V R. Govindarajan (known as Govi) likes to quote Intel CEO Andrew Grove's motto: "Only the paranoid survive". We need to be on our toes all the time, continuing to innovate, he says. "There will always be smarter people than you and perhaps with lesser baggage than you. They could come up with faster and better solutions." Being paranoid has served him well.
Chosen by the jury for the Best Fintech VAS (value-added service) award, Perfios is a product technology fintech firm that supports financial institutions in analysis and credit underwriting. It collects financial data and helps clients make credit-based decisions. Its functions include bank statement analysis, e-verification, financial analysis and fraud check.
From just about 20 clients in 2014, Perfios today has over 220 clients. In 2019, it signed up with the State Bank of India, the largest public sector bank in India. "Last year, we would have added about 30 new clients apart from deepening engagements with existing customers. On an average we grow 100 per cent year-on-year in terms of top line. This has been the case for four to five years and is expected to continue, at least for the next two to three years," says Govindarajan, Co-founder of the company. The company has been operationally profitable for the last five years, concluding FY19 with revenues of Rs 43.6 crore, he says.
While being pro-active has helped Perfios, it also had the advantage of the finance landscape in India moving towards digitisation. "Around FY14, fintech started becoming a large growth engine, fueling innovation in financial services worldwide. Then, there was the thrust by the Indian government on digitisation." So, when the digitisation wave rose, the Bengaluru-based VAS fintech firm found itself in the right place at the right time.
Hungry for More
Co-founded by Govindarajan and Debasish Chakraborty, Perfios was set up as a B2C company 10 years ago with an aim to help people manage finances. Hence its name 'Perfios' - Personal Finance One Stop. But they soon felt that monetising a B2C platform was a challenge and decided to convert into a B2B model around FY13 (the B2C platform continues). Thereafter, they started approaching banks and other financial institutions offering a new category of solutions.
"We built on the foundation laid earlier. Then, 2019 saw the whole account aggregation move - the RBI initiated a regulatory move on account aggregation called NBFC-AA. This will completely change the way financial institutions are doing business in the country," says Govindarajan. Perfios Account Aggregation Services, a subsidiary of Perfios Software Solutions, has an in-principle approval from the central bank for providing account aggregation services, which means consent-driven account aggregation on behalf of end-users so that the data collected can be processed and analysed. This is expected to have a significant impact in the financial services world.
Perfios has also paid attention to diversification. In 2019, it pushed forward in foreign markets. "We are quite active in South-east Asia, the UAE and a few other countries." The firm intends to step on the gas in this segment. In the domestic market, a crucial component of the story has been increasing its reach. The firm started providing solutions and services to State Bank of India for their lending products, which Govindarajan sees as a major milestone. "There is also a lot of focus on PSU banks. This space gains even more importance with many mergers taking place. Apart from that, we are present in almost every private, multinational and small bank."
Govindarajan adds that across all the moves the company has made in the previous few years, the key has been innovation. "Unless we as a company stay focused on innovation, there is no way we can make progress because the pace of technology change is phenomenal. There is no way you can sign up new customers based on past laurels. One needs to continuously roll out new products and solutions."
Standing Apart
What helps Perfios stay in the front in the race in account aggregation? It is about providing a solution that reconciles data from multiple data sources, does cross analysis in real time, establishes a single source of truth (or the correct financial picture) of the borrower to the lender, explains Govindarajan. "We provide end-to-end services but there are players that provide specific services like identity related services. Some do only GST processing. Some do bank statement analysis, or just income tax return related analysis. We handle any kind of structured or unstructured data from identity, salary slip, bank statement to financial statement. Large institutions typically like working with a partner that can handle all of this rather than work with six different vendors."
Their business and its underlying strength has attracted investors. "We track four to five companies in pureplay fintech space on specific offerings, but we also follow several AI companies, either for acquisition or partnership or collaboration." Three years back, Perfios raised Rs 40 crore in Series A funding from venture capital firm Bessemer Venture Partners. In 2019, it raised about Rs 350 crore Series B funding led by private equity major Warburg Pincus, taking the total to about Rs 400 crore (the later deal included a secondary share purchase from early investors in the company).
If the firm holds its focus and is able to tap into the opportunities that fintech throws up, it is all set to gain.