Our entire biz will be digital in coming yrs: Bajaj Finserv's Sanjiv Bajaj

"With digitisation, a less monolithic structure is relevant for the future. But at the same time, there is certain solidity to being a bank because of the regulatory regime", said Bajaj

Set to take his financial services business to the next level of digitisation, Sanjiv Bajaj, chairman and managing director of Bajaj Finserv, spoke to Surajeet Das Gupta about his plans. Edited excerpts:

After the heady growth of the financial services business in the last few years, what is your key focus area now? 

The pandemic has made us pause, rethink and reset our business and re-organise our thoughts. Our new three-in-one app puts consumers right in the front for frictionless access to our multiple products and services, as well as the investment products which we sell for others. It will provide next-generation experience for our customers and partners. We work with 100,000 retail stores and manufacturers who make TVs, mobiles and furniture, and we integrate them to provide a seamless and intuitive experience. In the coming years, our entire business will go digital.

How many customers do you expect on this platform in the next five years?

Currently, we have 50 million customers who are credit-tested and KYC-cleared and approved for loans on multiple products. Nearly half of them work with us digitally to buy our products. No one has such numbers outside a few banks (payment players don’t) and even they won’t have them digitally. Our debt management services or collection business will also go digital in the next year to 18 months, and so will employee engagement. Bajaj Finance adds 5-7 million customers every year and that will be accelerated. When we look across all financial services, including our insurance business, we have close to 150 million customers. In five years, there is no reason why we should not have 150-200 million customers on the platform. 

Is there any other way you are looking at enhancing the digital customer numbers?

Payments is one. We have a payment licence and Bajaj Pay, our payment gateway, will be implemented in the next year. It will be a strong transaction route for our customers. While transactions don’t make much money, it is a natural extension for us as we can cross-sell customers our products and solutions where we make money.

You started the financial services business with two-wheeler loans. Are you looking at the auto space in a different way with the digital drive?

Later this year we are planning to launch an online store for two-wheelers across multiple brands, but financing only our customers. I don’t think Bajaj Auto competitors will let us sit in their showrooms. But for our 150 million customers, why can’t we give them pre-approved loan and insurance products?

We have also been in the used four-wheeler space for three years. As we build better capability, we are evaluating going into the new four-wheeler business and are looking at strategic collaboration with some of the large companies. In electric vehicles, we are doing a significant amount of work so that, once the space evolves, we are ready.

You are getting into the mutual fund business but why move into a very crowded market so late?

We had applied for a licence in 2012, when it was also very crowded, but we did not want to come out with a ‘me too’ product. And as we were building our customer base then, we put it on hold. But now with the very large numbers of customers that we have, we can create a unique offering by looking at different customer segments and not doing a one-size-fits all product and that too at a lower cost than traditional industry, while also leveraging the digital space. We plan to launch it at the end of this year.

It’s an oft-repeated question but will you go for a bank licence?

If you think of two circles, one being a bank and the other a non-bank and if you bring in an overlap, we represent the best of both. So far, the current model helps us in growth for the next 3-5 years. With digitisation, a less monolithic structure is relevant for the future. But at the same time, there is certain solidity to being a bank because of the regulatory regime, because banks are not allowed to fail and because customers have greater confidence in a bank. We are pleased with some of the announcements on bank licensing which the RBI came out with and they will play an important role in our decision.  

Are there opportunities for you in new digital technologies and products like metaverse digital art, and non-fungible tokens?

We are watching this space so as to separate the noise from what is real because what is real still needs financing and insurance. It still needs a platform to house and store it for authentication. We will look at which areas we can play the role of an enabler.    

Your father (Rahul Bajaj) was an auto man but did he advise you on the running of the financial services business?

He had an uncanny ability to focus on the big picture and also deep dive into the smallest of details even though he was not an expert in the financial services business. He had the ability to ask the most relevant questions. 

In 2006-7 when we were evaluating demerging the financial services business, I volunteered to build it up and Rajiv was taking Bajaj Auto to new heights. I remember my father telling me ‘you are sitting in the back seat in Bajaj Auto, so while none of the credit came to you, nor did any of the failures. But in financial services, success and failure will both be on your watch. I have to tell you this as a father and as  chairman of the group'. He was happy I took it.