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CEO STORY with PhonePe
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00:00Hello again, or welcome if you are joining us just now here in this room or remotely online.
00:06We are continuing these sessions of CEO Stories and we are pleased to welcome Samir Nigam.
00:13Hello, Samir.
00:14Hi, Ellen.
00:15Welcome to you. You are the CEO of PhoneP.
00:18It's a company that you co-founded in India in 2015, if my information is correct.
00:24And it specializes in digital payments and financial technology.
00:29So, my first question is going to be around innovation.
00:34What are the new tech that you identify you think are going to transform your business, say, by 2030?
00:42I think the one I'm most excited about at a market level is India is introducing 5G technology.
00:49So, we are a mobile payments company and with 5G coming in, you should be able to actually make payments
00:55very seamlessly in all parts of the country.
00:57So, that's the big one.
01:00During COVID, because it became hard to use cash, the government has also introduced feature phone-based digital payments, which
01:07is also very exciting.
01:08So, I think that's at the market level.
01:10The second one I'm really excited about is with the UPI, the Unified Payment Interface in India, we're starting to
01:17go global.
01:18And there's a bilateral sign with the French government as well yesterday.
01:22So, Dubai, Singapore, lots of markets.
01:24So, I think there's a lot of room for international expansion.
01:26We'll touch base on that in just a few minutes in more detail.
01:31I'd like to know what is your outlook, your global outlook concerning the industry?
01:37I think the outlook for digital payments overall is just fantastic, right?
01:41So, India just crossed $3 trillion in payment value process digitally.
01:46That's the size of the GDP.
01:47And our forecast is that just in India itself, that number will hit $10 trillion by 2030, 2025 rather.
01:55And I think even globally, again, I think because of COVID, most people wanted to go contactless across the world.
02:01So, we're seeing an explosion.
02:02You see apps like Venmo in the US, which didn't exist five, seven years ago, apps like PhonePay in India.
02:07I think the future is very exciting.
02:11Has COVID transformed the way you work further than this?
02:17Two fundamental changes.
02:19Offline payments, most people prefer cash, especially in small markets, small shops.
02:23At least in India, where in the first couple of waves of COVID, we didn't have any vaccines.
02:32People were really afraid of using cash.
02:34So, digital payment adoption on the QR code just exploded.
02:37And that's not come back.
02:39So, that's good.
02:39I mean, it's staying that way.
02:40The second thing that we specifically did was we went very deep into rural India and the hilly terrains of
02:47India and acquired about 10 million small shops and merchants for digital payments.
02:52So, we have the largest connected network now, possibly globally.
02:55We have about 30, 35 million merchants connected.
02:58What was the reasoning behind acquiring these small shops?
03:01So, technology is awesome, right?
03:03So, when COVID was happening, the government started putting out a heat map of zip codes in the country that
03:09had a lot of COVID cases.
03:11All the cities were red hot because of the density, but all of the rural parts of India and the
03:16hilly terrains were green.
03:17And we figured that while everyone's distracted, most of the tech ecosystem is in the cities.
03:23And we had a sales force.
03:24We just built out an app where we could onboard freelancers and we put 100,000 people on the ground
03:29and just said, go into rural India.
03:32That's very interesting.
03:33Thank you for that insight.
03:35Now, for years, we've been talking a lot about a digital transformation and artificial intelligence.
03:41So, I was wondering if there was one technology, just one, that you would bet on for the future in
03:48your business.
03:48What would that be?
03:49I think it continues to be machine learning because I think there's just so much data coming out, especially when
03:55you're talking about digital payments.
03:56It's pretty much defining the economic activity in a country.
04:00So, machine learning is par for the course for us.
04:03A lot of the other stuff is, at least in my mind, 22 years in the startup ecosystem, they're fads.
04:10So, I don't really care too much about the new age stuff, the metaverse and all of that stuff.
04:16Are you using any of these technologies already?
04:18I got off social media, everything except Twitter five years ago, and my life's the better for it.
04:24I don't let my kids use any of it.
04:26I've never bought a crypto token.
04:29I don't believe in it.
