Aviral Srivastava – Dutch Uncles

Policybazaar: Upending the Complex Indian Insurance Market with Tech

Aviral Srivastava — Tue, 15 Jun 2021 05:05:04 +0000

In today’s world, people tend to take steps in order to mitigate their losses and encourage their financial stability by binding themselves into a contract which gives them financial flexibility and encourages a better flow of trade (for business houses) even when they suffer an economic loss. This is where the insurance industry comes into motion and where Policybazaar makes its mark.

The uncertainty of events in our lives is the reason why insurance policies play a major role in securing a better future for oneself or our loved ones. A person can incur the risk of losses of life, health, asset, property, etc. It isn’t always possible to prevent the loss of any commodity, the financial sector provides us with this product called “insurance”. This helps in promoting economic growth, generation of long term financial resources, providing support in medical emergencies as well as providing safety to the business from extreme-end losses.

What is Policybazaar?

Policybazaar is an Indian insurance aggregator based in Gurgaon, India. This company helps a person compare financial services from different insurance companies on a single digital platform making it easier for people to choose the most convenient and affordable option. The company was founded in June, 2008 by Yashish Dahiya, Alok Bansal and Avaneesh Nirjar.

The company is now worth over $2.4 billion making it one of the most successful Fintech companies in the country. In early 2020, Yashish Dahiya told Bloomberg that Policybazaar was set to make its Stock Market Debut as India’s first Unicorn.

The enterprise has over 10,000 employees working from its headquarters in Gurgaon.
Policybazaar, now works as an insurance selling operator after switching from a policy comparison website. This move was a turning point in the company’s business run as they discovered multiple sources of income leading them to success.

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It isn't always possible to prevent the loss of any commodity, the financial sector provides us with this product called "insurance".

Policybazaar: Covering Milestones

In the mid 2000s, the Indian insurance industry was still growing and didn’t have a lot of impact on the financial sector. Policies and insurances were sold through agents via one-to-one communication. The industry back then didn’t have a lot of transparency and people were still hesitant to buy off even general policies from an agent.

But with the change of time, this perspective also changed. With more and more companies joining the insurance industry, the competition rose and trust was built between people because of the same. In 2008, when the three entrepreneurs came up with Policybazaar, it was merely an information portal which used to help people know more about different kinds of insurance policies and its benefits.

This process involved comparing insurance prices of different insurance companies, explaining about policy-programs and other useful information regarding the same. Policybazaar had a long Journey from being an information provider to a full-time policy seller agency. The website expanded enormously and became a premium hub for insurance policies.

In 2015, the company launched its own Android and IOS application which helped them grow on a bigger scale. The company made its services available to more and more consumers and sold more and more policies.

The Success Story of Policybazaar

Since its inception, Policybazaar has managed to make some good acquaintances in the financial industry. Policybazaar has managed to raise $US366 millions since 2008 within 7 rounds of funding. Major companies like Info-Edge, Intel Capital, Inventus Capital Partners, Premji Investments (Wipro), and Tokyo based Softbank:s Group of vision funds have invested in Policybazaar making it one of the most reliable Fintech companies in the country.

The owners proposed a good business model to every group of investors and were quite commendable with it. The business model of the company would be explained in the next section.

Policybazaar has also been awarded quite a lot of trophies for its consistent and trustworthy service that they’ve been providing to their customers. Some of the major awards won by the enterprise are IAMAI Indian Digital Awards for best financial website 2015, BAM award 2015, Best Marketing & PR Campaigns – India PR & Communications Awards 2018, Best Content in Online PR Campaign – Drivers of Digital – Inkspell Awards 2018, Best Consumer Awareness Campaign – Silver -Economic Times Brand Equity Kaleido Award 2019, Best bank in Fintech – Financial Express Best Bank 2019, Leading Fintech Innovator in India -KPMG-H2 Ventures Report and many more adding on to the list.

The company has proved its worth as they claim to process about 25 per cent of India’s total life insurances and about 7 per cent of the nation’s health cover. The company provides its consumers with more than 250 insurance plans and operates around 50 insurance brands on its platform.

The Genius Business Model Powering Policybazaar

Policybazaar being an aggregator of insurance policies which means that it would list out all the insurance products relevant to the search made by the consumer. They would redirect the consumer to the insurer’s platform for selling the required policy and therefore, earn commission based on the consumer traffic brought by Policybazaar on the insurer’s website. This process can only be initiated once the company has been approved of a IRDA license. Companies which have an IRDA license can directly sell insurance policies without the help of any mediator like Policybazaar. In such a case, Policybazaar sells information and leads of their customers to the other insurance companies for expanding their customer range. This is just one way of earning money.

