Digital payments firm, Mobikwik, is in the midst of an ambitious transition. The company, which recently turned 10, wants to veer away from merely being a mobile wallet, and make a foray into financial services. It hopes to do this by issuing small loans to a vast majority of the 100 million users of the Mobikwik app.
"However you look at it, not more than 200 million Indians are using digital payments. It’s going to be a couple of years before that number hits 400 million and maybe a decade before it hits 500 or 600 million digital payments users," said Mobikwik co-founder, Upasana Taku, in an exclusive conversation with CNBC-TV18.
"Because of our payments business, we have two large assets. We have a large user base of over a hundred million, a lot of financial data about these users, especially their spend behaviour. Financial services in India have really poor penetration. While 960 million Indians have a bank account but only 3.7 percent has insurance and only 6 percent has formal credit, while only 2.5 percent Indians have a credit card. Given that we have so much data and distribution, we can sell and cross-sell the right financial product to the right kind of user on our platform," Upasana said.
Mobikwik has already hit the ground running. In the last 12 months alone, the fin-tech firm has disbursed Rs 700 crore in loans, even as it hopes to lend more in the current fiscal. "In FY20, our aim is to do a disbursal of Rs 2,000 crore in loans. The aim is to do small ticket sized loans, which would allow us to disburse more than 100,000 loans per month,” said Upasana.
The decision to lend more and work up a decent loan exposure comes amidst a stellar financial performance by Mobikwik, this year.
While the company has been on a steady loss-cutting tangent, it began 2019 with about $25 million in annual revenue — a number that has gone up to Rs 62 million USD, today. “We have seen a five-fold growth in monthly revenues, and have brought down our costs to a stable number. This has allowed us to be contribution margin-positive for the last nine months,” said Upasana, pointing out that not many consumer tech start-ups in India continue to operate on negative margins.
“We are also trending at a really small loss number every month, which is less than Rs one crore per month,” she added, “We are looking forward to break even — if not in August — definitely in September.”
The next target for Mobikwik is to target annual revenue of $100 million by the end of FY20. Even as it notches up one financial milestone after another, the company’s founders are looking to turn angel investors.
The husband-wife duo of Bipin Preet Singh and Upasana Taku recently launched KwikPitch, a shark-tank like an approach to inviting business pitches from budding entrepreneurs who want to infuse life into their start-up idea.
“In our aspiration to bring entrepreneurs and more innovation in India, we thought of giving back to the start-up ecosystem in India,” said Upasana, “Ideally we would want to take a couple of bets if the pool of candidates or teams is solid. There is also no inhibition in terms of category. It could be a start-up in any space, and doesn’t necessarily have to be limited to fin-tech.”
While the Mobikwik bosses haven’t decided to budget seed money for their angel fund, Upasana expects it to be anywhere between Rs 5 lakh to one crore, depending on the nature of the start-up. “The idea is to get started, identify founder material, motivate and push them in the right direction, and help them with seed money as well,” she said.