On Wednesday, Indian payments platform Paytm announced setting up of its investment and wealth management division, Paytm Money Limited, a wholly owned subsidiary of One97 Communications (the company that owns the brand Paytm).
This makes Paytm Money the fourth consumer brand apart from Paytm, Paytm Mall, and Paytm Payments Bank for the company.
With the division formed in October last year, the company also announced the appointment of Pravin Jadhav as Senior Vice President who will lead the new venture.
An ex-entrepreneur, Pravin led Product and Growth at Servify and Rediff in his earlier roles and was the Founder and CEO of Wishberg.
At present, Paytm Money is setting up its operations in Bengaluru and looking to seek regulatory approvals from SEBI to commence operations.
Giving a tentative timeline, the company plans to go live (with the platform) after four to six weeks of receiving the approval. According to the company, the launch is ideally supposed to take place in the first quarter of 2018.
Commenting on the new subsidiary and Pravin’s appointment, Paytm Founder and CEO, Vijay Shekhar Sharma said,
"We started as a payments platform and expanded customer offerings to deposits with Paytm Payments Bank. Today, with Paytm Money, we have taken the next logical step in the direction of wealth management. Pravin and his team is on a mission to make wealth management easier and accessible to a large number of Indians. We aim to increase the size of wealth management customer base and bring simple and easy to understand wealth products to our consumers."
In an interaction with YourStory, Pravin talks about the new platform and Paytm’s foray into the wealth management space.
YS: What will be the first products which will be available on the ‘Paytm Money’ platform?
Pravin: We will be going with Mutual Funds as the first product on the platform and our in discussion with almost all 40 Asset Management Companies (AMC) in the country.
However, Pravin states that the platform will be available with 10-12 AMCs during launch, which cover close to 70-80 percent of the industry money. Currently functioning with a team of close to 40 members, the company plans to ramp up this number to 200 employees in the next four to six months.
YS: What is the nature of license which you’ve applied for? Is it a distribution or an advisory license?
Pravin: It is an advisory license which Paytm has applied for. At present, there are two kinds of wealth management platforms – Distributors and Advisors. Distributors are those who take commission from AMCs and act as intermediaries.
We want to take the advisory part, focusing on an investor first approach and just advising customers on the platform. However, the final decision lies with the customer.
YS: So, how does Paytm plan to make revenues from ‘Paytm Money’?
Pravin: We are not focusing on revenues for the moment. However, we might introduce subscriptions or charge an advisory fee to the consumer.
YS: How much investment is One97 Communications promised to invest in the new entity?
Pravin: We can’t share absolute figures, but with One97 Communications being the sole promoter of the company, the internal investment commitment put in the project is extremely high.
We are well funded internally and will put a lot of our resources into engineering and operations.
YS: Since when has Paytm been working on this platform?
Pravin: We have been considering wealth management for quite some time now. You would have seen Vijay speaking about becoming a full stack financial company for a while now.
Although the work on it has been going on for a while, the entity Paytm Money was formed only in October.
YS: Could you tell us more about the consumer flow for the user on the app? Will you be taking a goal-based approach like other wealth management solutions?
Pravin: We are exploring multiple options. Should we go through the existing app or build another dedicated app? All these are in the thought process.
But the philosophy undertaken is to simplify the entire communication around the products (listed) and investment procedure to the investor, while consciously building their risk profile.
There will be various tools to decide which Mutual Fund might fit the bill for the investor, and there might be a goal-based investment as well.
We are also looking to make the onboarding process completely digital and friction free with the customer having to do their KYC on enrolling themselves to the platform.
YS: How many customers are you targeting to reach through Paytm Money by the end of this fiscal year?
Pravin: There are close to 15 million Mutual Fund investors in the country. With Paytm having nearly 300 million consumers, we do plan to expand the pie significantly.
However, since we are still in the approval taking stage from the regulator, we will come back to you on the numbers once the approval is granted.
With active strategies of wealth management and credit, in November last year, the company entered into the lending domain in partnership with ICICI Bank and launched their short-term credit product, ‘Paytm ICICI Bank Postpaid’.
In the last week of December, the company had also claimed to have crossed 100 million downloads on the Play Store.