From Loans To Soundbox: How Jio Financial Services Plans To Disrupt The Indian Fintech Market

Reliance Group’s latest publicly listed entity Jio Financial Services (JFS) seems all set to disrupt India’s fintech market with a range of offerings from personal and merchant lending to insurance and retail payments. 

In an investor presentation on Monday (October 16) after its Q2 FY24 financials, JFS said it has already launched personal loans service for salaried and self-employed individuals in Mumbai via its MyJio app and consumer durable loans across 300 stores pan India.

The company said it has also established partnerships with 24 insurance companies across general, life, and health insurance segments for its insurance broking service. JFS will be in head-on competition with the likes of PB Fintech, InsuranceDekho, Paytm, PhonePe and others on the insurance broking side. 

On the payments solution front, JFS has launched a soundbox, which is in the pilot stage. This will further increase the competition for startups like Paytm, PhonePe, Google Pay, BharatPe and others in this space 

As per JFS’ website, the company has also forayed into the UPI space, but its investor presentation didn’t mention much more about this vertical.

Led by the UPI, digital payments are on the rise in the country. As a testament to its growing usage, UPI transactions crossed the 1,000 Cr transaction threshold in two consecutive months in August and September this year. 

While the UPI market is currently led by PhonePe, Google Pay, Paytm, and CRED, it goes without saying that JFS is eyeing a big pie of this fast-growing market. The soundbox strategy would be similar to the one followed by Paytm and PhonePe to create a captive base of merchants. 

It will be interesting to see if the entry of JFS in the space impacts Paytm as subscription revenue from soundbox is a key revenue stream for the Vijay Shekhar Sharma-led fintech giant. 

This is the first time that JFS has provided clear details about its business plans, which fall in line with the marketwide expectations for an all-encompassing fintech platform. JFS also said that it is developing a unified app for all of its fintech services.

In July this year, JFS announced a partnership with the world’s largest asset management company BlackRock to enter India’s mutual fund market. 

In its first-ever reported quarter, JFS saw its consolidated profit after tax double to INR 668.2 Cr in Q2 FY24 while operating revenue increased over 61% quarter-on-quarter to INR 608 Cr.

Besides, JFS said it has a strong capital base to fund its growth strategy and meet regulatory requirements. After all, Reliance has capitalised JFS with a net worth of INR 1.20 Cr. 

Plans In The Pipeline

While JFS has already launched several services, the company is looking to bolster its offerings across various sub-segments. 

“JFS will increase financial services penetration by transforming and modernising them with a digital-first approach,” it said in its investor presentation.

The company said that business and merchant loans for self-employed individuals, sole proprietors and small business entities, auto loans, home loans, and loans against shares are in the pipeline. 

Its payments bank, Jio Payments Banks, is also planning to launch debit cards after relaunching savings accounts.

However, JFS did not give any further details about its plans for the mutual funds business.

JFS said technology will be the key differentiating factor for the company and it plans to use artificial intelligence (AI) and analytics to create enriched customer profiles for tailored offerings.

As per Inc42’s analysis, the overall domestic fintech market is expected to touch $2.1 Tn in market size by 2030, growing at a CAGR of 18% from 2022. In that, lending tech is expected to comprise a majority of the market size at $1.3 Tn.

JFS is aiming to crack the fintech business code with a D2C approach, which would drive cost efficiencies while also enabling personalised customer interactions.