Aims to woo millions of lenders as India embraces digital payments
Alphabet Inc's Google said that it is partnering with a handful of Indian banks to bring quick loans to the masses, as it aims to woo tens of millions of new internet users in the country to its digital payment services.
At an annual Google event in New Delhi, Caesar Sengupta, vice president of Google's Next Billion Users initiative, said the move would make banking services accessible to tens of millions of Indians.
Google launched payments app Tez, meaning "fast" in Hindi, in India last year by integrating it with the State-backed unified payments interface (UPI) as it sought to gain a foothold in the South Asian nation's digital payments space which, according to Credit Suisse, will grow five-fold to $1 trillion by 2023.
Last year, Finance Minister Arun Jaitley, who launched Tez in New Delhi, said Google was keen on joining India's transformation into a digital economy, especially after the demonetization.
"The Google team was extremely keen because they saw a great potential, both in the economy and the businesses in India," the minister said.
On Tuesday, Google rebranded the app as Google Pay and said it was partnering with four Indian banks - Federal Bank, HDFC Bank, ICICI Bank and Kotak Mahindra Bank - to provide instant loans to the app's users.
"We're talking to a lot of banks, we're completely open with who we work with in terms of banking partners," Sengupta said in an interview on the sidelines of the event.
"Banks bring their financial capabilities, their understanding of the user, their customers. We bring our user experience, our ability to make complex processes extremely simple and very fast."
Google's ambitions could potentially pose a challenge for homegrown Paytm, backed by Japan's SoftBank, China's Alibaba and US conglomerate Berkshire Hathaway.
Alibaba and Ant Financial, which runs one of China's top payment systems Alipay, jointly own about 40 percent of Paytm's parent after an investment in September 2015.
Japan's SoftBank also became a shareholder in May 2017, injecting $1.4 billion in Paytm's parent company for a 14.2 percent stake and some existing shares.
Paytm's founder Vijay Shekhar Sharma and its parent One97 Communications run a payments bank and the payments firm also plans to expand to selling financial products such as insurance and mutual funds in India - the world's fastest growing internet services market.
Berkshire Hathaway, the US conglomerate run by billionaire Warren Buffett, confirmed in an email that Berkshire had invested in One97 Communications Ltd.
But Buffett was not involved in the transaction, his assistant Debbie Bosanek said in the email, without giving more details.
India's Economic Times reported on Monday that Berkshire was in talks for a 3-4 percent stake in a deal valuing Paytm at more than $10 billion, citing people familiar with the matter.
The investment is a major endorsement for Paytm that has grown to become India's leading digital payments platform in just eight years.
Sengupta said Google was open to collaborating with other Indian payment firms.
"We are huge fans of interoperability ... when a product like Tez does well it creates more value in the network for everyone," he said.
Tez has over 22 million monthly active users, according to Google.
"Google has more Internet users' data than any other tech company so they can work with banks to offer solutions to these customers," said Satish Meena, senior forecast analyst at Forrester Research.
"Google's partnership with Indian banks to offer loan products is going to be a challenge for Paytm and even WhatsApp, which is yet to formally launch its payments service."
Sengupta said Google also expects the KaiOS mobile operating system, in which the company has invested $22 million, to do well in Africa and parts of Southeast Asia.
KaiOS is a low-cost phone operating system which, among others, has been used by Indian billionaire Mukesh Ambani to sell his Jio telecom venture's low-cost internet enabled phones.
"Countries like India, which are mobile first have so many people coming online for the first time, just generate an incredible amount of opportunity for innovation," Sengupta said.
