumer tech giants to destroy what they feared. quickly becoming an alternate power center in their otherwise nanny state.
We are still far from there. So as mega-conglomerates like RIL, Adani or Tata move into financial services by catalyzing data from their existing telecom or retail empires, or both, it becomes a much more bankable option. RIL’s telecom consumers alone digested some 30 billion gigabits of data in just 3 months, giving them the ammunition to compete with banks, phantom lenders like Bajaj Finance or fintech start-ups. . After the breakup of IL&FS, with increased scrutiny from the Reserve Bank of India, it’s good that data-centric lending is done in a regulated way, under close scrutiny than the slimy offshore scumbags that feed on people vulnerable.
In 2016, the world awoke in shock when news surfaced of angsty Chinese college students being forced to bare all, holding their ID cards, to sleazy and slanderous loan sharks on the internet who sought nude photos as collateral. in their more expensive -for-porn regime – in exchange, for higher student loan disbursements.
Unemployment and inflation in Africa’s largest economy in Nigeria have also driven the desperate into similar faceless financial corporations that thrive on toxic messages distributed en masse to friends, family and even co-workers of defaulters. payday loans, with attached photos of their social media pages and phone book. .
Such predators also lurk in India. Several have alleged ties to Chinese entities that rely on the licenses of dormant locally grown NBFCs, sucking borrowers dry through extortion, while the government, regulators and major app stores like Google – which in August said it kicked more than 2,000 of these platforms’ apps from its Play Store in 2022 alone – is racing to bring billions of these transactions under control.
Although frightening on some level, we all know that data – analyzed, sliced and chopped – can show a mirror of your life like few others. From personal likes to dislikes, hobbies, passions and plans. From buying trends to stability, financials, mentals and everything in between, telecom and trade data plays predictability very well. And in a country where telecom penetration is higher than banking, the data collected will consequently be much bigger and deeper, fitting into the larger Digital India narrative. This additional data will also yield much more insight into our bottom of the pyramid, who remain largely unbanked, giving them access to cheap credit, as companies better leverage this information and digital leads to deliver tailored financial offers. – loans, insurance, etc. – for a longer-term and profitable commitment.
As Mohan Jayaraman of consultants Bain and Co told me, the socio-economic “lift” will be very significant given the growth in our incomes, because many of these people may soon enter the mass market or seek to pass to the affluent mass segment. Currently, this group has unpredictable and lumpy income, which poses a higher risk for traditional lenders. But bringing them into the ecosystem, being an end-to-end enabler, is a smart strategy. If executed well, it will also bring millions into the fold of a broader framework for the financial sector.
Bloomberg columnist Andy Mukerjee also argued that with a $200 billion balance sheet, players like Reliance can also exploit “the capital cost advantage it gets from being rated a notch higher than the Indian government.” and subsidize their fintech through other companies.
Jio disrupted telecommunications with free voice calls, what’s stopping them from disrupting the B2B Point of Sale (PoS) market by charging merchants no MDR? Break out the vending machine and start offering cheaper working capital loans to kirana owners to manage their inventory, Merchant POS also offers other value added features such as GST compliant invoices and acts as a good value for traders compared to traditional players.
For people like us (PLU), there are digital wallets, financial products, wealth solutions. Partner with NBFCs, banks and offer their analytics and earn fees or start lending. Secure this loan portfolio from time to time and effectively mobilize its capital. Sky is the limit.
But at the same time, privacy regulations need to be in place as we jump into this new paradigm. Black Swan events, technology disruptions, disruption of core telecom and retail operations can also derail many back, nee digital or neo-bank and fintech initiatives. But if Singtel and Grab can work together or if GoJek -Tokopedia merges to boost digital banking aspirations and Bank Jago commands such a valuation premium, why can’t Ambani be one or Adani aim to be a group Ant?