The company has connections with various and different kinds of insurance operating companies. This network helps Policybazaar compare and analyse the price, benefit, insurance cover and reliability of different insurance plans. This information is provided to the customers in a more organised manner in order to research and buy. Policybazaar is in a tie up with companies providing car insurance, life insurance, corporate insurance, health insurance and travel insurance. This opens up a lot of options for a customer within the same platform.

One of the most important and toughest parts of the job is to convince people to buy insurance. With a lot of competition being around, this task was made nothing but more complex. Selling off insurance to an optimist might be seen as a hurdle because of the long term investment. Policybazaar made sure they maintained a reputable goodwill in the market and were very transparent with their work.

How Policybazaar Stared down the Competition

The major competition faced by Policybazaar is from Fintech companies like Bankbazaar, Acko, Coverfox, Easypolicy, etc. The insurance industry has grown to be very competitive and hard to survive with various other companies hanging around. The company had made their business model featuring the cost and services of the policies available to its customers increasing the company’s reliability. The insurance companies have started to adapt to the needs of their customers and have attempted to reshape the policies and their business models according to their target customers. This has opened up a lot of options for a person looking for a good insurance program.

The company has stayed afloat in a very competitive Fintech industry for more than a decade now. The company deals with millions of customers every year where they have to convince more people everyday to buy off insurance policies from their portal. In a country like ours, people tend to do a lot of research and analysis before buying an insurance policy. Policybazaar already provides the customers with such analysis making it easier for the customer to choose any policy from the given insurers.

There’s a huge traffic of policy-buyers everyday on the Policybazaar website already and now, the main focus of the traffic handlers is to increase the positive and more active network by encouraging people to buy policies or do any other kind of activity on the portal. The company is responsible for the privacy of the information shared by any customer as well as the legitimacy of information provided to the customers.

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Policybazaar is one of the clutch Fintech startups of the country looking forward to flexing the tightly regulated financial services segment enjoyed by state-held and bank-backed insurers.

The Road Ahead

India’s fast moving tech-industry has attracted numerous investors with huge investing capabilities. This is a great opportunity for well-established businesses to expand their wealth as well as reach. Subsequently, even Policybazaar announced that the company was going to go public and would be a part of the stock market from 2021.

The Soft-bank backed company would be filing for an IPO (initial public offering) that would raise upto $500 million for the insurance company. This would raise the value of Policybazaar to an estimate of $3.5 billion and would consist of new stocks of already existing or familiar shareholders.

Policybazaar is yet to announce their final decision regarding their IPO draft and is set to be India’s first mega-start up to go public this year. Yash Dahiya, Co-founder of the company, told Bloomberg last year that the company would mostly go public in 2021. The plan is to secure $250 million in a round of financing at a $2 billion valuation before September. The reports emerged stating that the company is enlisting themselves in the Mumbai IPO but Mr. Dahiya told Bloomberg that they were also looking for dual listings if there are any amends in the rules.

Policybazaar is one of the clutch Fintech startups of the country looking forward to flexing the tightly regulated financial services segment enjoyed by state-held and bank-backed insurers. The idea is to make these policies available to the middle class uninsured and under-insured Indians. The target customers can still be expanded in a country like India with most Middle classed men and women would not have insurance. The company has made goodwill in the market and is now considered as one of the best insurance aggregator companies in the country. With the IPO registration, the company obviously becomes public and the profit margin of the same has expanded indefinitely. Through this, the insurance company can support the incoming policyholders while still working as an aggregator.

Amidst all of this, the mobile app of Policybazaar plays a criminally underrated role. The app service launched by the company back in 2015 works for both Android as well IOS users and hence, increased the number of customers. This also made buying insurance online much easier and reliable. In 2018, Policybazaar adopted Amazon Polly and developed an AI system in order to improve their customer satisfaction. This proved to be very helpful as Policybazaar received a lot of complaints regarding excessive phone calls to their consumers.

Since 2008, the company has been a major part of the Fintech industry as an insurance aggregator and later witnessed a massive turnover. This just proves how deep the Fintech industry is in terms of the money involved.

