 Welcome, everyone, to this next panel of tech and innovation summit 2021. We are in the third stage, which is the final stage of our day, and this panel is about the changing dynamics of money, and to talk about it, we have with us Mr. Ashish Singhal, co-founder and CEO, Point Switch, and we have Mr. Madhusudan Ekambaram, CEO, credit company and co-founder face, Mr. Anand Kumar Pajaj, founder, MD and CEO, Payneerbhai, Mr. Rajesh Raju, managing director of Ladi Capital, and Mr. David Kauri, managing partner, Jungle Ventures. And to lead the session, we have with us Mr. Ashish Kafadia, partner, Lume Ventures. Ashish, over to you. Hi, very good afternoon, and a warm welcome to everyone. It's been a pleasure going back and working with some of the friendly faces that we have been and good to know a few others who have who we have not met. So thank you once again, Saurav and Tupan and Gati. The thought process was to spend some time trying to talk about the overall future, the way we look at fintech. We are all investors, trope founders, trope entrepreneurs in more ways than one. And the idea would not be to try and just gesticulate on only about things which we are hallucinating or dreaming about, but the thought process would be to try and connect the dots and try and put forth our views on how we see the scenario shaping up specifically with respect to fintech as an industry. So just to get going, my quick thoughts on the vertical, the way I have seen fintech over the last few years, I have kind of felt that we are moving towards a era where fintech is no longer going to remain a vertical. I do feel that the horizontalization has pretty much begun and COVID if at all has only been a catalyst to that process. What I mean by that statement is over the last 20 years, you would track various opportunities and various opportunities to invest as well as to start up into different buckets and technology was one of the many buckets and over the last 10 years it became horizontal. In a similar vein, I do feel that fintech is pretty much in the past to be a horizontal and less of a vertical and the reason I say this is because you look at payments as a vertical, whether you look at credit as a vertical, every other business, if not every business will have some of the other elements that are relevant and you will end up building a stack or a layer of overlapping fintech ideas. So with that overarching thought process and context, we do see several areas in which the Indian and global ecosystem has evolved. We have the conventional financial services on one side with banking, insurance, capital markets and we have a bunch of new initiatives on the payments, alternative areas of credit to accept on the other side. So what I will try and do is bring in views of my fellow panelists here on each of these areas, starting with an area which has been in the news on and off and something which most of us can't get our minds off. So broadly the way we do see blockchain crypto, it has been anointed as something that will take over the future. There are economies which have been predicted to be built on top of cryptocurrencies and there are also a lot of white papers, etc. floating around which say that the economies which don't adapt are definitely going to miss out on lot. So let me start with my fellow panelists here, going over to Ashish, Ashish how do you see the developments here and what are the areas we see blockchain creating sustainable enterprises and in the vein of that, how do you see crypto emerging in India from here on? So that will be good to start with and then of course we'll move the panel to understand other dynamics. Thanks Ashish. Thanks Ashish for summarizing the fintech landscape in India and obviously crypto has been in the news and at the cutting edge of what we are trying to achieve as well. So crypto as an overarching theme in itself is trying to change fundamentally how systems work, creating less and less dependencies on third parties, creating more resilient systems which are built at the core by code itself and serving the people equal, taking say insurance for example, banking for example, it becomes just an internet and a mobile device you can now access globally wherever you are the banking and the financial ecosystem that is what crypto is here to revolutionize to make not just everyone in the world but every corner of India linked to this global ecosystem and trying to create different services in a new way possible. So crypto establishing a new way to build businesses to take people into this economy through just a mobile phone and the internet and creating their own identity over this financial ecosystem. Crypto especially in India is very very powerful not from just this standpoint of investment but also from the standpoint of the infrastructure. In India getting people on board on banking services, remote areas of India, it's hard. The infrastructure to build in India, it's very very difficult to reach every single person in India even in the remotest area to get them linked to the financial ecosystem but crypto is that bridge that we believe working with the financial ecosystem but creating a new way to onboard these people, to link these people to the economy and not just the local economy but the global economy in itself. So crypto has emerged as a platform not just as an investment platform in general but as a platform to revolutionize banking, lending, insurance as we go on. Obviously it's a very start of the journey, we'll see how things evolve in the future but it's really promising how crypto could really benefit the world and especially India and being so many innovators in India. Just looking forward to what we will come out and build the next set of multi-billion dollar companies in India on crypto and blockchain. Thanks Ashish, I appreciate the views. So David coming to you next, in terms of taking