Paytm billionaire bets on young wealth to hit profit sooner

Paytm plans to revamp its online wealth management services and hire more than 15,000 contract salespeople to get more merchants on its network, aiming to hit profitability sooner than targeted.

Billionaire founder-CEO Vijay Shekhar Sharma is overhauling its suite of money management products to better tap growing wealth among younger users, who're warmer to the idea of investing online.

At the same time, it's orchestrating a campaign to boost its salesforce to 50,000-plus people next fiscal year to try and sign up more merchants across smaller Indian cities and towns.

Getting back up

The twin initiatives mark an ambitious effort to turn around Paytm, officially called One 97 Communications Ltd., once hailed as a new-economy symbol of India's startup scene. The company has fallen roughly 70 per cent since a $2.5 billion 2021 IPO as investors fret about persistent losses, while rivals such as Walmart Inc.'s PhonePE and regulatory curbs threaten to sap growth.

Now, Sharma says the wealth and merchants push, coupled with cost savings from AI automation, could help Paytm generate an operating profit in under a year. That would be faster than previous internal projections or analysts' estimates, the CEO said without elaborating.

"We have learned and we will amplify our ability to serve India, its small merchants and businesses," he told Bloomberg News in his company's chrome-and-glass headquarters on the outskirts of New Delhi. "

We should be crossing about 50 million merchant-base signed up on the Paytm platform in the year," he said from offices overlooking condominiums on one side and a large construction site on the other.

Insurance, investments and digital payments

The Noida-based company had about 38 million merchants as of September, nearly 10 million of whom were paying for offerings such as QR codes, Soundboxes or audio payments confirmation machines and card machines.

Sharma, 45, the son of teacher from a small town in India's most populous state of Uttar Pradesh, founded One 97 in 2010. The company began by offering services such as recharges for pre-paid mobile services, but a federal withdrawal of high-value currency notes in 2016 gave its business a fillip.

It grew rapidly into India's most ubiquitous payments brand, and counted Jack Ma's Ant Group Co. and Masayoshi Son's SoftBank Group Corp. among its backers.

The company launched its digital wealth management product, Paytm Money, around 2018. Its mutual fund business has done moderately well since, but the firm wants to double down on the business, layering it with artificial intelligence, as India's middle class increasingly go online to invest in capital markets. Insurance is another fertile field given a lower penetration in India, Sharma said.

The total addressable market for financial services could cover 250 million of India's 1.4 billion people in the near term, he added.

Wealth management is the new 'black'

The firm's ambitions in managing wealth will come up against global and local banks from HSBC Holdings Plc to ICICI Bank Ltd. that are all fighting to gain ground in this space. The country's growing wealth management industry could be worth $5.5 trillion by 2025, according to Bloomberg Intelligence analyst Sarah Jane Mahmud.

Paytm said in February it had achieved operating profitability before factoring in the cost of employee stock ownership plans. It now wants to be in the black on a full operating basis, which Sharma foresees happening sooner than the company anticipated.

It has generated free cash for the past two quarters and Sharma expects that trajectory to continue. Paytm has trimmed quarterly losses and quickened lending despite rising competition from PhonePe and Alphabet Inc.'s GPay.

"This year was the year where we could tell the world that there is a viable commercial model of Paytm," said Sharma. "And in the year onwards, we will mature to another stage, which is called shareholder returns.""

AI can help

Young customers are headed towards this. So we are saying, okay, let's just build our trading platform with investor protection and with recommendations, the power of AI and a high transaction success rate," Sharma said in a Tuesday interview.

Sharma is pushing his 10,000-strong technology, product and engineering teams to use Microsoft Corp. and Google AI tools. That has helped Paytm narrow product development to just days from weeks. Sharma, like other companies using automation, expects he may need fewer staff.

"We will be able to save the targeted 10 to 15 per cent that we had planned in employee costs, all because AI has actually delivered more than what we expected it to," he said.