04:30Yeah.
04:30I'd like to just walk back on the COVID crisis because this has really been transformative for our workplaces.
04:40Have you seen this translate for you with your teams?
04:43Have you used it in any way to attract new talent or to keep talent?
04:49And how have you been rethinking the future of work in the wake of this crisis?
04:55That one's been a bit tricky, right?
04:57So, the minute COVID hit, we asked everyone to just suddenly go and work from home.
05:02Yes.
05:02We were fortunate because we are a digital company.
05:06Everyone can work from their laptops for extended periods of time.
05:10And we made sure we ran the vaccination drives for all the employees and the families and stuff to keep
05:14people safe.
05:15But by about the one-year mark, there was definitely a deterioration in mental health.
05:23People were just at home sequestered.
05:25There was deterioration in just culture and values being disseminated because we also added a lot of people during COVID.
05:33We doubled the size of the organization.
05:35And it's really hard teaching young kids who just graduated that you're going to work remotely.
05:40You'll never know who your teammates are.
05:42You'll never know what the office looks like.
05:45So, by December last year, we actually told everyone it's mandatory to come back in.
05:49Initially, there was a bit of resistance.
05:51People didn't want to come back in.
05:52But I'd say 99% of them, one month back in, are actually saying thank you because they're feeling happier.
06:00They're socially connected.
06:02I think we are a social species.
06:03I don't think we are designed to stay away.
06:05I mean, just look at the Viva Tech Conference here.
06:08Doing this digitally and doing it with thousands of people walking in on the turnstiles is just not the same
06:13thing.
06:13Like, this is just amazing.
06:15Very quickly, because we have roughly two minutes to address this.
06:19Are you, is social responsibility of any importance to you at all?
06:24And how do you implement it in your company?
06:27So, I started working in the internet industry in 2001.
06:35And I saw the carnage of hypervalued companies where everyone's just trying to, like, buy their, buy their Porsches and
06:42their Ferraris and there's no social impact.
06:45I've seen the other extreme of that, which I think is a really, really sort of pleasant step forward, is
06:51the work that entities like India Stack in India and the government are doing in collaboration with industry where, by
06:59design, you're trying to be inclusive.
07:00By design, like, phone pay doesn't make as much money as a lot of international payment companies, but we service
07:07400 million people.
07:08And we take a lot of pride in that.
07:09Yes.
07:10And as far as, I think, social impact for us, one of the things we keep telling everyone in our
07:15company is, you've got to build tech for good.
07:18In fact, it's plastered on my back, so I'll just show that, right?
07:22Nice.
07:23I think the whole idea here is, if you're taking from society the best of technology, as a company, you
07:30should be able to give back the best.
07:32Thank you so much for that.
07:34Here is the second segment of this interview.
07:38It's called On My Watch.
07:45This is a segment that I particularly like because we ask our CEOs to address a question that they are
07:52passionate about.
07:54And here you wanted to take the opportunity to address digital payments in India.
08:00And perhaps we can start by talking about UPI.
08:04I believe it's a bilateral agreement that was signed very recently.
08:08Yeah, I'm incredibly excited about that one.
08:11So, for the audience, India has a mobile payments-based stack that came out of public-private collaboration called the
08:21Unified Payment Interface.
08:23It's designed for the mobile era.
08:25It's a direct bank-to-bank money transfer process.
08:29And it is by far and away the snappiest, fastest way to make payments, whether you're paying online, whether you're
08:36playing at a shop with a QR code, whether you're transferring money.
08:39There's nothing like it, honestly, in the world.
08:41And I've spent, again, several decades working in this industry.
08:47It's captured the average consumer's imagination in a way that I hadn't imagined when we started out seven years ago.
08:54We now have almost 400 million users on UPI in India now.
08:59Four billion.
09:00400 million users.
09:02400 million, yes.
09:03And PhonePay alone, we process about 3 billion transactions every month.
09:08We are now almost at a trillion-dollar TPV run rate, transaction value, processed annually.
09:16This is unimaginable, if you think about it, that you don't need a POS device.