this little forward, do we see crypto emerging as a mainstream activity which will take over being more than what today has been looked upon as an revenue and asset class and what are the critical factors for that to become mainstream if at all we believe that way. And before we start David also a small 30 seconds introduction about you would be really useful for participants. Sorry I missed that with Ashish, we'll come back and do it again. So over to you David, thank you. Sure, just 30 seconds on me as I originally spent 12 years doing M&A at Yahoo covering everything except for the U.S. and then TBG Capital and then I've been a partner at Jungle for the last six years. We invest in Series A, Series B tech companies across India and Southeast Asia. And like you we also believe that Pintek has always been horizontal and within that you have vertical categories from payments to credit that are building up. I think the other thing that's been evolving is that you also have years ago you had defined Pintek companies where today I think there are Pintek elements within all types of businesses. So you may have software businesses that have a payment or a credit or some other layer. There's companies like Pine Labs, you have multi faceted businesses that have Pintek as an element of what they're doing. So I think it's become more pervasive. I think as you think about crypto, certainly there, as Ashish just mentioned, there's a tremendous amount of benefits whether it's the velocity of transactions, the reduction of fraud. I think from an investor's perspective, I think one of the things that we are conscious of is the regulatory environment. And I think U.S. President Ronald Reagan had it right when he said the nine most terrifying words in the English language are, I'm from the government and I'm here to help. So there is government involvement in crypto. There needs to be at a domestic level across all of the markets. And how that regulatory regime comes together really defines what role I think crypto can play in each of the individual markets. But clearly there are benefits and pros and cons to that. But as you think about the global applicability of crypto, it is one of the most pervasive technologies I think to grow globally to align consumers and businesses in order to either transact or to drive more efficiencies into what they're doing or make the world a smaller place and induce a lot more trade, a lot more continuity of service and consistency. So I think there's a tremendous amount of upside. I think it's still in the early days and really is up for development based upon each individual domestic market. I appreciate on that note coming to Rajesh, a very relevant question, given what David mentioned about government, is India ready for crypto? What are the factors we see are critical for crypto in India? If at all, we believe they are ready. And if it is not, what are the parts we need to walk? Thanks, Ashish. Good question. India has already tried to regulate it in some ways, ban crypto usage in India, linking bank accounts to crypto exchanges, they took that step a couple of years back. I'm sure Ashish and others who are closer to crypto can answer that question may be better. But in general, my views on crypto, of course, there are a lot of benefits. And when it comes to any sort of, whether it's currency or a financial services product, security is the most important thing and speed of transactions is extremely important. And the price of the transaction is critical. So crypto does provide a lot of great advantages around all those three. But at the same time, the way maybe it's a perception issue, maybe there is a way to semi-regulate the entire industry to make sure that the crypto comes into the mainstream rather than a back-channel currency, the way it's looked upon today. My views that the governments are not going to leave this particular industry alone without any regulation. I think from taxation to government revenues to maybe it's a perception issue. Excuse me. So I think it will be regulated to what extent by which government is there going to be an international body or individual country is going to regulate this on its own. I think there are a lot of complications ahead of crypto and very difficult to kind of forecast how the whole industry is going to evolve. But my view is that it is going to be regulated to what extent and depending on the country, they may take different approaches to this. But as the industry gets bigger, absolutely the governments are not going to let a lot of revenues leak and there will be some regulation. I guess Ashish and others I'm sure are thinking about this on a daily basis what the regulation is going to be but it is going to be regulated. Just taking on that point Ashish, we are even expecting some developments on the tax run. Of course, the way the Indian laws define, they can tax on anything and everything. There's hardly anything that they can't. But we're expecting a little more clarification that this will be tax managed and migrated going forward. That's broadly the thought process of the news. And the other thing also is that I do feel that for that to be mainstream, the government will need to do better to give a clarity in terms of where its head is at. Do they want to have their own currency? Do they want to allow and permit other currencies to operate? I do feel that a lot more clarity and communication on the topic is going to do all of us a world of good. Till then we can only imagine speculate and take our positions but there are lots more to be done over the next 24 months or so before we can even start thinking of that becoming mainstream from an India standpoint the way it is. So moving ahead, coming to Madhu. Another payment from a credit lens are the emerging trends leading to and broadly what is the way you see the landscape evolving? We have seen