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PolicyBazaar, Coverfox, FundsIndia, CreditMantri, others under investor radar

Financial technology, ranging from online wallet service players like PayTM and MobiKwik to payment companies Citrus and Billdesk, has been on the investor radar for some time now.

, ET Bureau|
Last Updated: Jul 03, 2015, 10.17 AM IST|Original: Jul 03, 2015, 06.35 AM IST
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Financial technology, ranging from online wallet service players like PayTM and MobiKwik to payment companies Citrus and Billdesk, has been on the investor radar for some time now.
Financial technology, ranging from online wallet service players like PayTM and MobiKwik to payment companies Citrus and Billdesk, has been on the investor radar for some time now.
MUMBAI: Amazon, one of the world's largest e-tailers, is leading a Rs 375-crore funding round in online financial services marketplace BankBazaar, a move that highlights the growing investor interest in this segment.

The deal, one of the largest funding rounds in this space, will also see participation from New York-based family office Mousse Partners and PE firm Fidelity Growth Partners India, besides existing backers Sequoia Capital and Walden International.

Financial technology, ranging from online wallet service players like PayTM and MobiKwik to payment companies Citrus and Billdesk, have been on the investor radar for some time now.

Several companies, which are bringing online marketplace model to financial services space, have been seeing an aggressive pace of dealmaking.

Snapdeal entered the space with acquisition of RupeePower earlier this year, while existing players like PolicyBazaar, Coverfox and FundsIndia have mopped up large doses of venture capital funding as consumers are increasingly moving online.

Industry observers say consumers are now getting more comfortable buying complex products like financial services online. Other factors like regulatory trends are also aiding take-off of these services.

“Directionally, regulators across financial services industry have also acted against miss-selling and high commission charged on products. This is giving a push to low-cost channels like internet to push financial products,” said Parag Dhol, MD at VC firm Inventus Capital, who led early investments in Policybazaar and FundsIndia.

This is being aided by the number of smartphone users in India rising to 651 million in four years and the country becoming the world’slargest mobile-first internet market, according to Cisco.

“We are looking to bring all financial institutions into users mobile phone and leverage Aadhaar, eKYC and online banking to deliver electronic transactions,” said Adhil Shetty, co-founder & CEO of BankBazaar. The company gets 40% of its traffic through mobile and BankBazaar will use the capital for “technology integration, hiring and strengthening partner relationships”, besides “marketing and branding efforts”. The company, which has tied up with 23 banks, is also aggressively investing in its mobile application platform.

Bankbazaar said online loan applications across home, personal and auto loans are growing by 90%, compared with 15% growth in offline.

Other online platforms are also seeing significant traction. FundsIndia is focused on selling mutual funds and shares online, besides offering gold and deposits. It has 70,000 investors on its platform, which it is targeting to more than triple in the next 18 months to 2.25 lakh, according to co-founder & CEO CR Chandrasekar.

Experts feel that internet portals are becoming an increasingly significant channel for sale of financial services products due to factors other than convenience. “There is a high level of trust and credibility in the digital medium as they help demystify financial products, have user reviews and are considered more trustworthy as compared to a TV ad or an agent,” said Nimisha Jain, partner and director at Boston Consulting Group (BCG).

Across the online commerce segments, 13% of consumers surveyed are transacting online while 24% are influenced by online search and discovery, according to a BCG study. In categories like health insurance the influence goes as high as 26%.
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