The company still hasn’t reduced the intensity of the amount of work done and has already listed out targets for the upcoming year. These involve expanding their customer base to 1 crore, underwriting premium worth Rs. 10,000 crores, increasing revenue to Rs. 1500 crores, expanding across the globe and finally launching its IPO soon. All of these targets are to be achieved before the end of 2021.

The post Policybazaar: Upending the Complex Indian Insurance Market with Tech appeared first on Dutch Uncles.

BillDesk: An Old-School Start-Up Thriving in the Online Bill Payment Space

Aviral Srivastava — Wed, 26 May 2021 11:35:04 +0000

Back in the early 2000s, a businessman had to make the effort of going to the bank to withdraw hard cash while making a transaction. The banking service was still in its developing phase and their facilities were not efficient and fast. To overcome this barrier, a newly established business industry – the Financial Technology (Fintech) witnessed the emergence of a private company – BillDesk in the early 2000s.

The plans of the company promised immediate and convenient monetary transactions for financial institutes in order to make their cash flow more lenient. This means that this new product was intended to open a faster and safer medium of flow of money between any two or more business organisations, other than cash.

What is BillDesk?

BillDesk is one of the leading payment gateway companies in the market with an estimated worth of $1 Billion (estimated in 2015). The company, considered a pioneer of the Fintech industry, had set its foot in the market in the early 2000s. This private ownership was founded by three accountant friends working for the American firm- Arthur Anderson. The three friends, M.N. Srinivasu, Ajay Kaushal and Kartik Ganapathy left their jobs at their previous firm in order to implement their knowledge for an Indian customer base.

This platform was introduced to reduce the labour of physically going out and paying various household or phone bills and the product very well turned out to be a success when they made this facility available to the public. This essentially targeted Indian business owners who were still using outdated methods of paper bills and check writing systems, to switch to an easier method of payment.

BillDesk through the decades

When the three co-founders came together with this idea back in 2000, the idea was remotely known to people. Nobody could trust the internet on a greater scale with money or banking activities as people were not familiar with the inner workings of online payments gateways. BillDesk received its first payment from SIDBI Venture capital and Ltd. (a private company) and Bank of Baroda (public sector bank). This marked the beginning of a tremendous uptick. Public perception shifted in favour of BillDesk as associations with banks and big names in the private sector meant a growth in trust as well.

With times changing, other banks and financial institutions also started adopting online banking services and the usage of online payment gateway started becoming a trend. The popularity rose with the revenue and BillDesk became one of the very first payment gateways in India.

BillDesk and its owners proved their worth by selling a unique and useful product. They provided the facility of paying off electricity bills, credit card bills and bookings, ISP charges, phone bill payments and other banking facilities when no other payment gateway company did. The way it works is; for every transaction to be made, the user gets a confirmation slip on registered number or email ID. They also provide the bill of the transaction on the spot. The whole concept may seem very casual in today’s age but this was the beginning of the online payment technology back then and it was considered as an essential asset.

There was not much competition in the market against BillDesk for at least 10 years. The platform ran very smoothly without sharing their customer base with any of the competitors. Organising a business that involves so much cash, government and bank backing is a huge undertaking. The company worked very well under all the guidelines and helped balance the economic structure with its convenience and efficiency.

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BillDesk was introduced to reduce the labour of physically going out and paying various household or phone bills and the product very well turned out to be a success when they made this facility available to the public.

The Plan for Glory and the Rise to Success

The idea behind the introduction of BillDesk was to reduce the financial gap between the two business parties by creating a medium of payment suitable for both. Business transactions aside, various other personal expenditures could be paid off using this facility.

BillDesk provided the solution to multiple problems like- storing bills on the internet, reminding about monthly bill cycles, providing flexibility of payment hours and many more. BillDesk initiated transactions with lesser processing charges which were earlier heavily implemented over any online transaction. This was possible through every mode of payment possible; credit card, debit card or UPI. Any savings or current bank account holder could have access to the product at ease.

The organisation gives back-end support and foundation to numerous small time firms like retail based business sites. It empowers these organisations to acknowledge online installments through BillDesk’s installment entryway. This made micro payments that much easier.

The whole system proved to be very beneficial for the bankers and large business owners in the longer run as the profits were marginalised due to the cut of processing charges and the frequency of business deals increased as the method of payment was simplified.

BillDesk is now widely used in India as well as abroad by various telecom, insurance, financial-services and e-commerce organisations and now has many online/mobile payment portals (or apps) used for online banking.

In India, post demonetisation in 2016, people tended to go cashless and BillDesk helped with this situation by providing the facility of mobile banking/UPI transfers. The company had activated its services mostly for the convenience of its huge customer-base.

