Gurjodhpal Singh was appointed CEO for Tide India, in January 2021. He is an experienced leader in the industry, with 13 years in FinTech and financial services. Most recently, Gurjodhpal led the SME merchant payments and credit businesses at PayU, the leading payment service provider in India; and has extensive experience of providing superior services to MSMEs. He boasts considerable experience in supporting Indian SMEs over many years, and is now at the helm of Tide in India, to establish the business in India and scale it over the coming years. Gurjodhpal is passionate about helping SMEs across India digitise and use intuitive technology to help them save time (and money) on the running of their businesses. In a conversation with CXO Outlook, Gurjodhpal explains how global fintechs are driving inclusivity for SMES in India.
Can you give us a glimpse of the SME ecosystem in the UK and how similar is it to India?
- 9m SMEs in the UK, 5m of which are small and ‘micro’ businesses (one-man bands)
- Over the course of the pandemic there was a significant increase in new businesses being created, a 21% increase on the previous year
- The UK was one of the very early markets for Fintech and adoption has increased significantly in recent years, the market is thriving, with numerous opportunities for collaboration within the ecosystem
- The pandemic has increased adoption of digital banking services, particularly in business banking as the majority of traditional banks closed to new customers as they dealt with demand for support through Government loan schemes
Where do you think are the challenges for global companies in India to grab market share and compete with the local businesses?
Global products are great, but their biggest challenge is adapting it to the Indian market. The first thing that global companies coming to India should bear in mind, is that they need to build for India. India is a diverse and large market, they need to understand the market, identify their target segment, recognise actual pain points in the segments and solve real problems. This is the only way they can add value to the business. Moreover, it is key for any business to manage the scale that India has to offer, considering the market here is vast.
Another very important aspect of being part of the ecosystem is to collaborate with various local players in the Indian ecosystem like banks, NBFCs, schemes, etc. rather than competing with them. The Indian ecosystem boasts of high speed to innovation which also ensures healthy competition in the market. This means that a high margin product won’t reach a large set of people; for that we need lower margins that will help the business scale as well as build significant revenue streams.
How important has the role of the Indian Government been to enable the evolution of FinTech in India? Any particular policies that have accelerated the adoption of Digital banking in Indian SMEs?
The role of the Indian Government has been pivotal in promoting a digital economy, especially since the past couple of years. The regulator is making some revolutionary reforms in the way the financial services sector works. From introducing video KYC to all banks and fintechs in Jan 2020 to extending Video-KYC benefits to small businesses and proprietary firms is a welcome move during these grim times, it will act as a catalyst for digitisation in the regulatory arena. Moreover RBI’s recent decision to allow NBFCs to apply for Aadhaar-e-KYC licence and the most recent proposal by Niti Aayog to set up full-stack digital banks are all positive steps in this direction.
As e-KYC will help in digital onboarding of customers, remotely, this move will provide a huge impetus to the process of digital account opening for all, moreover the introduction of full-stack digital banks will eventually eliminate the need of physical interaction between the bank and customer. This will definitely encourage informal businesses to move towards formalisation through a simplified process, thus driving inclusion to foster sector growth.
The fact that banks across India added only 1,383 branches in FY2021, the lowest in a decade is proof that the government is rapidly moving towards and promoting digitisation, consolidation and banking via alternative channels.
How has the business recovery been so far for MSMEs in India? What can be done beyond what the GoI and RBI already have to speed up revival?
Although the pandemic is far from over, we could say that the recovery has been strong. Having said that, we still need to solve the working capital situation of MSMEs in the country. Introducing embedded finance, in line with specific business models or supply chain will help ease the situation. It is key to bring capital at the point of need, and that can be enabled through digitisation. Businesses need a better view of cash flow and we need to assist them in facilitating digital collections and thus reach out to larger demand.
Can technology solve the problem of financial inclusion in India?
For a country like ours, where financial inclusion is a major concern with a very low digital maturity rate, it reaffirms that digitisation provides faster and safe access to financial services via simple procedures.
When it comes to using technology, Fintechs have become synonymous with financial inclusion in India. Across the country, people who do not have their own bank accounts are still seamlessly conducting digital transactions. Businesses in cash-dependent tier-2 and tier-3 markets, from kirana stores to neighbourhood panwallas, are receiving money digitally through QR codes and payment apps.
The most significant impact of India’s fintech revolution, however, has been on the MSME lending landscape. With the emergence of innovative alternative lending platforms, smaller enterprises with no financial records or credit history are now finally getting some much-deserved access to credit. The use of new-age technologies and digital tools such as AI, machine learning, and data analytics is helping fintech companies extend customised working capital solutions to the sector, which has been underserved for quite some time.
What is the outlook on growth for your segment in India with respect to the share of India to global revenue?
India has 10% of global SMEs, our aspiration is to impact 25% of global SME base through Tide. Hence India as a market is very critical. The needs of SMEs globally are largely universal, with the time wasted on banking and admin being a key issue. And digitization among SMEs is the first step towards solving this issue, and thanks to Govt policies and regulator intervention, India is going strong in terms of being digitally mature as an economy. With 25.5 billion digital transactions, India has paved its way to become World’s no. 1 in digital payments. While the pandemic has given the economy a digital push we will play an important role in digitizing Indian SMEs.