a fair bit of investment and growth of businesses around credit and there seems to be a unsatiable appetite both from the investor community and the in-state consumers who are leveraging these platforms. What is the way forward and what does the future look like for us to have a holistic payment system which can be managed where this can be created in a sustainable format? Okay, thanks Ashish. On a level of some brief introduction, I am Madhu and I am the CEO co-founder of CradeB. CradeB is a platform where we are intending to take the entire company towards a new bank services in the next couple of years in its real sense. I mean new bank is a certain term which has been abused very badly but in its real sense it's taking all the banking credit services to the last mile using technology as a platform and that's what we were aimed to. So of course what we have been doing for the last five years has been pioneering the lending especially to the masters, especially to the tier two to tier four cities. So T2 to T4 cities is what we have been servicing, providing the credit on their apps, on their Android phones is what we have been doing. So looking at credit, I mean it's interesting to understand where India is. So more than one third of the Indian population don't have banking services, the formal banking services, what we call it. So a huge part of India is dependent on the informal sectors. Just look at certain numbers. The health insurance which is a primary need for all of us. The penetration of health insurance of any format is only about 18% to the Indians. So that's a basic need. The credit card penetration, for example, it has become more of an exclusive or a luxury service to be offered. The penetration is about like 3% to the Indians. So on one hand what we see is that people like us keep getting tens of calls or there are like multiple times we get calls to offer, I mean offering us credit cards, offering us personal loans and offering us insurances and what not. On the other hand, a lot of the masses have been deprived of these basic services. So that's where the real India is. Now if you're looking at where the FinTechs can majorly play a role is not trying to go behind the crowd which has been already serviced so well by the banks and they're kind of put into kind of a repeated calls by these banks and what not. Not those customers but the customers who are really in this tier two to tier four cities and that's where the real last mile services of this banking has to be provided and that's where the real growth is going to come out and otherwise you don't really require to go and underwrite a salaried person with a 750 plus civil score. I mean there is no meaning in that. I mean already the banks are doing a FinTech can never or on a lending side you can never offer the rates what the banks can offer then what are you really trying to chase here. Your CACs are going to shoot up and ultimately there is no unit economics profitability what you could see that. So in all sense either the business sense or the real need within the Indian population I think the the mid India or the T2 to T4 cities is where the growth going to come for the in the future for the FinTechs is what is my thoughts. Thanks Madhu, appreciate. I'm coming over to you with respect to payments. It has been one of the earliest workouts from where India stands and it has also emerged to be a fairly crowded market where there are a bunch of opportunities and venues for customers and consumers alike. So how what do you see as the opportunity set next coming up? Do you see customers needing additional layers to be able to continue to engage with their preferred payment app? And if yes what would these layers be and how would the payment businesses differentiate? It's a fantastic question Ashish and the whole idea of what is the preferred lens of payment for a consumer and you called out early about the horizontalization of FinTech and I believe payment itself is one which is getting through the horizontal and applying itself to everything that exists. So every commerce gets expedited with a layer of super efficient payment mechanism be it with a card swipe with nil mdr not relevant with a UPI with QR scan not relevant for mass India where debit cards are expired mobile numbers are not updated in the bank account bank hyper banking. So that leaves you with cash or with protection may prevent them you put your thumb and the old guard way of going back to the age old banking practices of putting them and getting your money done. That is what by the way we do 6000 crore of throughput every month with 7 billion dollar odd process last year. That's it your first question is very interesting the part where you asked that will the customer prefer the preferred mode of payment. The preference of a digital savvy greedy segment is the discount and there is no loyalty warranted over there. So people are only burning money in doing habit formation changes where payment app A came and long live that payment app B came long live wallet with UPI coming in CDEFG came and then the challenges of beyond E2 towns where debit cards are expired where mobile numbers are not updated in the bank account. So how does one ride up to the UPI bandwagon either. Having said that there is a mass India the Bharat that you and I don't relate to your mason plumber electrician painter carpenter maids I a buy a buy an ABCD everything that is sub strata to us and that segment is catching up gradually for lending if you call it neo banking if you call it far away from crypto yet by basic best that will help me. So let the basic cash flowing what I'm excited about is that the horizontalization of fintech applied to retailing with the 15 lakh retailers registered on pay nearby platform without burning money 50 lakh downloaded without burning money and half a million five lack of them actively