InvestorQ : How will Paytm benefit from the deal to acquire an insurance company?
Katherine Gonsalves made post

How will Paytm benefit from the deal to acquire an insurance company?

Rutuja Nigam answered.
11 months ago

There are multiple advantages for Paytm in this deal. The first and foremost challenge for any insurance company in India is how to create, penetrate and service new markets. As a result, for any insurance foray the marketing and distribution plan becomes extremely critical. It is just that Paytm is starting to think about the insurance process the other way.

Post demonetization, Paytm has created a formidable digital franchise at the front end that covers millions of individual customers as well as merchants. When it comes to general insurance or non-life policies, it is merchants who are a big untapped market for products like fire, marine, health, etc. That is the market Paytm can easily tap.

Paytm now wants to integrate backward and become an originator of financial products. That is where inorganic acquisitions like Raheja QBE are coming in handy. Indian financial services are increasingly veering towards digital front end sales and that is a natural edge that Paytm already brings to the table.

So, that is how it falls into place. Paytm can use its massive war chest of funds raised in the last few years to buy out originators of products like insurance, mutual funds and pension products to give a full suite of financial products and solutions to its customers. The end result is that the customer of Paytm gets a holistic financial solution on the table.