Fino Payments Bank Limited — Q3 FY25 earnings call

So all these amounts, which are quoted, are in the technology space. Within the technology space, I think Rishi alluded to a point of Hollow-The-Core and CBS migration, which we are doing. In addition to that, over a period of time, whether we mentioned about UPI switch or all the other initiatives, which we've done over the last couple of years for bringing the technology this thing. So these are all capex expenses, which I was referring to. And these would be treated as depreciation depending upon the kind of speed, which is typically a hardware will get depreciated over a 5-year period and a software will get depreciated over a 3-year period.

Clarifies the nature and accounting treatment of the significant technology investments made by the bank.

Asked by Amit Mehendale

So having said that, our business, as we move into digital, will not get impacted. But just the opportunities to do more products. If you look at our transaction business, it was around 40%-plus 1 year back. Now it is in the region of 25%, so this definitely affects the revenue and income for the merchant. So that is where the interest has also come down. Secondly, also, that the growth of merchant ecosystem has become quite spread out already in the country. So to go into newer geographies and to go into the same geographies with more merchants also may result in some revenue loss or income loss or some other existing merchants. So we are also getting a little bit more careful in terms of adding only that many merchants in a particular geography so that we don't cannibalize their income in a way.

Explains the rationale behind the slowdown in merchant network additions, shifting focus from quantity to quality and productivity.

Asked by Naman Jain

So there is -- we do not fund technology or for that matter any other asset from the borrowed money, okay? We are a scheduled commercial bank, and we can participate into the borrowing and the lending program, which is run by the Reserve Bank of India through repos and reverse repos. So most of these borrowings are constituting of the call money lines which we can take and there will be relevant investment increase also, which we have seen throughout. So these are not borrowings for funding any assets. We are adequately and more capitalized for that and have, as you rightly said, good internal accruals. This is purely a treasury play, which we do that.

Clarifies that increased borrowings are for treasury management and not for funding assets or technology investments, which is important for a bank's balance sheet health.

Asked by Kunaal

So right now, there's a drop of 35%, 40%. We believe that of that 20% alternate options that people are looking at, at some point of time, that will come back to the normal remittance business growth. But we definitely feel that it will not come to the original levels, which we've seen in last year. But 20%, 25% drop will be there from those levels, and some recovery should happen. See November, we had a big drop. December, we had a recovery. January is more or less the same as December. So over the next 2, 3 months, there should be some recovery, but the number will never reach the original numbers, which were there before the regulation change happened.

Provides a clear outlook on the remittance business, indicating a permanent reduction in volumes due to regulatory changes, despite some near-term recovery.

Asked by Prateek Giri

So technical declines are definitely much lower than the industry. The second part on the core banking platform, we are at a stage where we have started our testing on some of the applications, which have got built up on the core banking and also Hollow-the-Core. We expect in the next 3 to 4 months, we should be going live on this product.

Gives a specific timeline for the crucial core banking platform migration, which is a key strategic initiative.

Asked by Dhruv Shah

I think Dhruv earlier also asked the same question that, is there any direct revenue which comes onto the UPI on the D2C kind of a scenario? So a simple math in terms of revenue versus the throughput may not be the right representation of looking at the business because of the D2C reason, which I just explained. Second aspect, which we earlier spoke about, is the B2B businesses wherein we are giving the UPI Collect or the UPI Pay-in as we say. That is the 23 to 25 partners, which we just mentioned about active. There is a take rate, which is different for each of the contracts, which we are essentially doing it off. So our current source of digital revenue growth, okay, direct growth, the other one definitely comes to the higher or the subscription. And the renewal rate which we look at, that is D2C. Our B2B essentially comes from the revenue, which comes is from the B2B, the Pay-in and UPI Collect, which we just mentioned. Here, Rishi earlier mentioned that we are over the next couple of months or quarter, we are planning to have more avenues, which will come through. So we will provide more products to our B2B partners.

Explains the complex revenue model for digital services, differentiating between B2C (stickiness, no direct revenue) and B2B (variable take rates), and hints at future B2B product expansion.

Asked by Kartik