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The Future Paradigm Perfecting Fintech Disruption

An infra mindset, convergence as its strategic lynchpin, and connecting the many divergent dots that have mushroomed across the Indian fintech space, EbixCash is redefining the sector to build a future-perfect model — one that is difficult to emulate and puts miles between it and the competition

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At a time when travel and related activity such as foreign exchange transactions have been on the decline, EbixCash, which has a leading play in these sectors — and beyond —  is on target to clock more than $800 million in revenues in CY 2021 at an EBITDA of nearly $100 million. What makes this further noteworthy is the consistent profitability of the company in India while growing at a CAGR of 66 per cent over the past three years.
In addition to approximately 11,000 employees, EbixCash has a larger physical network than any of the banks, through 300,000 ‘phygital’ franchisee locations including 50,000 bank branches serving as remittance outlets. Through these phygital locations, it provides a plethora of digital locations that position it way ahead of the competition.

According to Robin Raina, Chairman and CEO of the US-based parent company Ebix Inc, and Founder of EbixCash in India, EbixCash’s focused approach to converge distribution with a backend play and empowering both sides creates the market while simultaneously providing the required technology on-demand.

The result is that EbixCash is a leader in nearly every segment it has entered, barring the limited exception of domestic B2C (business to consumer) travel. Even in travel, the company was clocking $120 million in revenues and 22 per cent operating margins in pre-Covid times. To put this in perspective, the other two players, Makemytrip and Yatra, continue posting record losses.  

An Infra Mindset 

The very building blocks of EbixCash have played a pivotal role in developing a structure that creates diverse growth opportunities. “At the time we were looking to enter the India market, the predominant conversation was about e-wallet and digitisation. It was very obvious even then that people were speaking in silos,” says Raina, reflecting on the journey.

He feels the situation is similar to the insurance sector in the US, with different subsectors working in ‘islands’ when he was setting up Ebix in 2001. And this is where Raina draws the difference between infrastructure and product; and why he chose to build a company with an infra play in mind.

“When it comes to travel, you choose the airline, but you are not exactly choosing the airport. You just have to go to the airport. The ‘airport’ is the infrastructure, and the ‘airline’ is the product. EbixCash, by the same philosophy as Ebix, is not in the product business. I created Ebix as an infrastructure business. The entire play of EbixCash is hence around the theme of convergence; it is around building financial hubs,” explains Raina.

Paradigm for the Future
Raina’s thought process is all about driving disruption in the traditional mindsets in this space. For example, payment apps and e-wallets enable UPI transactions, but this is just the starting point. “What is the consumer ultimately using it for?” asks Raina, adding, “Could it be travel, visa, or taking a loan? When I looked at the Indian market, there were hundreds of companies in this sector, and everything was a licensed industry.”

In India, there are separate licenses for inbound and outbound forex, which is different from other financial products and services such as education remittance, internal remittance, domestic remittance, bill payments, credit cards, and several more. Each of these requires a separate license.  

“It occurred to me at the time what if there was one party that had the licenses for all of this. So, on one hand, there were these different pieces that I thought could be converged. And on the other side, there was travel which by itself was a large industry but again ridden with silos,” Raina observes.
For him, all of this raised the question of what if all this was assimilated under one umbrella. That is the cornerstone of EbixCash’s business model. Raina’s experience in the US bolstered his confidence to rely on a ‘buy’ rather than a ‘build’ approach. The objective was dual — inherit relationships and strengths from acquisitions and create a multi-product offering that creates customer affinity. Companies and individual consumers increasingly seek simple, holistic solutions in a complex market structure — which is what EbixCash is delivering.

The All-inclusive Solution
EbixCash’s payment solution has exhaustive services in forex, payments and remittance,  with all top players aligned. For forex, Centrum Direct, Weizmann and Essel Forex are in its fold, as is Itzcash in payments, whereas for remittance associations span across Western Union and MoneyGram as well as Paul Merchant, You First, Goldman. The same principle has been applied to the travel vertical where it is present across B2B, B2C, MICE, luxury travel while also sitting in the backend of travel tech through Zillious. In addition to this, EbixCash has successfully integrated all these companies into its payments solutions division under a unified infrastructure, workforce and management.

