Thyagarajan Seshadri, President, Banking Relations, Electronic Payment and Services,
emanates as a visionary and a strategy revolutionist in the Indian ATM Industry, with expertise in driving corporate strategies to new initiatives in the payments domain thus contributing towards organic business growth by maintaining strong customer engagement, relations and excellence.
He proactively paved way for Brown Label ATMs in collaboration with other notable leaders by introducing new business models in the industry. With a very strong interface with Ministry officials, policy makers and regulatory bodies, he has established sound relationships for a robust organisational progress. He has been successful in enforcing connections of EPS as a first board level member with ATMIA. Along with being an avid reader, his interests and hobbies dwell in basketball and travelling.
Electronic Payment and Services (P) Ltd.
is a leading payment system company founded in 2011 by veterans from the Banking, Technology, Retail, Oil & Gas industries. EPS is headquartered in Mumbai, the financial hub of India and was launched to bridge the gap in demand for efficient, secure and technology driven products and services for the banking industry. EPS has built a firm reputation on delivering results, reliability and dependability of our business services and commitment for excellence to a majority of Public Sector Banks across the country and established its project execution skills by successfully deploying over 4200 ATMs in urban and rural locations, in union with the Ministry of Finance (Govt. of India) led mission for Financial Inclusion and Pradhan Mantri Jan Dhan Yojana (PMJDY) Scheme in India between 2012 - 2014.
In a tête-à-tête with Anil Mascarenhas of IIFL
, Thyagarajan Seshadri says, “We are looking at an INR 1,000 crore turnover in the near term as well as IPO for the benefit of all the stakeholders in the ecosystem.”
You were active in the ATM age decades ago when it was then a disruptive technology. Walk us through how ATMs have evolved especially in rural areas. Any interesting anecdotes you have to share (like Gadchiroli - 100km for ATM)?
EPS’ successful operations start with the identification of the right ATM site. We have a team of professionals who identify the site and does the survey with respect to its visibility and safety perspectives. They are also vigilant of the fact that the selected site should attract higher footfalls. The team chooses to select busy residential, commercial and workplaces rather than deserted areas. Once the site is identified, branding is the next important criteria as it increases the visibility and branding is done in a manner that customers easily identify the ATM location. Once the deployment of ATM is done, necessary infrastructure such as UPS, VSAT would be installed and ATM would be connected to the bank switch. EPS’ technology partners would cater to its technological requirements. Cash would be collected from the bank and other services such as maintenance of the machine, maintenance of other equipment, filling up the cash, filling up the stationary would be outsourced to the respective service partners such as cash filling agencies, maintenance agencies, etc. As and when the requirement arises, agencies are notified to complete the assigned tasks.
Once the machine gets started, it would be monitored continuously from the EPS’ monitoring center. As and when a problem arises in the machine, it flickers which opens up a ticket in the Center. Local channel managers who are responsible to sort out the problem would be notified about the problem. Machines would be fixed within the given turnaround time. There is also an escalation process in place, which ensures that even the senior managers and top managers are notified in case the machines are not fixed within the prescribed period. EPS is responsible for running all the services of the ATMs end-to-end. EPS’ job is to ensure that machines are up and running 24/7 so that customers can access the machine and get the money as and when they want without any inconvenience. EPS follows the transaction-based revenue model, which charges INR11.9 per transaction. This implies that higher the number of transactions, higher the revenues. This concept ensures that their professionals are always on their toes to ensure that machines are always up and running. With the increase in uptime, customers’ trust on such ATM sites increases which converts into more number of transactions and in turn yields more revenues. Besides, EPS’ Centralized Monitoring Center and Business Analytics Tools play an important role in maintaining its efficiency.
What is the difference between brown label and white label ATMs? In this age of mobile money, how do you see the business model shaping up?
Well to begin with, white label ATMs are owned, set up, and operated by non-banking financial institutions. They have the features similar to that of any normal ATM but without the branding of any bank. The main aim behind installing white label ATMs is to incorporate more people under the financial inclusion plan. The bank which sponsors the ATM provides the cash, and it is mandatory for them to deploy ATMs in different cities, especially tier 3 to tier 6 cities. White label ATMs also require separate license from the RBI in order to take off their business. In case of brown label ATMs, the hardware is owned by a service provider and the cash management and network connectivity is provided by sponsor bank. In other words, the bank outsources the ATM operations to a third party, and they themselves provide cash for the same. The ATMs carry the logo of the bank, and their no involvement of RBI as the brown label deal directly with the banks.
