MC interview: We are a larger-than-life fintech playing at national scale: Suresh Sethi, CEO & MD, Protean

Edited Excerpts:

You mentioned that Protean has been professionally managed since its inception. Would it be fair to draw a comparison to how NPCI operates today?

Suresh: You can almost compare Protean to NPCI in terms of its architecture. That’s why I emphasise foresight. Even back in 1996, when we were established as a market infrastructure player, the leadership at the time envisioned it as an agile, startup-like organisation. They were keen on leveraging cutting-edge technology from the outset. So, yes, Protean was a model built with that vision over two decades ago.

Reflecting on Protean’s journey—from starting as a market institution (depository) to becoming an agile tech firm exploring the private market—how do you see the organisation’s evolution?

Suresh: Once the segregation happened [Depository and E-Governance Businesses], other than the depository business, everything was with us [NSDL eGov, now Protean]. You can look at us like a larger than life fintech, because we have been playing at a national scale. The focus has always been digital public infrastructure. Our starting point was taxation, then pension, multiple projects with the government, and then identity. We are incidentally the only company in the country which manages all four facets of identity, whether it is e-KYC, authentication, e-sign or online PAN validation. These businesses contribute almost 90 percent plus of our top line. The government took a clear call to build 17 transformational stacks across multiple sectors, known as open digital ecosystems stack which we forayed into.

The focus area remains new growth vectors, including data stack solutions, Open Digital Ecosystems (ODEs), digital commerce, transport and mobility, open finance, international business, and investments in cloud and cybersecurity. Currently, over 90 percent of our revenue comes from core business lines.

However, our aspiration for the next 2-3 years is to achieve a 25-75 split, with new business segments contributing approximately 25 percent to our top line.

The legacy businesses have evolved into transactional businesses over time and seem like steady-margin cash cows. Would these still require new investments, given that they largely depend on new contracts and sign-ups? Or is all the focus now on investing in new businesses?

Suresh: Managing the PAN database requires ongoing investment in infrastructure, interfaces, and data security to handle 73 crore PAN cards and nearly one crore daily validations across BFSI. We also invest in enhancing the pension business infrastructure and in strengthening our position as one of the top identity service agencies in India. Additionally, we're adopting emerging technologies like generative AI and tools for last-mile agents to support both existing and new businesses.

Is there a concrete number (investment) here?

Suresh: We generate approximately Rs 150 crore in free cash annually and maintain Rs 750 crore in reserves, funding our operations and new ventures through our own treasury.

As a zero-debt company, we focus on a “flywheel” model: steady growth from our core businesses and expansion into open digital ecosystems. We’re also vertically integrating in our identity business by creating value-added solutions for fintechs and banks, such as customer onboarding and digital lending tools, while leveraging our account aggregator license for data analytics and credit scoring.

With ONDC, how do you see the model, especially monetisation, evolving. You are currently a gateway and registry provider…

Bertram: We’ve been operating the ONDC gateway for about 2.5 years using a cost-plus model. We often get asked when this model will change. While it’s difficult to predict exactly when, we expect it to evolve over time.

We realised there was an opportunity to expand into the innovation layer on top of this infrastructure and decided to become a technology service provider (TSP) and compete with others in the market.

Our advantage lies in our experience in building high-scale, enterprise-grade, secure technology. This is something that large enterprises trust, and it gives us a unique edge in the market. Our goal is to provide these technology components as a SaaS offering, which will allow us to monetise transactions, similar to how a payment gateway works. However, our revenue potential is higher—on a typical transaction GMV, we can earn anywhere from 0.5 percent to 3-5 percent, which is a significant margin compared to the payment gateways.

Though we’re still in the early days of the ONDC network, which has about 100-120 participants, we believe this ecosystem has a long way to grow.

Would these new businesses also turn into transactional streams or annuity revenue? What kind of margins are you looking at?

