Fintechs bank on credit cards for growth; ShareChat’s FY23 losses jump to over Rs 4,000 crore

Fintech heavyweights such as Cred and PhonePe are exploring cross-selling options and forging partnerships with banks to act as distribution channels for their credit cards. This and more in today’s ETtech Morning Dispatch.

Also in this letter:
■ Twists and turns in the OpenAI-Altman saga
■ Indian IT firms trying to tackle gender pay gap
■ Draft Broadcasting Bill raises new questions on OTTs, costs

Fintechs queue up for card distribution business to lift topline


Cross-selling, as a theme, seems to be picking up, as two fintech heavyweights are looking to forge partnerships with banks to act as distribution channels for their credit cards. According to sources, fintech startup Cred has started distributing Axis Bank credit cards through its platform, while Walmart-backed PhonePe is in the process of partnering with Axis Bank for the same.

But why? The strategy around leveraging fintechs to distribute credit cards will allow banks to gain access to a cost-effective way of sourcing good quality customers. For the distributor fintech, it is to build pure play engagement and create additional monetisation on its captive base, until they figure out their credit strategies.

Fintech Print GFX

Topline is key: Both Cred and PhonePe are at interesting junctures on their topline. Cred, on the one hand, is seeking greater monetisation of its existing user base, while PhonePe wants to diversify from core payment revenues. But distribution cannot be the only strategy, as they figure more margin-accretive business lines.

Deeper inroads:
According to a senior banker, this distribution play may also set the foundation for future co-branded card partnerships, a senior bank told ET on condition of anonymity. Industry executives also said that commission models might also evolve for the industry as fintechs might get the onus to provide exhaustive avenues for the credit card holders to use the product.

ShareChat parent’s FY23 losses jump 38% to Rs 4,000 crore

Ankush Sachdeva_Sharechat_BW

Ankush Sachdeva, cofounder and CEO, ShareChat

Vernacular social media platform ShareChat’s parent Mohalla Tech has posted a 62% rise in FY23 revenue at Rs 540 crore. However, its losses grew 38% to Rs 4,064 crore, driven by non-cash items such as increased financing costs and impairment of investments in subsidiaries.

Loss-making items: In FY23, the firm accounted for an interest payment of Rs 215 crore ($25.7 million) on $400 million it raised through non-convertible debentures in 2021 and 2022. This figure was up from Rs 88 crore in FY22. It also recorded an impairment of Rs 817 crore on investment in a subsidiary. These two items added significantly to its losses.

Financial numbers: According to RoC filings, around Rs 255 crore of the total revenue came from advertising and the rest from in-app virtual gifting. Further, there was a marginal decline in operating costs at an Ebitda level of Rs 2,372 crore in FY23, excluding non-cash items, against Rs 2,578 crore in FY22.

sharechat layoffs

Cutting cash burn: The Tiger Global- and Temasek-backed company has also put a complete pause on its marketing spends and had fired 500-600 employees at the start of the year.

“We have reduced our server costs significantly, which is one of the biggest cost centres for a social media platform, and taken corrective steps throughout the year, which has led to ShareChat – as a standalone business – becoming contribution margin positive,” said Mohalla Tech CFO Manohar Charan.

The company is in discussions to raise a bridge funding round likely through convertible notes, sources told ET. The details are yet to be finalised.

OpenAI staff threaten to quit en masse; cofounder regrets Altman’s exit


Sam Altman, cofounder, OpenAI

Monday morning in Silicon Valley brought a fresh twist to the OpenAI-Sam Altman saga, with more than 500 employees of the AI startup, including chief technology officer Mira Murati and chief scientist and cofounder Ilya Sutskever, threatening to quit if the company’s board did not resign, multiple media outlets reported.

Open letter to OpenAI board: “The process through which you terminated Sam Altman and removed Greg Brockman from the board has jeopardized all of this work and undermined our mission and company. Your conduct has made it clear you did not have the competence to oversee OpenAI,” read an open letter to the firm’s board.

Other demands: The employees also demanded that Bret Taylor, former co-CEO of Salesforce and CTO of Meta, along with American politician Will Hurd, be appointed independent directors to the company’s board. Hurd, who was appointed to the company’s board in May 2021, resigned earlier this year to focus on his political career.