transacting and serving there nothing but merchant network. So look at us as half a million retail network facilitating banking cash and cash out on top of it you have a soft boss for tap and pay you have a card swipe you have a UPI you have a hard pay and a link based payment not to miss out on top of it you engage layers of e-commerce you engage layer of FMCG so this is a transportation layer a digital transportation layer of micro entrepreneurs seeded into deep arteries of India and most of the work that you would talk of two way flow of communication be it taking high end of technology to the bottom of pyramid which is payments or taking e-commerce to assisted commerce or taking the offload of the ground like taobao in china can you help ssg self-help groups to take their products online for sales at amazon and itc at flipkart so yeah exciting times ahead but too sent on the blockchain since I can't hold I heard mtab chaudhary speaking in the previous session what currency is it which is so much fluctuating the basic dharma of currency is to be stable and give a stable commerce sense CBDC would take the cake away when it comes whenever it comes libra was held back for similar apprehensions probably and what exchanges are those which fail offline often and take away the whole currency that is loaded onto them on crypto no security warranted 600 million dollars taken away 200 returned last week I read about some exchange so I don't understand this I think we are we are far away from it and we don't seem to be missing anything either but the blockchain below it is a very great technology for distributed ledger which you can apply for many other things sorry I don't understand it hence I'm expressing my apprehension and that's to you Ashish no appreciate this one thanks for adding the last bit on the bitcoins well appreciate so let me come back and bring in some investor views around what we are seeing as a mega trends in the market as well one one segment that where not much was done initially was the intra space on the financial services side realistic innovation that last innovation that I can recall on the banking side having been part of a couple of banks was full banking solution happening at scale and it's been two decades since we spoke about that a lot of practical stuff a lot of stuff on specific segment but nothing at a scale that level so what I'm definitely curious to know what are the trends we are seeing on the inside on applicable to financial services banking insurance for specific vertical within the financial services and fintech domain would love to start with you David and then also I have Rajesh's view as for my investments before we pull the founders and have their thoughts sure so I think one of the biggest changes has been the leverage ability of data so if you think about that in the insure tech space it's not just to Onan's point about the products reaching consumers in two or two or three towns and reaching a new base but it's also leveraging the data that you're able to capture to drive and to create better underwriting which hopefully lowers premiums and drives accessibility of certain products and I think that's been largely prevalent in the insure tech space so that's been a category that I think has been able to and in the midst of transforming itself from you know traditional to new age through the use of that data through the benefits that technology brings maybe I'll pass over to Rajesh for his view and a bit more and thanks David I'll come back to you I have a couple of points on the data that has been an engine a fair bit of hope and opportunity I'll come back on that but before that I'm going to request Rajesh to comment on his thoughts on the overall trends and the opportunities in the pentech space on specifically on the infrastructure or any other thing that he has his views on what trends they're observing on the pentech side from a future standpoint Rajesh you're on mute sorry and on the infrastructure side I'm sure there are a lot of intakes including a couple of our companies for building automation and other products for banks and large NBFCs and I don't see much innovation coming from the core banking sector you're right Rajesh since the core banking you know digital core banking I don't think there's not much has happened I think they're they're fat and happy and I'm sure with the with the boom that we are seeing I do notice through our portfolio companies the larger banks are taking notice they're trying to they're trying to at least upgrade their technology does it mean they want to develop everything in house or are they going to go with the off-the-shelf cutting-edge products and platforms they're at least trying we have a company called Sainzi which does a lot of the workflow automation for banks and large NBFCs including digital KYC etc which used to take their weeks and months for merchants now we're doing it in you know matter of minutes and hours right so there is some some fundamentally you know performance and security and cost of transaction like I mentioned before all those areas I think infrastructure upgrades are going to happen either by the banks themselves or by young entrepreneurs trying to innovate and and sell it in the infrastructure products to you know large banks to NBFCs too and and like you said I mean the hold on pretty much everyone is going to be NBFC eventually so we need core infrastructure across not just pure financial services companies but but it could be across many other players who will be dabbling in in financial services whether that's their fourth business or not there may be a supply chain player and they'll be doing payments and lending and it will be many other segments right so it's not their core business so infrastructure can be provided by you know fintech companies as a horizontal to many of these players where it's not their core