How many of you are actually fintech over here? Please raise your hand. Okay. Almost 80-85% of the room. Okay. Just to probably call out a few things. I'm probably the most underqualified person in this room. I'm a BA in philosophy and an MBA dropout. And my first payments company, FreeCharge, was built and exited before UPI was born. So I'm that ancient. The word fintech did not exist at that time. We used to call ourselves different things but not fintech. I've been very fortunate to see the journey of the Indian startup ecosystem through both building as well as investing in many founders, and I have seen a few principles that continue to do well and have seen the pattern repeat itself a few times. So I'll just talk about a few principles to start with.
First is, if you are building in fintech, you are in the business of trust. No matter what your category is, building solving for at the core of it is about enabling trust for things to work more efficiently. There was a famous study done which actually got somebody a Nobel Prize: as the trust of a system increases, the economy dramatically improves, the per capita income grows, the economy moves forward. But at the crux of it, understanding trust is allowing ourselves to be vulnerable in a trusted ecosystem. We can think of ourselves to be vulnerable. For example, if today transactions, sir talked about as the fraud rate per transaction is consistently coming down, let's say if it was going up, it is hard to imagine more and more people adopting UPI, right? Because the core challenge will always remain of trust, allowing yourself to be vulnerable in an ecosystem where you rely on many, many things. Many of us don't think of trust as importantly because trust usually is good for people to think about who can think about their longevity to start with. Many of you are operating with very short runways. Many of you probably are struggling with product market fit. Many of you are struggling with choices that you have to make and thinking about trust becomes we'll think about it later. But what you will notice consistently is that it's one of those things that may be very hard to build. Think about trust as a bank account where you can almost deposit probably one rupee a day only. But when it comes to losing trust, it's almost like you instantly withdraw the entire account together, right? There is no such thing as I trusted a little bit. Trust is a little binary in that way. And I think a lot of young people often take shortcuts that I have noticed that often cost reputation, often cost impact to business and impact to consumers. And I think that's something that we have to always think about. Also being long-term about the consumer, a lot of choices can be made in fintech where it may not be great for the consumer but be great for the business. And often many companies end up doing that. But the challenge of that is it comes with a short-lived approach. One of the principles we follow at CRED is never launch a product or a service that we would not proudly offer to our friends and family. And it's a simple principle if you think about it, but it's something that allows you to make choices very, very differently. When you, many of you are veterans in fintech or financial services, you know that there are many products that you can launch which can take advantage of the vulnerability of the consumers, but eventually you will never create a culture of high-quality people working for you. They will always be the same: if the leader is okay with taking shortcuts and taking advantage of the customer, they will also make these choices across the chain, and it'll never be a high trust organization to start with.
The other thing to think about is how do you classify trust and break it down to an equation. I think it's a combination of four things. All four may not be needed to create trust, but absence of either of these four will definitely cause mistrust. One of that is competence. Do people trust you to do something with? For example, imagine you're going in a cab. Do you trust the driver to be able to drive? Basic competence. Second is consistency. Can you do something consistently versus kind of a mindset, right? Third is integrity. It's one of those things where it's funny, but usually people can smell from a distance, right? And especially the fastest proof of trust on integrity is: does your own team trust you? Will they say that this person is high integrity or not? Forget about the building people outside the building. It's very easy to verify inside the building. If you ask them, 'Oh, is this guy who's leading the company? Is this person high integrity or not?' It's very easy to know. The fourth is benevolence. If you do not think about being somebody who's building for long-term and thinking about well-being of everybody that you're operating with, even a slight amount of absence, if somebody thinks of you as non-kind, non-benevolent person, they will automatically not trust you because they will always think, 'I have to watch my back around this person.'
