Jio Financial, a potent disruptor but can get the execution right?

Jio Financial Services (Jio Financial )— a core investment company spun off from Reliance Industries Ltd (RIL) earlier this month— is poised to become a formidable player in the financial services sector, said a report from Axis Capital.

With a net worth of Rs 1.1 lakh crore and a market capitalization of approximately Rs 1.35 lakh crore, Jio Financial ranks among the top NBFCs in terms of net worth, surpassing even giants like Kotak Mahindra Bank and Bajaj Finance.

Armed with a robust capital base, an experienced team, a strong brand, a massive customer base, and cutting-edge technological capabilities, Jio Financial is gearing up to provide a comprehensive range of financial services. As a holding company, Jio Financial will operate such financial services through its consumer-facing subsidiaries.

With the entry of this deep-pocketed player into the market for insurance and payments, competition has increased for new-age Indian players including Zerodha, Groww, Paytm, PhonePe, and PB Fintech.

“Leveraging Reliance’s nationwide omni-channel presence, Jio Financial is poised to intensify competition in the retail lending and fintech sectors. With no legacy issues or baggage, it starts fresh with focus on new-age products and technologies. The parent company’s AAA rating ensures Jio Financial can access low-cost funds, a critical asset for its lending businesses,” the report noted.

The new entrant plans to “democratize access” to financial services by building a digital-first institution across retail/merchant lending, MSME financing, insurance (broking + manufacturing), e-broking, and asset management, Axis Capital said.

Negligible presence

Reliance Industries currently has a negligible presence in the financial services market.

Hiving off Jio Financial as a separate company, backed by adequate capital and management bandwidth, indicates the group’s focus on and aspiration, Axis Capital said.

It has currently consolidated all its financial services businesses under the Jio Financial umbrella and aspires to add multiple, new verticals in the coming quarters and years.

“We believe Jio Financial will become a very relevant player in the NBFC space, disrupting some sub-segments (like digital lending), and may aspire for market leadership in the segments where it is present,” it noted.