you know asset or skill set so there are many examples like a credit with you which does you know differentiate credit scoring and then we do that for you know pretty much every large bank and every large NBFC out there it's not that the banks and NBFCs cannot do but but just the innovation of applying taking a few data points without bothering the customer too much and how do you apply AI and data science and figure out whether they're grade worthy or not right so so there are a lot of things happening all around the financial services it's not just about payments and lending right I mean those are the things which get talked about but this fundamentally infrastructure side things have to change and it's a matter of time either the banks do it themselves or you know the the the reason new banks exist is because banks cannot provide simple digitalization and extending it to every customer who wants banking to their doorstep right so now now you're at your fingertips so you know the fintechs and and the entrepreneurs the new entrepreneurs are going to put a lot of pressure on the entire system to innovate or at least buy off the shelf platforms and products to make their whole process much more smoother and faster thank you I think one very important point you made is about payments and lending is not the only thing and that's where the earlier boom came in and thanks to the last few years we are seeing a slightly more balanced attention to the infrastructure as well without which I don't think we'll be able to get to a lot of solutions things as basic as vacancy liations or things as whether it is a credit card for their merchants or whether it is the customers for the banks we still are in areas where there's a lot of scope on those areas and that's where I think even the best of the new banks will have to think through some of these to become more holistic and own the customer as well as being able to have meaningful margin structures for themselves so you would be good to start with a quick 30 second background about you and the company and rather than putting my question for you I'll crowdsource it there has been a favorite of interest and we're asking questions so let me use that so the question that was put up was how do you as a company look at the technology and the security related concerns related to crypto and the other part also what I thought relevant what I wanted to be meaning to check with you is about the cost of transactions so would be good to hear your thoughts thanks Ashish and just to introduce myself myself Ashish single CEO and co-founder of Point Switch Kube which is the leading crypto platform in India making crypto as investing as simple as ordering food online and just before I answer your question Ashish I want to address Anand's point as well on you know that it's we believe I was about to ask you on that when he said let me come so thanks for being here so we all we are not so probably close to crypto so we do not understand who are actually investing in crypto 60% of our users which is over 6 million users are coming from tier 2 and tier 3 cities my made invest in crypto as well my parents invest in crypto obviously they're biased but they invest in crypto and do they do tier 3 cities are the big hubs which are getting into this investment and crypto is not just about CPDC users about stablecoins why bitcoin fluctuates so much why did gold fluctuate so much when it was starting to accept as a payment because once you figure out that there is a mode of payment then every region had different demand and supply and demand and supply need to equate for this fluctuation to go away crypto is in an adoption phase this fluctuation will reduce and stabilize over time stablecoins are a solution it has been implemented across the world through various like USDC USDT and various other factors which plays a very critical part but that critical part is not what blockchain and crypto is is all about it's it's about building infrastructure it's about building creating more solutions like Ashish talked about reconciliation identity is one of them cross water remittance among them and micro payments which I now talk about regarding the cost of transaction Ashish to address your point so cost of transaction on crypto obviously you know fluctuate too much because of the network issues it's a new network which is trying to build up now but over time things like lightning network things like sidechain would reduce the amount of transactions on the actual blockchain reducing the amount of cost and enabling micro payments if you have to pay even 1 rupee to continuously say stream a youtube video from any point you can still do that without worrying about the cost of transaction in that mode right so these are the so like people used to say right that internet money for the internet has never been built and bitcoin and cryptocurrencies what they're trying to do is trying to establish that that infrastructure which will allow payment to happen smoothly over the internet and cost of transaction is a very important point to address there and things like lightning network things like you know sidechains would considerably reduce the cost of doing transactions over you know the networks built on blockchains itself and we would see traditional finance using blockchain in the future to reduce their transaction cost and remittance is a is a very good example for that remittance cost and time has reduced significantly you know since the banks have started using blockchain as their base to you know send and receive information in and around the swift message right coming to security obviously security is the biggest risk because once you take away you know currently in the current financial ecosystem you trust banks and third parties to be secured to take care of your security crypto works the other way the security lies in the hand