Navigating success in the digital payments landscape: Deepak Chand Thakur, NPST

In the dynamic landscape of digital payments and banking services, NPST (Network People Services Technologies) has emerged as a key player, driven by a combination of visionary leadership, strategic decision-making, and relentless innovation. Under the stewardship of Deepak Chand Thakur, co-founder and CEO, NPST has charted a remarkable journey, leveraging its pioneering spirit to navigate the complexities of the fintech industry. In a discussion with Dataquest, Deepak Chand Thakur sheds light on the key factors that have propelled NPST to success, the challenges encountered along the way, and the strategic priorities that will define its future trajectory. 

DQ: Key factors that have contributed to NPST's success in becoming a key player in the digital payments and banking services sector?

Deepak Chand Thakur: You know, I've been emphasizing this point repeatedly – it's the vision that propels us forward. Vision stands as the cornerstone, the driving force behind any organization. Take a moment to peruse our organization's vision statement, and you'll find it's a rarity, especially for an organization of our magnitude. But I don't shy away from embracing such grand ambitions. Why? Because we find ourselves in a uniquely opportune moment in India, akin to where the US stood back in the 60s and 70s.

Consider the global landscape: influential figures from the US, including government officials and diplomats, traversing the world, invariably clutching their plastic cards. Today, the world revolves around these masterful transactions. Look at the recent developments, particularly in the last five years, with the advent of UPI. We're witnessing UPI and RuPay making strides beyond India's borders. We've been entrenched in this sector since 2013, pioneering through the pilot phases.

For an organization like ours, size shouldn't dictate our aspirations. Instead, we should focus on the enormity of the opportunities before us. This is where our vision truly shines. When we talk about providing digital technology across the financial value chain, we aren't content with confining ourselves to banking alone. Banking might be the bedrock of the Financial Services Industry (FSI), but the horizon stretches far beyond. While some may tout it as recession-proof, we need to be cautiously optimistic. Beyond banking lies the realm of FinTech, the hub of innovation and connectivity.

Our journey began as a tech partner to banks, but three years ago, we made a pivotal decision to ascend the value chain. Our mission unfolded across the financial spectrum – from the Reserve Bank of India (RBI) to the railroad of banks, onward to aggregators, merchants, and finally, end-users. Our rationale for starting at the core was clear: we aimed to craft products, secure intellectual property rights, and pioneer processing engines while the world lagged behind.

Subsequently, we approached banks with a proposition – to replicate our success beyond their confines, bridging the gap between traditional banking and FinTech. This pitch commenced four years ago, met initially with skepticism, particularly regarding our transition between value chains. Then, amidst uncertainties, COVID struck, throwing plans into disarray. Undeterred, we opted for an IPO, a move that proved instrumental in achieving our objectives.

The subsequent growth speaks volumes. So, circling back to your query: how is the global economy evolving, where does India stand, and where does NPST fit into this narrative? Our decision to ascend the value chain has positioned us favorably in this evolving landscape, reaping significant dividends along the way.

DQ: NPST operates both as a Technology Service Provider (TSP) and a Third-Party Aggregator Provider (TPAP).How do you manage to balance these dual roles effectively, and what advantages does this model offer in the competitive fintech landscape?

Deepak Chand Thakur: That was indeed a challenging position to navigate. Three years ago, when we made that decision, we came to realize that the organization's DNA was deeply rooted in technology. That's where we originated. However, we found ourselves gradually transitioning towards a role focused on operational efficiency, a shift from our initial trajectory. To illustrate, we successfully completed an IPO in August 2021. By November 2021, we resolved to commence the pilot phase. Yet, by September 2022, we hadn't generated a single rupee on this platform. The intervening time was dedicated entirely to restructuring the organization.

What we did was establish a separate vertical within the organization, solely dedicated to this secondary business. Remarkably, this restructuring did not adversely affect our primary business. Nonetheless, challenges persisted within the primary business, particularly in balancing product and service delivery.

