Tap & Borrow: Walmart-Backed PhonePe's Swift Entry into Personal Loans

Unicorn startup PhonePe, the widely used digital payments platform, is gearing up to enter the consumer lending space, with plans to launch personal loan distribution services by January 2024. This means that the PhonePe users will soon have an option to get loans on their mobile phones through the app.

The move marks a strategic expansion for the Walmart-backed company, positioning it as a distributor for personal loans.

In addition to personal loans, PhonePe is exploring the possibility of offering a credit line in the later stages of its consumer lending venture. This move aligns with the company's broader strategy to diversify its financial services and cater to a wider range of user needs.

Integration with Five Lenders Underway

PhonePe is currently in the final stages of integrating with five lenders, a mix of both banks and non-banking finance companies (NBFCs). The integration is a crucial step as it facilitates the company's foray into consumer lending by ensuring seamless collaboration with these financial institutions.

Recent Milestones and Organizational Changes

Earlier this month, PhonePe celebrated a significant achievement, surpassing the milestone of 500 million registered users. This makes it the first Indian internet company to achieve such a vast user base globally. The company's founder and CEO, Sameer Nigam, expressed his astonishment at the rapid growth and shared future aspirations.

PhonePe Founder and Chief Executive Officer (CEO) Sameer Nigam said in a statement, "When we started PhonePe, I had never imagined that we would get to 500 million registered users in such a short span of time. It feels almost surreal. Yet, we have achieved only 50 per cent of our vision statement of bringing digital payments to 1 billion Indians."

In the wake of this achievement, PhonePe announced promotions for several key executives across various verticals. Hemant Gala was elevated to the role of CEO for PhonePe's lending business, Vishal Gupta became the CEO for the insurance business, Vivek Lohcheb assumed the role of CEO for Pincode, and Ujjwal Jain was appointed CEO of the share market, overseeing the wealth and broking business.

Financial Performance and Partnerships

Unicorn startup PhonePe's robust financial performance has been a catalyst for its expansion efforts. The company reported a remarkable 77 per cent growth in consolidated revenue to Rs 2,914 crore for the fiscal year 2022-23. This growth was attributed to market expansion and increased digital money transfers. Notably, PhonePe had posted revenue of Rs 1,646 crore in the preceding financial year.

The company has also been actively partnering with financial institutions. New is also doing rounds in the media of PhonePe being in the final stages of collaboration with Axis Bank, intending to distribute the bank's credit card offerings. Furthermore, there are indications of a potential credit line offering in the coming year, although it is not an immediate priority.

Diversification Beyond Payments

Beyond its core digital payment services, PhonePe has been expanding its portfolio of offerings. In July, the company reported selling 5.6 million insurance policies, covering life, health, motor, and car insurance. PhonePe has also ventured into merchant lending, providing loans of up to Rs 5 lakhs to its merchant users earlier this year. 

As PhonePe gears up for the launch of consumer lending services, the company's strategic moves underscore its commitment to becoming a comprehensive financial services provider, catering to the evolving needs of its vast user base.

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