One final thought on the same topic is trust is almost the base condition, and then there's a condition of making something dramatically more efficient. One of the things that I have seen consistently in the fintech ecosystem is just by making something digital, it does not make something efficient. We confuse both to be synonymous, but it's not. There are many solutions that are digital but they are not efficient. Right? If I have to give you a classic example, for many of you taking a cab or an auto on an app is hyperefficient. But let's say buying a jacket for an important event online may not be efficient. But it is possible to be buying a jacket digitally. Often we forget that digital does not mean efficiency. Another problematic thing that often I wonder about is many Indian languages do not have the word efficiency in it. It's not cultural. And what you will notice is that therefore what is not cultural is value for time. If you go to the western world or many other countries that have become developed nations, one of the core concepts is value of time. In India, we do not understand value of time the same way. And one of the things I've observed is most of them started their career with an hourly salary everywhere in the west, right? Actually, let me ask you, how many of you know what your income per hour is? 1, 2, 3, 5, 6. Okay, that's good. That's good to know. This is probably the highest per capita that I have seen in any room that I've asked this question. Maybe it's because of the IMA, Fintech, I don't know. Something is causing that. But if we do not know what our value per hour is, how do we take good decisions with our time? And therefore you will find many surprising behaviors where somebody who makes maybe 10,000 rupees an hour spends one hour trying to save 500 rupees on a flight ticket, and we think it's our values but we don't understand the value of time as a concept, right? And it's cultural. And therefore in Indian consumers itself we find a struggle. For example, how many of you use ChatGPT? Okay, almost everyone over here. If I told you that maybe 50-60%, and this is my conjecture, I don't have data to prove this, but I believe I'm right. 50 to 60% of people use ChatGPT for non-productive purposes. Let me explain what I mean by non-productive purposes. They are using it as a friend, using it as a counselor, sometimes an astrologer, sometimes... and many of you are smiling for a reason. But I think just thinking about tools for productivity is going to be a challenge. And we have to remember one thing: the largest employer of the world is inefficiency. Right? When you are moving to a world which is becoming hyperefficient, many of the jobs that we currently hold may not be in the same shape and form that we are holding it to be, and the world is changing rapidly. Right? I'm old enough to tell you that I have managed to see the early days of a computer to a mobile to a touchscreen to a dialup modem to browsers to everything. Now it almost feels like some of these changes happening every month, and very soon some of these changes will happen every day. How do we keep up, right? So the key point for all of you to think about is that one of the principles to think about is building for efficiency and not just getting stuck in the word tech, because many tech solutions are not efficient.
Final thought on this topic, and I would love to take some questions after that, depending on how much time I have, is if your business values are not clearly established, every single person in your team will take a different interpretation of what those values are. For example, one of the things that we did at CRED, we've taken 1% of our cap table and moved it to something called the CRED Foundation. It's a Section 8 company where we are putting 100% effort towards financial literacy for the country, but doing it in innovative ways that we can. But the fact that we are able to commit this, we are able to move some of these things in that direction, you are signaling to the whole team what do we really care about. Often your actions will mean more than your words. You can keep talking about things that you stand for, and people will observe your actions to be the opposite. So one of the things I would say is that some of these things are not marketing and PR. Some of these things are lived, and unless you are really living some of these values, you will create an org which will be observing how you act and not what your marketing material is. So be careful about those choices. Coming to the topic on BFSI, just one thought: we have multiple inclusions still to be achieved. Gender ratio: one of the biggest things, look at the gender ratio of this room tells you that we are still a long way to go. A very small percentage of the female population is currently, let's say, actively using financial products. You will see the delta in almost every product to be material when we compare ourselves to some of the nations that actually became developed in a very recent past. One of the strongest factors was female participation of labor. In India, it's not something that we are acutely observing or doing something about it. And it is becoming quite evident that many females drop the workforce during different life events, be it marriage, be it having children, and so on and so forth. And I think we will not dramatically improve our per capita income if only one gender is driving per capita income. It doesn't work. It's basic math to think about. Other things to think about is financial literacy. But financial literacy is not just making them pass a test. It's about breathing some of these things. Often what I have observed is even the most qualified people do not understand the nuance of many things. For example, we interviewed somebody four or five years ago. This person was in the top 20-30 ranks in CA, and we asked them, 'What do you think is the interest rate on a credit card?' This person said 15%. 15%? And the nuance of this is that this is probably the most qualified person who could be answering this question, but this is a gap that we are living in. Forget about trying to reach the masses and other things, even the most qualified people are somehow stuck and not understanding the nuances of these things. And therefore I think the topics are becoming harder to discuss. Another thing about Indian culture is discussing money and matters of money is not a good social conversation to have. We often shy away from these things. We often shy away from actually talking about some of these topics. A majority of frauds in India are not reported because people are ashamed of having fallen for a fraud. Now these are topics that need to come out in the open. Good news for all of you, and many of you are already in this cohort: there is a chief technology officer in all of your houses that is between the age group of 8 to 20. Many of you are probably in that category already for your household, and very soon they are going to become the chief procurement officers of the households. They are going to become the chief knowledge officers, with AI also helping them. I think we have an opportunity to really leverage that cohort and solve for them and really upgrade, because sometimes it is better to change the newer cohorts versus the older cohorts which are unlikely to change. And I think if you can implement some of these things in the younger things and make this quite evident in schools, colleges, and make it a big deal, it'll kind of change the equation completely. So those are the few thoughts. Thank you so much.