Moreover, there was the issue of offshoots. Our ability to navigate this transition was facilitated by the prudent utilization of IPO funds over the course of a year, primarily focused on establishing a robust foundation for the new vertical. We bolstered the team with strategic hires at the CXO level and initiated a comprehensive restructuring process.

Recently, with renewed confidence, we streamlined our marketing department, a task that was previously ad hoc. Under their leadership, we've imbued each vertical with a clear vision and developed precise roadmaps. Looking ahead, each vertical will operate autonomously yet synergistically, potentially offering services to one another. For instance, the API business may generate revenue for the aggregator business, while the switch business could serve as a service provider to others.

Building the P&L, structuring the organization—these endeavors consumed nearly two years of concerted effort, ultimately proving to be a significant boon for the organization.

DQ: With over 100+ customers and processing 6% of total UPI transactions in the country, NPST has played a significant role in driving the adoption of digital payments. What strategies have you employed to maintain such a substantial market share, and how do you plan to sustain this momentum in the future?

Deepak Chand Thakur: Let's delve into the current design of UPI products. Examining this will provide valuable insights. Six years ago, there was a significant need for aggregation in payments. This involved consolidating various channels like internet banking, debit cards, credit cards, and prepaid instruments onto a single platform for merchants – that's the essence of PAPG. This framework still operates today. However, UPI has evolved to encompass functionalities previously handled by separate channels. Now, UPI serves as the backbone for internet banking and debit card aggregation, given that a debit card essentially links to a bank account. Moreover, UPI now integrates RuPay credit cards and aims to ensure interoperability with prepaid instruments. Essentially, UPI has centralized the entire payment ecosystem.

Considering this, it's evident why we anticipate a surge from 13 billion to 30 billion transactions in the coming years. Moreover, we haven't even tapped into the rural market, where penetration remains low. Positioning ourselves as an innovative partner within this evolving ecosystem is crucial. We boast a track record of rapid innovation, participation in innovation labs, access to merchant networks, and the ability to drive business growth.

With a decade-long presence and a successful pilot phase, we're well-positioned to capitalize on this momentum. Transitioning towards the ASP model opens new avenues, particularly in serving small banks. We're already witnessing interest from major banks, a testament to our platform's capabilities and the diverse range of products we offer. It's not just about our 6% market share; it's about understanding the evolving needs of banks and offering solutions that are stable, reliable, and efficient – qualities that define NPST.

Moving to the merchant acquiring side, we're proud to serve as the switch provider for banks, enhancing the experience for merchants. This strategic focus underscores our commitment to building robust solutions in this domain.

DQ: NPST was the first to launch Online Dispute Resolution and Instant Refunds for UPI in the industry.  Are there any upcoming innovations or developments in the pipeline that you can share with us?

Deepak Chand Thakur: Our tagline itself embodies our ethos: "Innovation in Every Byte." Innovation isn't just a buzzword; it's ingrained in every aspect of our operations. Whether it's a line item, a process, or any task we undertake, innovation is our guiding principle permeating throughout the organization. Take, for instance, our approach to merchant ODR. This is a prime example where we address the disparity between real-time UPI transactions and the delayed resolution of RISC-V transactions, which can extend up to seven days due to declines. Despite the technical decline benchmark set by NPCI being just 1%, when you consider our transaction volume of 13 billion, even a 1% decline is significant. Our API-driven approach to refunds ensures real-time processing, putting control squarely in the hands of the merchant—a solution we've diligently worked on.

Furthermore, we've pioneered Aadhaar-based onboarding to facilitate Aadhaar Pay penetration, especially in areas with limited debit card usage, such as rural and semi-urban regions. This initiative enables individuals with Jan Dhan accounts, who often lack debit cards, to seamlessly transition to UPI payments. We were the first to implement this innovative solution in collaboration with NPCI. Additionally, we're collaborating with NPCI on IoT-based payments—a compelling avenue that promises exciting developments this year.

