Fintech major Paytm plans to deploy AI to improve business operations

“Instead of expanding business functions, we are trying to add capabilities of machines and systems to the platform. The systems will continue to grow and this will create demand in a linear way of the number of people we need,” said Vijay Shekhar Sharma, founder and chief executive officer (CEO), Paytm. 

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The move to focus on tech-enabled systems to improve operational efficiency of business comes amid the company’s stance on rationalising its employee cost structures. This includes revising its hiring strategy, focusing on contract employees, and a stricter performance appraisal, Business Standard had reported earlier. 

“Today, with the technology, which is powered through AI, we are able to do work much more efficiently with less number of people,” said Bhavesh Gupta, chief operating officer (COO), Paytm. 

Gupta added that the company has seen its employee costs go down in the past few quarters.

Employee cost (excluding employee stock options or ESOPs) for the third quarter of FY24 was Rs 809 crore, slightly up from Rs 807 crore in Q2.

“We’ve seen our people cost come down. We will remain focussed and tighten our people cost, especially for the on-the-ground sales team, which is a very large part of our people cost,” he added. 

The Noida-based company said it does not expect to hire sales people in similar numbers as compared to the previous quarters. 

Paytm Postpaid will continue to shrink

The company said its ‘buy now, pay later’ (BNPL) product, also known as Paytm Postpaid, will continue to shrink in terms of its contribution to the lending business over the next two quarters. This comes after the fintech firm cut down on these disbursements following tightening norms by the Reserve Bank of India (RBI). 

He added “We have visibility for the next two quarters and it will continue to go downward in terms of its contribution to our overall lending business.” When asked, beyond one quarter, should it stabilise, he said, “I think we would wait out for another quarter to be able to give that answer,” Gupta said. 

He reiterated that a decline in postpaid disbursements did not have any substantial impact on the company’s business. 

“While postpaid is a good product, and has been a very material differentiator as far as low-ticket business is concerned, its contribution to profit and loss (P&L) has been very marginal. Its impact on P&L is overestimated, whereas it is very small. Moreover, that impact is easily compensated by high-ticket personal loans and other forms of businesses,” he said. 

Gupta said the company enhanced the percentage of users that it cleared from its base every month. This comes after the firm and its lending partners sensed discomfort with the user cohort utilising the postpaid product. 

“The use cases that we have taken out are predominantly where we could see that consumers were spending a larger portion of their postpaid line in a single transaction. We were also finding users who were consuming the entire limit through one or two transactions. These were in certain categories of merchants such as online lifestyle and high-ticket offline, among others,” he said. 

The company disbursed postpaid loans amounting to Rs 7,496 crore in Q3 FY24, a 16.8 per cent decline from Rs 9,010 crore in Q2 FY24. The number of such loans disbursed during the same time reduced from 12.8 million to 11 million. 

Paytm had announced its decision to reduce the disbursement of small-ticket loans, specifically those less than Rs 50,000. This is in the wake of RBI tightening norms for unsecured personal loans last month. 

The company saw its net loss narrow to Rs 221.7 crore on a consolidated basis in the third quarter of financial year 2023-24 (Q3FY24) from a loss of Rs 392 crore in the third quarter of FY23. 

On a sequential basis, too, the company trimmed its loss from Rs 291.7 crore in Q2 FY24.  

Its revenue from operations rose 38.2 per cent to Rs 2,859.5 crore year-on-year (Y-o-Y). On a quarter-on-quarter (Q-o-Q) basis revenue increased 13 per cent from Rs 2518.6 crore in Q2. 

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