Is Fino a pivot or a bank embarking on a well though out digital strategy? I tend to believe the former, from the data and the management’s language in AR and conf calls.
Their strategy now is TAM – Transaction, Acquisition and Monetization. Transaction is when they set up the distribution (MATM, AePS etc). Acquisition is CASA and the digital payments which they have been doing doing last 1.5 years. Setting up Monetization where referral products will be introduced which will be the next leg of growth.
But the core business (Transaction) has been in ventilators for 1-2 years now. They introduced Fino 2.0 in AR 2022. Then in 2023 they said it is TAM – there is an Acquisition phase (a transition phase) in between before the next leg of growth.
- Acquisition phase has been going on for more than a year where the new referral products partnerships has not fully done yet. This phase is not revenue accruing.
- Setting up digital stack and digital product team only after the Acquisition phase in TAM was well underway.
- UPI adaptor developed inhouse only by Q4 FY2023.
If TAM or Fino 2.0 whatever it is, is a well thought out strategy and not a reaction to a declining core business, the preparation for monetization phase should have done well ahead, isnt it? So that there is no long non-revenue accruing phase and next growth leg started sooner.
But this is fine, it could happen in a company pioneering a new model. However the point of concern is the company has been painting a rosy picture and trying to project a notion that all this is a well thought/planned strategy. If you go through the AR or the prepared remarks in the conf call intro, this is the feeling one would get.
Besides this, in painting a rosy picture, the management is putting up a face which says everything is going well, we are making new highs and so on, but the legacy businesses (MATM, AePS, BC) are in ventilator. There are many They did not speak upfront about any of this, only when questions were asked in conf call, they threw light on these. More over, progressively in various investor PPT decks, a few key data points or slides are disappearing. For example, in the latest Q4 FY23 ppt, the slides which show quarterly trend of each product is missing. New subscription income in CASA is missing too. In previous PPTs they showed both new subscription and renewal income split.
No management can get their strategies and actions right all the time, they very well have to tweak it as per the progress too. However a honest management will admit where it went wrong and be truthful about the corrective actions and its results. I am afraid I do not see it here.
I would like to hear out others’ opinion also on this and make sure that I am not just thinking too much. Have you guys also felt this?
Example of a missing slide in PPT:
Revenue shift from MATM/AePS to CASA explained only when asked:
AEPS quarter to quarter non-growth/degrowth explained only when asked:
New referral products progress not going well, which was explained only when asked. Note that new referral products is what they call the Monetization phase and is strategically the most important, and hence the most important to keep shareholders informed:
What if nobody cared to ask these clarifications?
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