Long-term, the financial resources available to JFS, its ability to execute at scale, and the reach provided by other RIL Group companies might be formidable and threaten fintechs’ market share. The potential that Reliance Group sees in the Indian fintech business is also demonstrated by this.
Jio Financial Services (JFS), according to Reliance Industries Ltd. (RIL) chairman and managing director Mukesh Ambani, would be a crucial addition to the Reliance ecosystem of customer-facing businesses, including Jio Telecom and Reliance Retail.
On August 28, Ambani spoke at the company’s annual general meeting (AGM). According to him, JFS would streamline its payment systems for both consumers and businesses while also investigating ground-breaking innovations including blockchain-based systems and the central bank digital currency (CBDC).
“JFS’s digital-first architecture will offer it an unprecedented advantage over competitors in its ability to reach millions of Indians. This is a very capital-intensive business, and it has given JFS a solid financial basis on which to create a best-in-class, dependable financial services company and experience rapid growth, added Ambani.
According to him, the company had one of the largest initial capitalization levels of any financial service platforms in the world with a net worth of Rs 1,20,000 crore.
Even though the JFS stock lost 5% during the course of the first four trading days following its independent listing on August 21, the downside risks are minimal because a significant portion of JFS’s value comes from the 6.1 percent interest it has in RIL.
According to a Morgan Stanley report on JFS’ business plan, the company is expected to compete with fintech startups in areas like payment gateways, UPI payments, Point of Sale (PoS) devices, consumer durable lending, insurance brokerage, and more. At a listing valuation of Rs. 1.66 lakh crore, it is the third-largest non-banking financial company (NBFC) in the country, after the Bajaj twins (Bajaj Finance and Bajaj Finserv).
Given the size and wealth of the firm and RIL’s capacity to launch new ventures at scale, as it did in the retail and telecom industries, JFS’s ambition in the broad spectrum of financial services does appear to be a real threat.
Fintechs have chosen to take a wait-and-see attitude regarding new competitors because they believe that JFS opens up new opportunities for them even though competition is expected to grow. Although nothing is known about JFS’s current revenue, there is little doubt about its potential.