PhonePe, the payments arm of Flipkart, is set to enter financial services, starting with selling mutual funds through its app. The move comes at a time when the fintech space is seeing heightened action with multiple startups raising capital in the last two weeks. This is as per a report in the Economic Times.
PhonePe aims to tap the growing base of millennials looking to manage their wealth. Co-founder and CEO Sameer Nigam has been quoted in the report that the company has set up a new entity, PhonePe Wealth Services, for this business. He said while its regulated businesses like Unified Payments Interface (UPI) and mobile wallet would be under one entity, the new unregulated businesses would be under separate entities.
PhonePe, which was acquired by Flipkart three years ago, has become one of the critical standalone businesses for the latter, with over 30 million monthly transacting consumers. The entry into financial services pits the Bengaluru-based company once again against arch rival Paytm, which entered the space late last year.
Nigam said the company will build the financial services business through partnerships with existing players instead of doing a lot of the work in-house. Paytm has taken the latter path, creating a standalone team for this business.
The ease of making investments or buying insurance on an app is drawing interest. Most recently, Groww, an early-stage startup for such investments, raised over $6 million from a bunch of investors.
PhonePe has been steadily moving ahead with its ‘super app’ strategy, mimicking China’s WeChat. It has over 25 large digital apps on its app now, including Goibibo and Oyo. Nigam said the company has brought the leading bunch of travel apps on its super-app, and food and other verticals will see similar additions.
The plan is to have some 50 major apps and eventually open it to all digital businesses, so that you can buy almost any service through the app. In China, Tencent-owned WeChat and Alibaba’s Alipay have a whole slew of services within them.
Flipkart has committed $500 million to PhonePe, and the latter has exhausted about 50% of it. This is perhaps the first time there is clarity over how much of the funds allocated to it has been used. It is now aggressively spending on advertising and promotions to build its offline payments market. The app can currently be used at over a million offline merchants. Yuvraj Singh Shekhawat, head of the offline organised business at PhonePe, said the company is aiming to add five million more by December.
Apart from Paytm, now PhonePe, Mobikwik and Ola have also ventured into selling financial products like credit cards and insurance.