The company was dealing in people’s money indirectly and that too, on a massive scale. This raised a few arguments about the security of the process and needed the company to publicly announce its safety protocols beforehand.

Money and Trust Go Hand-in-Hand

The payment gateway portal has always been consistent and attained customer satisfaction over time. BillDesk ensures Secure Sockets Layer Encryption (SSLE) technology as the safe passage of the portal’s transaction. To sum this up; the user’s information that is available on the internet via BillDesk is totally encrypted or coded. This provides a sense of safety to the user when doing payments online. BillDesk was one of the very first online payment companies to publish their security plans and built trust around the market by being transparent.

The work rate of the enterprise during the initial years of its establishment was immense and had good profit margins. This was all possible because of the trust gathered by working with major clients like SBI and Bank of Baroda.

Working with government banks and high-end financial institutions gave BillDesk a lot of credibility and added to the clout which was much needed, given that it was such an early concept platform for its time.

When things started coming together for the entrepreneurs, the whole business idea turned out to be life changing for them. Since their establishment, the company has come a long way.

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At times like the post-demonetisation era (2016), digital payments were normalised, as going cashless became the new trend.

BillDesk: The Source of Fortune

In 2006, the State Bank of India put in an investment worth $7.5 billion USD jointly with Clearstone Venture Partners. The joint ventures were in business with BillDesk for a considerable amount of time and still continue to thrive together as partners. US based private equity firm General Atlantic and Temasek invested a total sum of Rs. 620 crores in the company in 2015 thus, sky-rocketing the valuation of the firm to $583.67 million USD back in 2015.

The firm’s net worth is estimated to be between $2 to $5 billion (USD) making it a member of the esteemed unicorn club. The company managed to provide a reasonable growth in the percentage of profits (consolidated) in the year 2017-18. The charts rose from Rs. 138 crores of net profit at the start of the year to Rs. 149 crores at the end of the financial year. The revenue from these consolidated profits also increased in this financial year increasing from Rs. 772 crores (approximately) at the start of the financial year to Rs. 943.7 crores at the end of the financial year. This just indicates what a golden year 2017-18 was for BillDesk and its founders.

The firm enjoyed sole profits for years as they lacked competition. With the change of time, this privilege was taken away from BillDesk and a few new firms rose up with similar business ideals and concepts. Let’s learn about some of BillDesk’s competitors back in their prime years.

The End of BillDesk’s Monopoly

Since the beginning of the last decade, the Fintech industry experienced a massive change with technological development. It also saw the increase in the number of companies with similar projects much akin to BillDesk.

BillDesk faced stiff competition from other major companies like RazorPay, CC Avenue, Oxigen and Citrus Payment Solutions. These companies grew in the early 2010s and significantly altered the landscape by bringing the option of various payment gateway portals to customers. The race for the profits tightened which resulted in an upgrade of the product from a security aspect.

The owners even wanted to sell off the whole business in July, 2020 because of the immense amount of competition faced by industries in the financial sector. Being a private company, it was obvious that they would be facing more and harder competition in the future.

RazorPay was one of the toughest competitor platforms that BillDesk faced in that decade. It had a similar model as to BillDesk but was more modern working and “techno-savvy”. RazorPay uses only a single code line on the website or custom button to initiate any financial transaction making it quicker than BillDesk, yet despite this BillDesk still stands to this day.

BillDesk and Its Future

As mentioned earlier, the owners of the enterprise wanted to put their business on sale for various reasons. This did not mean that the platform was coming to an end. The demand for such a gateway is always on the rise.

As of 2015, India’s online payment market was estimated to be worth $1 billion USD with a growth rate of 50 per cent annually. This indicated that people started going cashless and putting more of their money and trust in digital payments. This revolutionary change brought about in the users’ mindsets did not happen overnight. This was the repercussion of the trust built around the people by BillDesk over the years and a result as to how they managed to provide elite quality of service with such consistency.

In the same year, 70 per cent of the total online transactions were done through BillDesk providing a financial backbone to the economy of the country as a medium of instant and distant payments or transactions. At times like the post-demonetisation era (2016), digital payments were normalised, as going cashless became the new trend. This marked a new trend where everyday consumers started understanding the importance of online payments and banking.

It will not be wrong to say that BillDesk managed to bring about a revolutionary change in the financial sector. They managed to provide people with something they needed but never knew they did.

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