There is now a well-established recipe for growing an online business. You start by selling one product. Then, after acquiring users, building infrastructure, and logistics, you dole out more features. After all, whether you sell one product or 10, the cost is incremental, but the revenues—explosive. Now, with a cluster of features, from grocery to food aggregation to delivering packages, your transformation to a multifaceted online platform is complete.
Since every online service—from ride-hailing to e-commerce—needs to accept payments, it became a feature on several platforms. From payments, the next logical step was to also enable lending and insurance. What would have been standalone, intensive, traditional businesses could now exist as a mere feature. Online platforms universally embraced Fintech as a Feature (FaaF).
Take ride-hailing company Ola Cabs, for instance. In 2010, it only operated cabs. By 2015, it had a standalone wallet called OlaMoney. That same year, it got into food delivery and grocery delivery with Ola Cafe and Ola Store (which both both Financial Express In March 2016, online taxi aggregator Ola has officially shut down its food and hyperlocal delivery services Ola Café and Ola Store, which were launched on its platform in 2015 Read more shut down a year later), respectively. By 2017, it also became a food aggregator. But it wanted to double down on fintech.
Soon, the cab aggregator had a suite of financial services products under the brand OlaMoney: a wallet, a postpaid facility, co-branded cards, insurance.
Ola isn’t the only online platform that has become ambitious about its fintech features after India’s post- demonetisation demonetisation Demonitisation In November 2016 India banned 86% of its currency fintech boom, which resulted in the creation of unicorns such as Paytm* and PhonePe PhonePe The Ken From $2 billion in 2018, Flipkart-owned PhonePe is worth ~$10 billion today. As it has grown, its reliance on Flipkart has shrunk. Once, 50% of its monthly transactions came through Flipkart. Today, this is less than 0.5%. Read more . E-commerce giants Amazon and Flipkart have also introduced features like payments, lending, and insurance. The idea was that fintech as a feature would help make shopping online or taking a cab a seamless experience.
These online platforms then started expanding their payments services to other merchants. Which meant the features were now as good as full-fledged fintechs, competing with the likes of PhonePe and Paytm.
And for all these companies, Alibaba is the north star.