Ours is open-banking model of the times: PayNearby's founder & CEO Bajaj

PayNearby's managing director & chief executive officer plans to raise $50 million through equity dilution in what is inherently a 'people's business'

PayNearby has scaled up the business correspondent (BC) model using technology to build a hyperlocal fintech network. It has roped in retailers at the first mile to offer both digital financial and non-financial services to the masses. Anand Kumar Bajaj, its managing director & chief executive officer, believes he can roll out this model globally, and plans to raise $50 million through equity dilution in what is inherently a “people’s business”. Bajaj spoke to Raghu Mohan. Edited excerpts:

How is version 2.0 of the business correspondent model different?

It has evolved from a dedicated one-bank model to serving customers of any bank with interoperability; it is bank-agnostic now. The relaxations given by the Reserve Bank of India (RBI) allow us to go beyond 30 kms from the sponsor bank’s branch to harness the power of digital for the benefit of our customers. A retail shop in any village can be on-boarded by us with the help of digital due-diligence in addition to their physical verification and training. We are working with the Bill and Melinda Gates Foundation to have BCs within every five kms radius in the country and are sharing our latitude-longitude locations accordingly.

You can appreciate how critical BCs and bank mitras are, especially during the current stressful period arising from coronavirus, to finance minister, Nirmala Sitharaman’s statement that there are to be no restrictions in their movements. Ours is truly the ‘open banking’ model of the times -- home-grown at that.

In the past, stickiness of BCs had cropped up as an issue. How has this aspect been tackled?

Just like in the FMCG sector, the first and foremost requirement is to maintain the quality of services, get the pricing right and have a customer-centric approach. A near 100 per cent uptime is a must as customers need banking 24/7 and they should not be deprived of this requirement. Automation helps in scale and hence, we have automated reconciliations, refunds and fee-management, among others.

Our endeavour is to ensure the success and growth of our retailers, and we employ advanced data-science techniques to help them grow their business. Retailers who serve as BC agents, are called the ‘digital pradhans’ of their areas. This lends credibility to the already existing trust they have with our customers. Our motto is ‘Zidd aage badhne ki’, and the effort has always been to touch the lives of the retail community positively. They can create a better life for themselves and their families through this partnership. Stickiness is an outcome of trust, empathy and continuous good work.

A key piece in you model is the cash-out part. Now, what if the kiranawalas were to run out of, or do not have cash? 

Nandan Nilekani had asked me this question when we presented to him during the deliberations of the Committee for Deepening of Digital Payments last year. You see, even automated teller machines (ATMs) go out of cash; shops run out of stock. So, customers go to the next shop -- it can’t be that all shops are out of cash at the same time. Today, alternative approaches to businesses are shut and what is working well are these retail outlets – you present your thumb impression and take your money (effectively, cards with no PIN). Kirana stores have persevered because people are using them. Our model is about taking high-end technology to the bottom of the pyramid in the truest sense.

How do you take care of reputational risks – of the banks involved and that of PayNearby?

Reputation is important even when you are buying a packet of wheat. But then, you trust the neighbourhood retailer who has been around for years. We sort of “sachetise” trust and dispense it through local partners. We have joined hands with the Retailers Association’s Skill Council of India to reskill 2 million  retailers across the country. In a pilot project last year, we certified 24,000 retailers under the national flagship skilling initiative Pradhan Mantri Kaushal Vikas Yojana. We have been working with retailers to make them partners for financial inclusion in the first mile ‘Har Dukaan Digital Pradhan’.

How have you funded the company?

We took Rs 15 crore in seed-funding in May 2016 and have since doubled our net worth. With a presence in 17,000 PIN codes with 800,000 retailers, there is an opportunity to register and activate more of them. We feel proud that PayNearby’s services have been called in for national duty of relaying government grants to millions of citizen through our BC channel. To shoulder the government’s load in dispensing direct benefit transfers is a very responsible feeling — like soldiers without uniform. This accentuates credibility of our work. We hope to raise our service standards and emerge as a national asset. 

Funding in current times is obviously required and we are looking at strengthening our teams, visibility, technology and reach. We are planning to raise $50 million through equity. It will be utilised for non-banking financial services and to scale up our engineering work with use of modern technologies like artificial intelligence, machine learning and location sensing.