09:21You don't need cards in your wallet anymore.
09:23This actually just happened to me a couple of days back.
09:26I came here from London, and four of us colleagues went into a cafe.
09:31We had a breakfast, and we realized none of us is carrying our wallet.
09:35It was really embarrassing, because we're all used to paying with our phones now.
09:38So, in India, I think what UPI has done is it's helped the country leapfrog the digital payments,
09:44sort of global trends, in two fundamental ways.
09:48One, it's designed to keep the money in your bank.
09:51So, you don't have the wallet player where everyone has to load their money.
09:55I don't want to be out of money to spend my money.
09:58So, money moves between banks directly.
10:00Secondly, it's public-private collaboration at its very best,
10:05because the core backbone has been built by what's called the National Payments Corporation of India.
10:11And all of us players are building the applications and the merchant solutions.
10:16So, the startups are collaborating with an entity that is backed by the central bank and the government of India.
10:23So, it's a fantastic way of actually looking at the future.
10:27That is really impressive.
10:28And I think you wanted to talk about PhonePulse.
10:34That's the PhonePulse report.
10:36So, PhonePulse is a project where we took about $40 billion of the consumer payment transaction data,
10:44anonymized it, aggregated it, and put it on an interactive India map.
10:50So, you can go on pulse.phonepay.com.
10:54For those in the audience, if you'd like to see a live demonstration.
10:57So, it's buzz.pulse.phonepay.com.
11:07Right.
11:07And you can zoom in into a district, into a state.
11:13You can see how many people are making payments, how many merchants are accepting them.
11:17You can see, for a startup, if you're trying to find greenfield spaces,
11:21you can see underpenetrated areas where there's not enough merchant acceptance.
11:24You can find categories in which consumer needs are not being met.
11:29And we put this out because there's a billion point four people in India.
11:34And I don't think even PhonePulse can actually address all their needs alone.
11:37So, we want to open up the market.
11:39Thank you so much.
11:40And we are now going to move on to the final segment of this interview.
11:46It's called Question Time.
11:54This is a conversation between CEOs.
11:57That's how I dubbed it.
11:58So, we asked one of your peers to ask you a question.
12:01And this time, it is Michael Trabia, who is Chief Technology and Innovation Officer for Orange,
12:08who wanted to ask you this.
12:10Yes, we have a video.
12:14Hi, Samia.
12:16I'm curious about the role of the telcos in the Indian ID and payment system.
12:22What would be your advice to the European Union
12:25that is willing to develop a European identity system?
12:31Thanks.
12:33I think the first part was regarding the role of telcos.
12:36Obviously, in India, it's one of the cheapest mobile data markets in the world today.
12:42And honestly, innovations like UPI, innovations like the government's own track and trace apps for COVID would save millions of
12:51lives, possibly.
12:52All these things wouldn't be possible without very cheap, high-speed internet.
12:56So, telcos are the backbone of the new age economy in that sense.
13:00Last mile region in India is fantastic.
13:02As far as the digital identity project, I don't have all the details.
13:07But in India, we have our own equivalent digital identity or biometric digital identity called Aadhaar.
13:13Again, it's started having positive impact on so many different walks of life.
13:19The government of India, we have a lot of different kinds of subsidies, for example,
13:25and there used to be leakage in the physical world.
13:27They're now in real time dispensing, for example, with COVID,
13:31three or four hundred million people got subsidies directly in their bank account
13:35using Aadhaar as an identity and using the same NPCI infrastructure.
13:40We are using it to solve for financial inclusion because when you have customers in rural India,
13:46it's too expensive to do physical KYC for opening a bank account or giving insurance.
13:51So, I think there is a role for a digital identity.
13:56The only caution I would say is that I think India also has learned it took us about a decade
14:01to get the right balance between data concentration risk, localization security, etc.
14:06That's the only sort of thing to plan for by design.
14:10Thank you so much.
14:12Sameer Nigam, everyone.
14:14Let's give him a round of applause.
14:15The CEO of Phonepea, thank you for being with us this morning.
14:19Thank you.
14:20It was a pleasure having you.
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