With 90 million active users, PhonePe aims to become a full-stack financial service provider

By Priyanka Pani

Walmart-owned digital payments app PhonePe is aiming to become a full-stack player in the growing Indian financial services market. The app, which went live in 2016, is already a leading digital payments player and also is expanding its presence with digital gold, mutual funds, insurance even as it plans to add more products such as NPS (national pension scheme), EPF (employment provident fund) and stocks by the end of this year.

Hemant Gala, VP Payments & Financial Services, PhonePe told IBS Intelligence that while PhonePe started with the sole purpose of solving digital payments, it soon realized that there was a more significant opportunity in the financial services segment that is expected to reach over $340 billion in the next few years with growth coming from the smaller towns and cities.

The Bengaluru-based company, founded in December 2015 former Flipkart employees Sameer Nigam and Rahul Chari, was the first semi-closed wallet in India to go live as a UPI-only wallet in 2016. UPI or Unified Payments Interface is the world’s first real-time money transfer interface developed by the National Payment Corporation of India (NPCI), an Indian government-backed umbrella body for all kinds of digital payments.

The company, which was acquired by Walmart in 2018, soon started diversifying and launched personal finance products such as starting with mutual funds (MF) as the company felt that the penetration in that segment is still very less at a mere 4-5%. The company competes with dozens of MF apps with a critical differentiator by being a distributor for the Asset Management Companies (AMCs) in India.

Gala said, “We are trying to solve the basic and simple problem of mutual fund investing. Customers in India are still not aware of MFs, and even if they are, many don’t know which Fund to invest in. Hence, we let our customers choose from several funds suggested by the experts at AMCs. We do not believe in becoming a marketplace.”

PhonePe users are recommended funds depending on the data provided to create a risk profile. The company has around 200 million users, of which 90 million are active users, up from 55 million monthly active users in June 2019. In MFs itself, around 30 million people use or open the app daily across 5000 towns and 14000 pin codes in the country.

Gala said that the number of evolved MF investors is still tiny, and hence the idea is to create an awareness and investor education through the app, especially in towns beyond the metros with a simple onboarding procedure.

Gala said that the current pandemic has not impacted the company’s business but has accelerated growth in many ways. On the digital payments front, the company has witnessed a massive increase as people preferred online payments over cash to avoid the spread of Coronavirus. The COVID19 also led to an economic crisis as stock markets worldwide plunged to the new lows. It led to a massive spike in users coming to the investment platforms. PhonePe witnessed around 70% growth in new users looking for MF investments since March this year, according to Gala. The company also saw a spike in its digital gold, tax-saving funds and liquid Fund that allows users to earn higher returns on their savings with the ability to withdraw their money instantly 24×7.

Besides, the company also launched. “Corona Care” a cost-effective hospitalization insurance policy for an individual and his family members that don’t have health insurance. The plan is priced at just INR 199 and comes with a cover of INR 50,000 for a person under 55 years and is applicable at any hospital offering Coronavirus treatment. Gala said within 45 days of the launch, the company already has got 100,000 users.

It also launched a Super Fund. The Fund invests across multiple top equities, gold, and debt funds of different mutual fund companies to help investors create long-term wealth more securely.  The FinTech has partnered with Aditya Birla Sun Life Mutual Fund (ABSLMF) for the same and is looking partnering with other AMCs too.

The Fund also allows users flexibility to choose between the three options – Aggressive, Moderate, and Conservative – based on the user’s investment style and risk comfort.

PS: Updated with some minor corrections.