Cxo Insights: Akshay Sarma, Chief Financial Officer

axio, formerly Capital Float, is digital consumer finance company offering pay later, credit and personal finance management under one seamless brand experience.

Akshay Sarma joined axio after spending 6 years with Deutsche Bank. He has worked across Trading and Structuring teams in the Fixed Income division across London, Frankfurt, Singapore and Mumbai. Following his stint at Deutsche Bank, Akshay pursued his MBA at Cambridge University. At axio, Akshay has built and scaled the institutional co-lending model, from designing the process to onboarding institutions, Akshay is presently the Chief Financial Officer at axio.

Recently we have engaged in an interview with Akshay Sarma, Chief Financial Officer (CFO) at axio. He talked about his business operations and what are the plans for future expansion and much more.

Introduction

axio, formerly Capital Float, is a leading digital consumer finance company offering pay later, credit, and personal finance management under one seamless brand experience. On a mission to make credit worthy for all, axio leverages technology to deliver innovative financial products to millions of individuals across the country. axio is the brand name of CapFloat Financial Services Private Limited, a Non-Banking Finance Company (NBFC) registered with the Reserve Bank of India. The company has raised funding from marquee investors such as Elevation Capital (formerly SAIF Partners), Sequoia India, Lightrock, Creation Investments Capital Management LLC, Ribbit Capital, and Amazon.

How has Covid-19 accelerated the transition to digital for the traditional financial industry? What will be the new normal in the industry?

The pandemic created a once in a lifetime change in consumer behaviour. We saw an increasing proportion of the population becoming comfortable with shopping online.As a result, digital lending and Online Checkout Finance, in particular, increased in popularity. With physical stores being closed during the pandemic, online marketplaces became essential for people to survive, a pattern that we saw emerging across the country.

Customer behaviours undergo changes very rarely and when they do, they tend to be sticky for a long period of time. We definitely expect digital finance to be the new norm as an increasingly young working population get more and more comfortable with the digital experience: from shopping to payments. The financial sector is working hard to leverage technological innovation to transform customer experiences through seamless end-to-end service.

What, as per you, are the five important things that fintech should be looking at today?

Fintech is leading the digital revolution in finance. But this is much more than offering online services.

a) Regulation & Compliance: The last 12 months have shown us that it is imperative to be on the right side of compliance to be a long-term lender in India. The RBI, like regulatory entities worldwide, has been strengthening oversight and finetuning its guidelines. Fintech firms are better off taking a conservative approach if the ambition is to build a long-term sustainable lending business.

b) Transparency: Fintechs must be transparent with customers on all aspects of the transaction. This means sharing accurate and complete information regarding products/services, prices and policies. Such transparency engenders customer trust, which disruptive Fintech need much more than the well-established, traditional financial institutions.

c) Data Collection & Security: Fintechscollect and store sensitive customer information. This underlines the need to ensure they are collecting only the relevant data from customers and with their consent. Plus, with ransomware and data hacking increasing across the world, high-end security measures, such as authentication procedures and stringent privacy policies, are critical.

d) Liquidity Management: The uncertain global environment makes it vital for organisations to ensure that they remain liquid to absorb sudden shocks. Allowing yourself to be in a position to either defend the company or take advantage of market-driven opportunities would be highly beneficial to Fintechs. As someone wise once said,“Never waste a good crisis.”

e) Sustainable growth over hyper growth: I think that Fintechs should focus on growth that is sustainable and will deliver margins over the long term, against hyper growth that will come at a higher cost.

Share your view on digital lending guidelines by the RBI?

The RBI released new guidelines to regulate digital lending, including via mobile apps and online platforms, in September 2022. The guidelines call for increased transparency in communications, which we support and encourage. We believe that such transparency serves to protect the borrower.

The guidelines also clarify the acceptable flow of money, establishing a direct relationship between the borrower and lender. Other parties that facilitate the transaction will not be allowed to interfere or participate in the transactional relationship or the flow of funds. We see this also as an effective means to safeguard consumer interest.

As a regulated NBFC, we are fully compliant with the RBI’s latest guidelines.

How can small financial players overcome the challenges faced while adopting technology into their businesses?

In a hyper-competitive landscape, the trap that many startups and smaller financial players fall into is adopting technology just because it is the newest or is trending on the market. It is crucial to choose tech that fits with the business goals without overstretching the company’s budget. Another factor to consider is that the new technology integrates seamlessly with the organisation’s existing tech ecosystem.

More importantly, compliance and data security are crucial aspects to consider while adopting any new technology in the financial space. On the other hand, with technology moving at lightning speed, finance firms can now access powerful solutions for fraud prevention, easy and quick KYC, data protection and more.

Why should people come to your app and trust you for credit?

Theaxio app isn’t about credit alone. We cover a wide range of financial needs, from debt to budgeting, by bringing together pay later and personal finance management on one app.

Our aim is to empower our customers to use the axioapp to control theirfinances. This means going beyond the purview of just managing credit or singularly managing their budgets and taking a more holistic view of financial planning.

We believe responsible credit can unlock opportunities for our customers and have a transformative impact on their lives. This is why we offer a unique financial services app that combines credit with personal financial management.

What changes is axio bringing to the industry?

Our first priority has always been to earn and uphold customer trust. At axio, we firmly believe in championing responsible credit. By adopting a ‘low and grow’ approach, we enable our customers to work their way up the credit ladder gradually by being introduced to small amounts of credit initially. This prevents the customers from being overleveraged and channels credit to sustainably unlock their needs, dreams, and aspirations.

As a responsible lender, we offer our customers the tools to take control of their finances via the axio app.

How do you see the next evolution of digital lending?

Digital Lending has undergone significant changes over the last 5 years. The digital infrastructure built for digital lending has itself democratised access to credit. This infrastructure also bridges the gap between online and offline lenders. Now, with the facility to link credit cards with UPI being made available, I expect the cost of issuing credit to decline further, while extending reach to a wider audience. It will be exciting to see how credit cards evolve in a world where they can be used for UPI payments.