“Regret my participation”: As things looked to settle, even for a short while, OpenAI cofounder and scientist Ilya Sutskever posted on X saying he regretted participating in the board’s decision. “I deeply regret my participation in the board’s actions. I never intended to harm OpenAI. I love everything we’ve built together and I will do everything I can to reunite the company.”

The Sam Altman-OpenAI saga Four action-packed days_Graphic_ETTECH

OpenAI’s new interim CEO: Hours after Altman and Brockman met executives at OpenAI headquarters, the company replaced Mira Murati with Twitch cofounder and CEO Emmett Shear.

Laying out his plans for the ChatGPT-maker, Shear said he plans to hire an independent investigator to probe recent events and reform the leadership team in light of recent departures.

Joining Microsoft: Putting an end to speculation about Altman’s future, Microsoft CEO Satya Nadella said Altman, former OpenAI president Greg Brockman, and some of their colleagues would join Microsoft to lead “a new advanced AI research team”.

Gender pay gap widens as women go up the tech ladder

pay gap getty

Indian technology companies are looking to address the widening pay gap between men and women employees with ascension up the corporate ladder, suggests data from management consulting firm Aon and specialist staffing firm Xpheno. The pay gap is in addition to the underrepresentation of women in the technology sector.

Data decoded: According to Aon’s latest estimates, the unadjusted gender pay gap in the sector in 2023 is in the range of 28-30%, while for junior management it is 8-10%. This is an improvement over the pay gap of 34-35% during the Covid-19 pandemic. CEOs, boards of companies, and investors are now making diversity a top priority.

IT Gender Pay Print GFX

Yes, but: A study by Xpheno for ET showed the percentage of female engineers in the higher salary bracket is significantly lower compared with their male counterparts at the same experience level and identical job roles.

Only two in 10 female engineers compared to three in 10 male engineers in the three to nine years’ experience range are above the Rs 15 lakh per annum salary mark, according to Anil Ethanur, cofounder, Xpheno.

Who’s doing what?
Capgemini in India regularly tracks its gender pay and participates in surveys like EDGE and other diversity and inclusion indices. At Wipro, women form 36.5% of the workforce, according to the company. The retention rate for women returning from maternity leaves at Wipro dramatically improved to 99% in 2022-23 from 67% in 2020-21, it said.

Draft Broadcasting Bill raises new questions on OTTs, costs

Trai to start consultation on OTT communication regulation

Communication over-the-top (OTT) apps such as WhatsApp, Telegram, and Signal, among others, may be included in the recently introduced draft Broadcasting Services Regulation Bill 2023, experts said, raising concerns they may be bundled with the broadcasting OTTs such as Netflix.

Compliance burden: Experts have also sought clarity on whether such apps will be regulated by the Ministry of Information and Broadcasting (MIB), Department of Telecommunication (DoT), or in some cases the Ministry of Electronics and Information Technology (MeitY). Regulation by multiple government organisations may increase their compliance burden.

Defining broadcasting: Broadcasting has been defined under the Bill to mean one-to-many transmission of audio, visual, or audio-visual programmes using a broadcasting network, intended to be received or made available for viewing, by the general public or by subscribers of the broadcasting network, as the case may be.

Other Top Stories By Our Reporters

Co-founders of Kiwi_Siddharth Mehta, Mohit Bedi, Anup Agrawal

From left: Cofounders of Kiwi – Siddharth Mehta, Mohit Bedi, Anup Agrawal

Credit card on UPI startup Kiwi secures $13 million: Fintech startup Kiwi has raised $13 million in its latest funding round led by Omidyar Network India. Existing investors Nexus Venture Partners and Stellaris Venture Partners also participated in the round.

Australian stock exchange picks TCS to rebuild software after earlier flop: TCS has won a deal from the Australian Securities Exchange (ASX) to use TCS BaNCS for a market infrastructure product, ASX said in a note.

LTTS, Nvidia to develop Gen AI-based architecture for medical devices: L&T Technology Services Limited (LTTS) has collaborated with Nvidia to develop software-defined architectures for medical devices focused on endoscopy, which will enhance the image quality and scalability of products.

Global Picks We Are Reading

■ Cricket, influencers, layoffs: Alibaba’s risky bet in Pakistan (Rest of World)

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■ This viral game in China reinvents hide-and-seek for the digital age (MIT Tech Review)