Bertram: Our businesses combine transactional and annuity revenue models. In ventures like ONDC, we initially earn revenue from every transaction at the infrastructure level, which will evolve into a fully transactional model over time. Similarly, our data stack business generates revenue from API consumption, while our cloud services follow a transactional model based on usage. Additionally, we pursue RFP-led government projects, such as a Rs 161 crore project with CERSAI, which includes both one-time payment for tech deployment and long-term annuity streams through managed services contracts.

You have been a conventional player all along. But now you are up against nimble new age fintechs and SaaS firms. How do you compete?

Suresh: We built a sharp sales DNA in the organisation to strengthen corporate sales, performance marketing, growth marketing and invested in the same.

Instead of outsourcing the coding, we created our own Development Center, and today have almost 200 people operating out of Pune, including specialist. These teams are proficient in areas like AI and blockchain. The entire ONDC work  is done in-house with no outsourcing. Also, if you see we have moved beyond BFSI into segments like agriculture and education where we have built a full team with sector specialists. I would say we are moving from being a system integrator to a more agile product organisation as we move into the product layer like a new age fintech in the market.

But how would you differentiate yourself? Will Protean be able to leverage its conventional business moat?

Suresh: It is a competitive space, but we naturally have an advantage due to our deep involvement at the public infrastructure level. We understand how the ecosystem works, which gives us a distinct edge. Of course, we still need to compete by offering the best user experience, UI, UX, and the integration of advanced technologies like generative AI to improve these experiences.

However, there are traditional strengths, or "moats," that we bring to the table. For example, we're very strong in the BFSI (banking, financial services, and insurance) space. Banks, especially in the digital commerce ecosystem, are increasingly focused on B2B use cases and supply chain financing. They want to understand the transactional data happening within supply chains, and there’s growing interest from both large corporates and MSMEs in bringing their commerce onto the ONDC platform.

We’ve established exclusive relationships with some banks, who are eager to work with us as their development partner. We’re offering them what we call “ONDC in a box” for their buyers and sellers, including top corporates. This solution extends down the value chain to the retailer level, and effectively becomes a referral model.

Do you see a reduction in reliance on government projects, which analysts often cite as both a positive and a negative?

Suresh: I would view it more as diversification. Clearly, in India, the way Digital Public Infrastructure (DPI) is evolving, the government remains a strong advocate for taking the DPI stack global. The Prime Minister himself has been leading discussions, including at the G20, to showcase India's DPI on the world stage. So, we believe the government will continue to play a significant role in our business.

However, our focus is on diversification. While we will continue to target government projects, we are also expanding into strong B2B and B2C sectors. This approach helps us create a more balanced outlook and reduce our reliance on government business, which has both its advantages and challenges.

What are the POCs taking place on the Mobility side?

Bertram: We are running some POC pilots like Namma Yatri in different cities after Bangalore and Kolkata.

There are a lot of state governments and cities who are looking at building their own mobility use cases. So POCs are happening and we have seen some keen interest in multiple states. Some of the state governments want to lead these initiatives for citizens, so in some cases, we see this as being run privately. In some cases, there are state governments who want to lead it.

What's also interesting is that mobility now goes beyond just taxis and autos—it includes areas like charging stations and travel.

Protean is not a promoter-driven firm. Is that a weakness, not having a promoter at the helm?

Suresh: No, it’s not a weakness. In fact, from the very beginning, we’ve always been professionally driven. Even as a legacy institution, there was never any promoter entity. Now that we are listed, we’ve taken it to the next level. We have a fully professional board, with six independent directors who bring diverse expertise. Our board includes specialists like A P Hota from NPCI, Aruna Rao, the former CTO of Kotak Bank among others.

Our organisation has always been governed professionally. When we went public, there were questions about the absence of a promoter entity, but we clarified that we are a professional organisation. I believe professional organisations bring strong governance, continuity, and the right expertise, which is why we’ve built such a solid foundation.

Any update on the PAN 2.0 project? Reports indicate that Protean has bid for it. Any comment?

Suresh: Nothing outside what's in the public domain. The RFP has been out and we are equally interested and will be bidding for it. But everything else is out as you're seeing in the public domain.