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Business News/ Companies / News/  Novopay to spin off retail biz, focus on banking software

Novopay to spin off retail biz, focus on banking software

Novopay Solutions is spinning off its retail payments business into a new entity Novopay Retail Solutions Pvt Ltd, which was set up in March 2023.

Srikanth Nadhamuni, chairman, Novopay Solutions.Premium
Srikanth Nadhamuni, chairman, Novopay Solutions.

NEW DELHI:Khosla Ventures-backed Novopay Solutions Pvt. Ltd is in the process of demerging its retail business. The company will now only house its banking software business, which was recently rebranded as ‘Trustt’, chairman Srikanth Nadhamuni said in an interview.

Founded by Nadhamuni in 2014, Novopay Solutions began as a platform providing payments and banking services to unbanked and rural customers. Over the years as payments market changed with the emergence of UPI, the Bengaluru-based company started ‘Trustt’ to cater to the needs of financial institutions.

“The Novopay Solutions’ business has a focus on banking SAAS products whereas the retail payments business is focused on B2C channel. Considering the two different set of offerings, targeting two separate market and audiences, the demerger was a logical next move," Nadhamuni said.

Novopay Solutions is spinning off its retail payments business into a new entity Novopay Retail Solutions Pvt Ltd, which was set up in March 2023.

Separately, KYC-startup Veri5Digital, which was launched by Khosla Labs Pvt. Ltd in 2016, is being merged with Trustt. “We are in the process of applying for the merger of Trustt and Khosla Labs through NCLT," the company said in response to a query.

Novopay’s retail business, which works as BC (business correspondents or banking correspondents), lets domestic money transfers and AePS (Adhaar-enabled payment system) withdrawal services, via kirana shops. It claims to have created a network of 100,000 kirana stores across 23 states.

However, the financial inclusion space is now led by fintechs like Paynearby, Spice Money, Fino Bank and other payments banks. Asked if that was a reason to go slow on the retail side and put more focus on the banking arm, Nadhamuni admitted the business has changed. “While some of the things have moved, along with payments, but distribution of many banking transactions such as account opening, credit via the BC network is still valid."

However, in the process of linking with banks at the back end to offer these services, Nadhamuni said he discovered that the banking system uses “very primitive technology".

“That’s when we started building things for them. We started building digital lending system, card and payments and various components of banking," he said. “We then took this banking SaaS business and called it Trustt."

Trustt has four set of digital banking products – newly launched conversational AI product Trustt GPT; digital lending; digital distribution platform; and identity and verification (via Veri5Digital). The company claims that digital lending suite that it offers to banks has over 9,000 crore of asset under management under its platform with some 3.6 million borrowers.

Nadhamuni shared that he met with Sam Altman about six months ago in California and realized quickly that Chat GPT is a huge landmark in technology. “We then started working on a few products for banking, where they can deliver all banking needs of customers in their own language.

So, whether it’s insurance, loans, savings account, you should just talk to your bank in your own language; and the bank should answer actually, based on their product, and not on what GPT understands about banking. GPT can hallucinate. We have figured out how to build customized solutions from product discovery to customer acquisition to customer support to collections, for each of our clients."

While the company did not disclose names of some of its clients for its GPT product, three pilot implementations – one with a large bank and two smaller entities – are in progress. “Once the system is deployed at scale, we should be in a better position to announce the brand names," Nadhamuni added.

Since it is going all out on banking SaaS model under the Trustt brand, the company is bringing Veri5Digital – which was one of the top Adhaar-based KYC startup in its early days but lost its sheen after the Adhaar verdict of the Supreme Court – under its fold.

Many players went ahead in the KYC space and the core team of Veri5Digital, including its CEO Saru Tumuluri left. On this, Nadhamuni – who was the CTO of Adhaar – agreed that a lot of good companies have moved very fast in the identity and verification space. “I think that was the realization for us that by bringing it into the Trustt fold, we can actually speed up and compete in that space much better."

Trustt is also looking to raise funding to go international. “The banking software business is profitable, so we can pick the time on when we want to raise money. We are eyeing some $25-$30 million as we want to customize our products for other geographies such as Southeast Asia, Middle East and North America. Currently, the company is putting plans together of expanding out to these markets in next six to eight months," Nadhamuni added.

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Published: 21 Jul 2023, 10:57 PM IST
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