EbixCash’s has a fintech play spanning lending, wealth management, business & IT and business process outsourcing (BPO). Unlike its peers, EbixCash has taken the inorganic route to this, and that sets it apart from other players in the space, including some that have become Unicorns. The company’s entire fintech play too has been integrated under its financial technology division.
Shaking up the Market

India’s fintech market, one of the fastest in the world, has seen unmatched growth nearing $60 billion in FY20, and is poised to grow at a CAGR of 25 per cent until 2025 to scale $150 billion by 2025. India has more than  2,000 fintech players of which nearly two-thirds have been set up in the last five years.

India also has the highest volume of digital payments in the world with 25.5 billion transactions in 2020. This is nearly 60 per cent more than China which came in second, and equivalent to the combined volume of China, the US, the UK and Korea. The growth has continued unabated in the current year. As of October 2021, India’s Unified Payments Interface (UPI) has seen the participation of 261 banks and recorded 4.21 billion monthly transactions worth more than $100 billion.

Ebix, globally a leader in insurance exchanges, has built a highly profitable business model with a consistent financial track record over 84 quarters. Its consistency has secured it a place in Fortune’s 100 Fastest Growing Companies list several times in the last 12 years. A major part of its revenue comes from transactions on online software-based insurance exchanges. This SaaS model is supported by its India-based engineering team that keeps the cost of operations low.
EbixCash has seen payment exchange revenues grow even during the pandemic period primarily driven by prepaid cards. As the economy kicks back into gear, it should see more revenue coming from forex and travel segments. Ebixcash is expected to grow as the Indian economy recovers from the pandemic. The growth will come in the travel, foreign exchange, and remittance areas. It will also see growth in e-learning.

Setting New Benchmarks
EbixCash follows a double auditing method. Its auditors, who sign in a dual capacity, are Grant Thornton India and KG Somani & Co. (KGS). “We want to operate at the highest level of governance. This was why we decided to have two independent auditors, which takes away even the slightest doubt. I wanted to make sure we adopt the highest levels of governance and best practices in India,” says Raina.

As part of its focus on governance, EbixCash has deployed the services of the Big Four firms such as E&Y for taxes and Sox compliance, KPMG for valuation services and Deloitte for IT vulnerability and penetration testing.

Raina also sees the EbixCash board constitution as a key element in the company’s growth plans. The independent board members include names such as Padma Shri SP Kothari, Gordon Y Billard Professor of Accounting and Finance at MIT’s Sloan School of Management, who most recently served as Chief Economist and Director of the Division of Economic and Risk Analysis at the US SEC, and S. Ravi, who is presently the Chairman of Tourism Finance Corporation of India and serves on several boards and was appointed by the Government of India and the Reserve Bank of India as Chairman of the Technical Experts Committee for Punjab & Sind Bank’s Strategic Turnaround.

The board also comprises leaders such as Sunil Srivastav, who was Managing Director of the Corporate Accounts Group at SBI; Neil Eckert, Chairman of Conduit Re, a UK reinsurer, that recently listed on the LSE, and Pavan Bhalla who till recently served in multiple leadership roles at Aon Hewitt.

The Road Ahead 
Gearing up for its IPO — planned for early 2022 — EbixCash’s strategy is centred on expansion. A key step in this direction has been the entry into the healthcare space with EbixCity, which has been designed as a chain of smart hospitals. Offering multi-disciplinary solutions, EbixCity will be across India.

EbixCash’s core team is pushing the envelope to achieve some of the company’s ambitious targets. Its leadership includes TC Guruprasad, MD and Board Member, EbixCash; Sumit Khadria, CFO, EbixCash; Bhupesh Tambe, MD, EbixCash Global Services; Naveen Kundu, MD, EbixCash Travel Services; Dhawal Kamath, Chief Business Officer, EbixCash; Aruna Savant, Chief Management Officer at EbixCash Financial Technologies and Sameer Kaul, MD, EbixCity.

Raina’s first aim is to regain pre-Covid revenue levels, which he feels will happen naturally with the return to normalcy. Deep diving into its current verticals, which also include e-learning and startups in cab services (Aha Taxi) and Logistics (Routier) apart from payments, travel and fintech, is also on his radar. As EbixCash positions itself as a future-focused disruptor in the fintech market – the airport of the sector – it is poised to disrupt traditional thinking to achieve not just a differentiated, but probably a leadership position in the market.

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Magazine 28 Dec 2021 Robin Raina EbixCash Ebix