of the people that holds it so security is going to be a big challenge but it's not that you know we haven't done enough the industry has moved bounds beyond traditional security and you know Coinbase custody is a great example even a faraday cage of they are built to make sure that the information sharing is there's not possible across any network making the most secure crypto storage in the world today right so it's it's about innovation and as the innovation grows our need for security would grow and you know the young companies like us would try to build new innovative systems making sure that people feel secure and safe while using these infrastructures and still be able to utilize the best possible outcome from the infrastructure that built out of it. Good points appreciate Ashish thanks a lot just a quick 10 seconds before I move to the last couple of questions David thanks for your time I understand you need to leave really appreciate your time and insights thank you yeah no thank you it was a great panel. So Madhu a very quick question the perpetual argument about every lending stock credit business will eventually have need to have an NBFC versus platforms will have this hope to become profitable on their own without the NBFC the bank it so very quick shot you before we move to the last question to Anand. Yeah so I guess you know the models are really becoming quite well all right so there is NBFCs which are participating on multiple platforms and you know that there are companies like us who run both the platform and an NBFC so our platform has multiple NBFCs banks participating on our own platform while our NBFC participates on multiple other platforms so you will see a lot of m cross n structures that will evolve and probably gets enticing and that's how the industry is evolving right so there's there's never been a single bank in any in any country right so there always it's not a winner take take all market especially in terms of credit there's going to be multiple players and there's going to be multiple platforms and the coexistence and growing together is the way for fintech lending sectors right so that's what we are going to eventually see in this sector so the presence is what is more important and coming to that part of you know so who is going to be profitable here whether the NBFC or the platform I think the real question is who is going to unbride you know so the the overall point comes in is that NBFC is nothing but a regulatory license at the end of the day which which probably the the platforms itself can apply and whatnot right so the the real question comes is who is unwriting and whether that particular platform or NBFC has the ability to unwrite with the data available on that platform right so I think that's the key question and that's where somebody has to build their expertise on and those are the entities which will be valued more in in in the upcoming time or in future rather than to very clearly say that whether the NBFCs or the platforms and who will dictate the terms is more about who can unwrite here yeah point thank you Anand last question I I do feel that there will be a more holistic system with the new age tech players existing coincided with the existing ecosystem on financial services I don't think it is true that bank management will be replaced it will be coexisting it will be more sophisticated quick thoughts on that before we hand it back to sir yeah I believe it's a model of coexistence it's not entire existence everyone has a job to do and we believe that the fintechs are the front office of banks so to say rather than thinking banks are back office of fintechs there is a lot of governance there is a lot of credibility trust that they bring that said yeah bank and bfc fintechs non-lending ones also all of them will coexist and it's a like even rajesh mentioned and even I heard the madhu say that it's a matter of coexistence what of each other can you leverage so two plus two is not four it's actually 40 that is what you can leverage having said that to your own point that you mentioned about horizontalization earlier rather than verticalization of payment we see a huge opportunity with these half a million active retailers we are now able to take itc on our backfill to the remotest of the areas we are able to take a e-commerce company there we are able to take pharmacy to the last mile while simultaneously handling banking and payments all the payment modules on top of it lending enabled with terabytes of data that are available with human intelligence and actual we call it barosa score it's not credit score it's credibility score because hundred customers come to our retailer base every month on month on month on month so there is a credibility established through our data that we are able to see we experimented it with centrum and we see three cycles of repayment happening 100 percent so this is a scalable model imagine five lakh retailers getting 50 000 rupees it will be one of the good large portfolios created out of it now that's it to your point that Infra was built in the last two years Rome was not built in a year and overnight the UPI today enjoys the bedrock of IMPS which was built 10 years ago which rode on NEFT simultaneously came a spin off of adhar enabled payment system where when the cards were not working adhar was working when the ATMs were down underwater or the ATM cards were not working the Anguta chap was working actually and people you and I also withdrew by using adhar system so coexistence interdependency is a better way lot has been built and like you say we are a digital connector these are half million micro-entrepreneur platforms who help bring anything to anywhere so while we say most of the financial services to most of the people at most of the places it looks like with digital connectivity we can take most of the things to most of the people