Managed services providers (MSPs) have deployed machines in a short span of time. How do you see this segment emerging?
Apart from providing end-to-end ATM services to banks, EPS has developed its own specialized monitoring tool on technology and automation platform, as well as business analytics tools, which help management in decision-making. In 2014, the company launched “Centralized ATM Managed Services Center” with the aim of improving ATM operations, thereby enhancing the value of its projects. Centralized Managed Service Center is the monitoring center, which is operated on a 24/7 basis for 365 days in a year. The in- house monitoring tool developed by EPS and the consortium to monitor the ATMs on a 24/7 basis. The screen gives the overview of the dashboard, which gives the information about all the banks that EPS integrated with its application. The monitoring screen gives the details about the incidences raised automatically in the system. It gives the details of banks, location, description under which ticket has been automatically raised, open time, duration of the incidence for which the ticket has been opened in the system, ticket status, etc. Agent working in the monitoring area is responsible for dispatching the ticket. As soon as the problem is fixed, ticket is closed automatically.
EPS has also developed its own Business Intelligence Tool. It is a user-friendly tool, which is a one-source solution for analysis and reporting. It gives an overview of what was done in MoF project. It gives a brief overview of Onsite, Offsite and Lobby ATMs. It also gives details of ATMs installed area-wise i.e., in urban, semi-urban and rural areas. Various tabs include count of ATMs by share of top 10 banks, average daily transactions per ATM by month/by bank/by city, transactions trending, etc., in the MoF project. Data analytics also helps in identifying both the viable and unviable ATMs. The tool helps the company in taking decision to replace or relocate the unviable ATMs and invest in profitable ATMs with higher footfalls. Thus, the tool is useful for analysis, report generation and for sharing with the customers, investors and the management. In brief, both the tools help EPS in monitoring, gathering information, capturing details about the incidences and finally help the management with the analysis and decision-making.
The payments industry has seen a radical change in the last decade. What are the emerging trends? How geared is the financial services industry to handle the radical changes taking place?
The payments industry is India has indeed seen a radical change in the past decade. We have progressed from an age where digital payment was a futuristic concept to the present, where paying the auto rickshaw guy through mobile wallet has become quite commonplace. The accelerating growth in electronic payments and the consistent entry of new player in the market will further facilitate this trend. The greatest emerging trend is perhaps the mobile-first mindset wherein mobile has materialized as the payments and commerce platform. According to a report by PwC, with the large unbanked population and the growing regulatory agenda to absorb them into the financial system, emerging markets are in a unique position to drive growth in the payments industry. The financial services industry is equipped to an extent to handle the changes that are constantly taking place. 2016 so far has been momentous what with the launch of UPI, multiple digital wallets, all of which are steps towards attaining a less cash economy. We still believe a lot more has to be achieved in terms of infrastructure, at this point we have a base on which can pave way for further development.
The banking sector in India has undergone a massive change in this past decade. A number of reforms and initiatives have been introduced which have further helped in the development of the sector. The government as well the RBI are effectively pushing for the same which has resulted in the growth of customer base, coverage, and business. According to a report by Deloitte India and CII, initiatives such as PMJDY have played a key role in the expansion of the sector. ). Between 2011 and 2014, due to the sustained efforts of the government as well as the regulator, bank account penetration increased from 35% to 53%. In absolute terms, 175 million new bank account holders were added during this period. Keeping all this in mind, we can say that even in the age of mobile money, the business model is shaping up quite well.
Millennials are challenging the status quo in most industries. Their ideas are creating disruption. How are you viewing this development?
Banking is the backbone of our economy, and the millennials are the future. Their manner of banking is definitely different than their predecessors. The millennials are quite tech savvy whose instinct is to look for a seamless way to do banking or complete a transaction.
You have often said that for the payment industry, the entire ecosystem should be taken into consideration. Why are segments such as yours often left out in the thought-process? What steps are you taking to make your views heard?
Although the segment has achieved quick growth, we still face the challenge of coping up with this fast-paced growth. ATMs have evolved from being mere cash dispensers to multi-utility service providers. And India is one of the largest ATM markets in Asia, and they revolutionized the banking industry by lessening the frequency of visits to banks even for basic financial transactions. This has been further facilitated by the recent rise of less cash payments. In order to keep up with the changing times we are trying to adapt the technological changes and move forward with time.
What are the key requirements to improve the payment systems?
