With Paytm Score and Paytm Insurance, the company is planning to take over another market

By Zarnaab Aswad

Indian e-payment giant Paytm is set to enter two new segments: Insurance and credit scoring, in its bid to be a complete financial ecosystem. The company’s upcoming credit scoring product, Paytm Score, will provide credit scores based on the users’ transactions and buying behaviour from the services that Paytm offers.

As for insurance, the company has recently incorporated two new subsidiaries: Paytm Life Insurance Corporation Limited and Paytm General Insurance Corporation Limited. These companies look to offer differentiated insurance products like health insurance, motor insurance and life insurance and will directly compete with the well-rooted insurance companies in the market like EasyPolicy, BankBazaar and PolicyBazaar.

The company’s success so far has been attributed to the spike in digital transactions post demonetisation but it is now aggressively attempting to boost its other verticals while integrating multiple platforms.

Paytm Score

Unlike typical credit insurance companies which take into account an individual’s credit history and function in a regulated framework set out by the Reserve Bank of India (RBI), Paytm Score will factor in the customer transactions across the company’s multiple offerings, including their e-wallet, online marketplace (Paytm Mall), booking platforms and will throw up a final score that it is likely to be shared with the company’s lending partners, said one of the persons, who did not wish to be identified.

It is notable that with credit scoring, the company is not embarking on an unchartered territory, as companies like PolicyBazaar have already been doing this. What sets Paytm Score apart is Paytm’s ability to leverage the data of their huge customer base, running into more than 100 million users.

The two major investors of the company, Alibaba and Tencent, have both already tried introducing similar credit scoring products: Sesame Credit back in 2015 (by Alibaba) and WeChat app (by Tencent). However, the offerings did not gain much success in China owing to data privacy issues linked with their respective products.

However, in India, assuming that the company does not get stuck in regulatory hurdles, credit-scoring based on financial transactions may provide a big boost to flow-based lending, especially for those without a formal credit history.

Paytm Insurance

Paytm is not absolutely new to the insurance business as its parent company, One97 Communications Limited has a valid composite corporate license to sell health and insurance products by the Insurance Regulatory Development Authority of India (IRDAI) which it was granted back in 2017. While the company refused to disclose further details, by floating their two new subsidiaries, Paytm’s intention to sell differentiated insurance products is now clear.

The company has previously partnered with insurance companies including ICICI Prudential Life, Religare Health, Reliance Life and Reliance General to assist consumers in paying their insurance premiums online, through mobile & e-wallet transactions.

Diversification and the company’s future

One97 Communications Limited now owns six companies in all, including Paytm, Paytm Money, Paytm Mall, Paytm Payments Bank and the two new Paytm Insurance companies. It has wide opportunities in the Indian financial technology domain, now that it has extended its hands into almost all major verticals including online lending, insurance, banking, gold loans, wealth management among others.

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