Moreover, we're investing internally in AI-based modules, leveraging our R&D lab and a team of skilled data scientists to delve into data mining. This investment is poised to yield groundbreaking solutions in the near future. We aspire to be integral to RBI's University Hub, actively seeking to understand and address the challenges facing the financial landscape, both domestically and globally.

As we unveil this year's roadmap, the mandate for innovation will be clear to all stakeholders, from product development to marketing. With a clear focus on innovation, we're poised to meet and exceed expectations, solving complex problems and driving progress in the financial sector.

DQ: How do you navigate the challenges posed by the rapidly changing regulatory landscape in the digital payments sector? What measures do you take to ensure compliance with regulations while fostering innovation and business growth?

Deepak Chand Thakur: You know, working with PSU banks, the mantra often heard is "compliance first, business later." This conservative approach contrasts starkly with the ethos of the FinTech and innovation realms, where we constantly seek out gaps in the system to innovate solutions. Dilip Asbe, CEO, NPCI recenty stated that what is not mentioned in regulations is a no-go for FinTech entities. On the other hand, PSU banks prioritize adherence to regulations over business expansion. This creates a significant gap that FinTechs operate within.

Navigating this landscape is challenging for every FinTech. I often remind my team that while we don't have to be overly conservative, every action must align with compliance standards. This ensures the organization maintains its momentum. An illustrative example is a recent product proposal I presented to our marketing team. Despite strong pushback due to concerns about onboarding and compliance, I held off on proceeding until I was fully convinced. This underscores the delicate balance between innovation and regulatory compliance.

Though compliance measures may sometimes impede our pace, it's crucial for organizational stability. We must acknowledge and embrace this reality. Despite the regulatory constraints, our pace still outstrips that of traditional banks. We serve as tech enablers within the ecosystem, fostering collaboration rather than competition. By bridging these disparate worlds, we bring stability while maintaining a rapid pace of innovation. This acceptance and understanding are essential as we navigate the dynamic landscape of FinTech and regulatory compliance.
DQ: Looking ahead, what are NPST's strategic priorities for the coming years, and how do you envision the company's role in shaping the future of digital payments and banking services in India?

Deepak Chand Thakur: Firstly, we've outlined an ambitious slate of products for the upcoming year. Unlike the previous year, where only two or three products were launched, this year, our vision is much grander. To keep pace with India's burgeoning digital payment landscape, we must ramp up our product rollout speed. Thus, within our TSP vertical, where we've traditionally served as a tech partner to banks, we have ambitious plans for scaling up our processing engine. Currently, we're contemplating the launch of three to four new products, aiming to expand our portfolio to encompass 20 to 30 offerings.

However, the primary challenge facing the organization this year lies in restructuring and fostering a positive cultural shift. The rapid transition from a smaller entity to a major industry player has compressed what was expected to be a two to three-year growth trajectory into just one year. This accelerated growth presents internal challenges, particularly in nurturing talent and maintaining organizational cohesion.

In addition to product development, our focus is squarely on cultivating leadership within the organization and preparing for the next phase of growth. We're dedicated to fostering a supportive and inclusive culture, ensuring that we attract and retain top talent while addressing any organizational shortcomings. Our efforts are twofold: driving business expansion while simultaneously enhancing our internal capacity for growth.

DQ: Are there any staffing plans in place?

Deepak Chand Thakur: We're actively seeking out product domain experts who can propel our organization to new heights. We need individuals capable of driving business growth, translating our overarching vision into tangible results, and who deeply resonate with our organizational ethos. When we talk about leadership, it's not confined to specific business domains; it spans across all product-related areas. Moreover, we're on the lookout for individuals who bring innovative perspectives to technology, particularly in light of the ever-evolving landscape.

In essence, we're in search of individuals who can navigate both the business and technological realms with finesse, contributing to our growth trajectory and ensuring we remain at the forefront of innovation. Additionally, we welcome fresh talent across all departments, recognizing the value they bring to our organization's continued evolution.