In order to further improve the payment systems, it needs to be safer, more secure, sound, efficient, and accessible to all. In order to achieve this, payment systems will have to evolve at a greater speed. Presently, we are witnessing massive changes taking place in the payment systems and are experiencing a disruption in the physical/paper-based system by electronic ones. Payment system providers service a large number of customer accounts, and inter-operability between various digital channels will go a long way in improving the service. Along with this, new government initiatives, and convenience for the customers will also serve the purpose.
Unified payment solutions is now being seen as a game-changer. How do you view this situation?
Unified Payment Solutions (UPI) has taken the nation by storm. They have made the entire process of making payment effortless and prompt. As mentioned earlier, this is a positive step towards a less cash economy but we can’t overlook the fact that in rural areas, the smartphone and Internet penetration is yet to reach an impressive number. A large part of Indian population resides in rural areas with limited access to financial services. The people in rural area will be still dependent on the ATM machines for withdrawing cash. UPI has tremendous potential but unless it reaches each and every individual in the country, its benefits won’t be fully used.
Let’s talk a little more about EPS. How has your own business model evolved over the years? What is the future looking like?
Along with vast industry experience of our founder and other members of the leadership team, alongside the financial inclusion initiatives of the Government of India, EPS has grown steadily over the years. We came out with a first of its kind ATM transaction based model known as Disruptive Business Model (Pay per use) which is unique to the world. This has led to higher ATM uptime for banks thus leading to higher revenue streams. This is also called the Double Whammy effect which explicates successful transaction and uptime maintenance, wherein we get paid for every effective transaction from our ATM, and secondly, for maintaining an uptime of 95% approx., as per the agreement with banks.
This is how DBT (Direct Benefit Transfer) scheme was encouraged, which is a social benefit offering to the unbanked / underbanked, where cash is transferred by respective government departments through ATMs, without any middleman or broker for real-time credit to the actual beneficiary, saving loopholes and millions to the exchequer. Moving away from the existing business model, unlike competitors, thinking innovatively and proposing a win- win business model to the customer, leveraged our breakthrough into innovation space. We also came up with centralized ATM monitoring services center to support operations thus supporting the project mission more effectively.
Comment on how your business model has evolved over the years. What is the roadmap for growth? Are you open to inorganic growth?
We have been the solution provider in setting up of the entire ATM infrastructure for Banks. With a robust ATM monitoring capability, we have been successful in managing and maintaining Cash and offering for our customers 24x7. EPS mainly caters to all public sector banks along with SBI and its associate banks across India. EPS has set several milestones to its credit since its inception. In 2012, we deployed the first live ATM among all the vendors who won the bid for MoF project. In 2013, EPS set a record for deploying 1,000 ATM machines in 60 days.
Our first and foremost aim is to make things happen in a manner that things become better for customers, stakeholders, investors, employees. As we move on to the next platform, we would be looking at acquiring companies, entering into other areas of payment systems. We have acquired 100% stake in CISB ATM Services Pvt. Ltd., (joint venture between CISB and EPS), thereby making it a wholly-owned subsidiary of EPS. Our new initiatives include entering into Point of Sale (PoS) space and creating EPSecure, a proprietary and innovative solution of EPS to secure transactions that happen across various transaction mediums such as ATMs, PoS, Mobile Banking, Internet Banking, e-commerce, etc.
Who are the investors? At what valuation did they come in?
We have received funding from mainly three investors. Aavishkaar was one of the first companies to invest in EPS. They are an innovator in early-stage investing who believe that investing in early stage entrepreneurial ventures can not only deliver commercial returns but also bring about significant efficiencies and developmental impact to rural and underserved communities. Aavishkaar invested ₹20 crore in EPS in September 2012 and ₹33 Crores once again in July 2013.
In December 2013, EPS secured ₹33 crore funding from Asia Participation B.V, a wholly owned subsidiary of FMO Entrepreneurial Development Bank. And earlier this year, we secured 25 million USD from Apis Partners which is a private equity asset manager that supports growth stage financial services businesses in Africa and Asia by providing them catalytic growth equity capital.
What is your people strength at present?
We currently have a workforce comprising of 200 people.
Do you plan any fundraising or IPO?
At present, we are at an inflection point, and foresee multiple opportunities for exponential growth in the future. We are looking at INR 1,000 crore turnover in the near term as well as an IPO for the benefit of all the stakeholders in the ecosystem. We want to evolve as a professionally managed, fast growing, payment services Company.