Bajaj Finance Ltd’s new digital platform is a step forward in offering services in line with fintech apps such as Paytm, PhonePe and Google Pay. While phase-1 of the business transformation journey focused on creating a solid foundation, the second phase focuses on enhancing customer experience by introducing new features and building on existing functionalities.
As on 31 December 2021, the existing consumer app had 16.5 million active customers and the new platform had 6 million. True, other fintech apps such as Paytm have comparatively higher users but Bajaj can capitalise on its strengths in the offline channel of being a key financier in categories such as consumer durables and transition the revenue generating customers to the digital platform.
“While competition in EMI-financing space for consumer durables is increasing, we aren’t as concerned about risk of loss of market-share/ pricing pressure because (1) Banks largely focus on prime and carded customers, (2) Fintechs have yet not developed collection capabilities or fully tested their retail lending modules and (3) while ecommerce platforms are expanding market and/or gaining share from physical stores, physical stores are also putting-up a fight by matching prices or service, especially in segments like electronics” said analysts at Jefferies India Pvt. Ltd in a report.
Note that even as Bajaj Finance has a strong presence in offering financial services and products, it is a laggard in areas of leisure categories such as food, entertainment, travel etc. where the fintech companies have an appealing presence. Partnerships in these areas would aid Bajaj Finance’s online presence. “Addition of such partnerships should drive greater engagement and transaction throughput, thus extending the platform from being a leading financial services provider to an omnichannel financial marketplace. Along with customer additions, we would closely track new-to-Bajaj additions through the digital route” said analysts at JM Financial Institutional Securities Ltd in a report.
As the operating metrics reach pre-covid levels, all eyes are on the progress of the digital transformation journey. “We believe Bajaj Finance is catching up well with fintech players in terms of digital interface while delivering profitability, hence we remain constructive on this business transformation journey” added the JM Financial report.
Even so, Bajaj Finance faces risk from increasing competition in lending. As such, its shares have declined about 13% on a year-to-date basis vis-a-vis fall of 12% in its sectoral index, Nifty Financial Services.
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