Hello everyone, 

Welcome to the 55th edition of The Pattern, a weekly newsletter where we dissect and discuss the latest rumblings from technology, finance, and economy.  Let’s get started.

20-20 tests banks

The biggest entertainment extravaganza is in town again. The TATA IPL 2023 kicked off last week with much fanfare and excitement that one would expect of a Super Bowl in the US. Every year, the cricketing spectacle seems to get even bigger - with hundreds of crores being pumped into the organisation and execution of the IPL. 

However, IPL is not just another cricket tournament. It’s a phenomenon. While one may debate its popularity in its 16th running edition, it’s clear that IPL is not just an inexpensive source of entertainment but also astounding fortunes for businesses left, right and centre. 

This is where the story starts. IPL is like the annual fair in a sleepy town that brings business and livelihood - directly or indirectly - to the entire community and helps them prosper. This is how motels, tourist attractions, highway eateries and other infrastructure gets built - the annual event leads to progress and development through the year. 

Similarly, IPL has not just given rise to cottage industry in and around the stadia, venues, and hospitality - but also given birth to entire categories of businesses that are worth billions of dollars.

Which industries owe their inception or growth to IPL, you ask? Well, Disney+ Hotstar was the biggest beneficiary of IPL’s live streaming rights for years (till Jio nabbed it this year). Similarly, think of all the D2C merchandise brands that will sell cricketing gear, increased broadband bills for all the live streaming, and of course - heavy electricity usage in a stressful Indian summer. 

There’s many more such examples but the one that we’re concerned with here is the rise of fantasy gaming. IPL is at the heart of India’s burgeoning fantasy gaming industry. Let’s look at some numbers courtesy  News18 . 

If this felt overwhelming, consider that an industry wide CAGR of 212% is humongous by any imaginable standards. This is how much the Sensex - an index of India’s biggest companies - grows in 5 years. 

Add to this, the continued popularity of fantasy sports + huge marketing budgets + VC action + Ashneer Grover’s latest foray into this space with his own fantasy sports app called CricPe and you get a Molotov Cocktail of big money rustling through the financial system.

All good things, where’s the bad news? 

Herein lies the rub - the more people get hooked to IPL and fantasy sports, the more it will trouble the banking system. While the overall popularity of fantasy sports and IPL means money for the companies, their investors, and a fraction of their users - it might mean a world of pain for banks, payment apps, and financial infrastructure of the country as it tackles unusually high volumes of transactions happening at warp speed with little or no preparation. 

It might seem like a far-fetched idea but it’s as real as it gets. For years, people have complained about Hotstar, SonyLiv, and other streaming services not being able to properly air live games due to unprecedented volumes that left their infrastructure in disarray. The companies worked on it diligently and fixed it - but it’s now a constant exercise which means real investments, serious planning, and lots of careful decisioning to ensure that the only interruption during IPL broadcast is those of the ads. 

Banks, unfortunately, haven’t done the same. 

Already, there’s talk of banking infrastructure collapsing or suffering outages across various banks with users venting on Twitter. Even the biggest banks have recently suffered the vitriol of disgruntled customers venting on social media about service disruptions. And this was all before the IPL even started.  

Turns out, the bank CIOs have started factoring in IPL loads when they deliberate system upgrades, infrastructure investments, and scalability of their digital services. Consider this, from a Financial Express  report  - 

Why are banks not investing enough in scaling infrastructure then? 

The problem, it seems, is that scalability and reliability upgrades aren’t as seductive as  fresh and fancy product launches that bring the promise of either new revenue or more profitability. 

This is why, somewhat ironically, the foundational core of infrastructure gets ignored and put on the backburner while executives focus on building and shipping cool new stuff ™.  

While IPL may not bring the banking system down to its knees, it’s certainly fascinating that a cricketing tournament can expose the mortal threats of under investing in financial infrastructure and technology - something that our CEO Rajat Deshpande continuously harps about in his posts and  newsletters .  

If you’re a FinTech or banking leader or operator, here’s an  interesting model  to think about this problem and build things that scale well - and age well. 

“Slow services are more evil than failed services.” - Ian Gorton 

This is all from me for this week. As always, leaving some reading recommendations below. 

Between the digits

  Rs 5,000 crore -  Expected  revenues  from advertising sales during IPL this year for the broadcasters. 

5th -  Digital goods - gaming transactions are the 5th highest contributor to UPI transactions in India,  according to NPCI . It’s higher than spending at department stores, dairies or fuel stations. 

15.9% -  Year-on-year  growth  in credit offtake for the non-food bank loans. This is led by a surge in credit demand from agriculture, services and retail sectors. 

Reading list 

1. UPI to now allow borrowers to access digital credit lines from banks 

2. Raghuram Rajan says banking system is headed for more trouble 

3. The FinBox report on digital onboarding and UX

4. How can lenders increase revenue through intelligent customer segmentation

5. Watch - Introducing FinBox ConversionKit - the superpower your digital journeys deserve 

Thank you for reading. If you liked this edition, forward it to your friends, peers, and colleagues.

 Cheers, 

Mayank

All opinions expressed are personal and do not necessarily reflect the views of FinBox or its promoters.