Consumer Banking – Dutch Uncles

Artificial Intelligence : Providing Guidance to Indians to Effectively Manage their Wealth

Shalmoli Sarkar — Fri, 11 Feb 2022 12:35:11 +0000

In the past few years, Indian banks have grown fond of adopting artificial intelligence (AI) in their processes to provide a swifter and better banking experience to their customers. Today’s digitally-savvy customers have less patience and are firm believers of technology who expect fast, personalised, and meaningful interactions with banks and have less tolerance for the long trail of paperwork and queues. That said, AI adoption in banks has helped to boost revenues and retain customers by offering personalised services, quick and improved customer care through chatbots, risk monitoring, reduced errors rates, and better resource utilisation. In addition to this, AI has been aiding banks to entrust belief in customers as a safe place to keep money by detecting frauds, mitigating uncertain risks, and managing regulatory compliance.

Besides, bringing in operational excellence in banks, there exists a need to guide Indians about financial planning and investment that is yet to be unlocked through artificial intelligence.

But why do Indians need guidance in investment and wealth planning? Some statistics will tell you.

A dearth of knowledge in wealth management

The statistical figures shown in a survey by Scripbox, an online mutual funds platform showed the dearth of knowledge existing in Indians about financial planning. The survey found that around 72 percent of Indians of the 26-45 years age bracket are unaware of the amount of money to be invested or to be saved. 76 percent believe that there is a need for more education in the financial planning space. 56 percent lack the knowledge to handle personal finances effectively, resulting in difficulty in clearing loans. This mismanagement of personal finance is arising majorly among millennials as they lack the knowledge and initiative to earmark a portion of their income towards savings and not to forget their increasing lifestyle expenses. Another survey from Groww finds 30.7 percent of millennials lack investment awareness.

The prejudice about finance not being a women’s domain has also pushed them behind in financial planning, as only one in five women exhibit confidence in their knowledge of financial planning and are not aware how much to put aside to achieve financial freedom. This is where AI can step in to guide people about handling their finances. But how?

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A survey from Groww finds that 30.7 percent of millennials lack investment awareness.

Artificial intelligence ( AI ) for financial planning

There are multiple ways through which an average person can make money transactions. The modes of payment include cash, wallet, UPI, Credit Card, Debit Card, Gift Card, Net Banking, etc. In investment, they can invest money in Fixed Deposits, Recurring Deposits, Stock Trading, Crypto Currency, Mutual Funds, etc. With the trail of transactions being done artificial intelligence can understand the consumer behaviour specific to an individual based on the transactions made. It provides detailed information to the consumer regarding his/her expenditure depending on which one can chart out an investment strategy.

Artificial intelligence analyses the following data points to help consumers with financial planning:

Analyse the spending pattern
Determine income/debt ratio
on the above two data points, individuals can work on their credit score
Plan your investment by decreasing expenses based on the data.

Artificial intelligence for financial guidance – a gamechanger

Artificial intelligence for wealth management offered by banks to help consumers understand their savings and expenses can be a gamechanger that can improve their financial literacy. The same data can be utilised by banks to develop customised products that will help in retaining as well as gathering new customers.

Offering artificial intelligence by banks to analyse their spending, will not only help to save money but also offer guidance in investing at the right places and be creditworthy to seek home loans, car loans, and personal loans from banks and other financial institutions.

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India’s First Social Finance Platform, SaveIN Gets Patent

Anju Nambiar — Mon, 23 Aug 2021 05:30:09 +0000

As Indians, we love small and quick loans. It’s much easier to fulfil our financial commitments with them and there’s no cumbersome procedure involved to go through the verification and approval process. Also, with the kind of aggressive and unfriendly behaviours banks have displayed when it comes to loan repayment, we prefer borrowing from our trusted contacts like friends, family, and co-workers. This is because we can get much more flexibility in loan repayment, and they understand our needs and challenges better than financial institutions.

But how does one draw the line when it comes to lending to friends and family? Since there’s no paperwork involved, the situation can quickly turn unpleasant if the borrower doesn’t repay on time. This is where SaveIN comes in.

Fintech start-up SaveIN

SaveIN is a Fintech start-up in the personal loans market. Headquartered in Gurugram, the company targets the B2B (business-to-business) and B2C (business to customer) sectors. Founded in 2020, they have an eponymous online social finance platform. SaveIN also recently raised an undisclosed amount in a pre-seed funding round from angel investors and industry veterans.

SaveIN’s Social Finance Platform

Their social finance platform digitises informal, social, and relationship-based loans. It’s a peer-to-peer marketplace and there’s also a SaveIN mobile app. The platform institutionalises borrowing and money lending arrangements between friends and family by facilitating discovery, matchmaking, record keeping, and digital payments of such transactions.

Patent received for their platform

The company’s social finance technological innovation has recently received a patent for a period of 20 years. SaveIN is one among the league of fintech start-ups in India that obtain patents for their technology.

Positively impacting the financial health of Indians

SaveIN is positively impacting the financial health of Indians by leveraging their own trusted network and providing access to need-based and contextual financial products. Since about 77 per cent of urban Indian households reach out to family, friends, and acquaintances in times of need, SaveIN is capitalising on this market.

The social finance sector in India

Impact of the Patent

The fintech sector is headed in the right direction towards positive change. Start-ups like SaveIN are taking the route of patents at a time when big tech companies are entering niche segments in India’s personal finance market.

Growth strategy

SaveIN’s growth strategy is to raise more capital and is already in discussions with stakeholders across banking, consulting, block-chain, credit bureau and fintech sectors. By raising more capital in further funding rounds, SaveIN will expand its market reach, accelerate its product development, and strengthen its in-house team. It plans to reach over 5 lakh users by the end of the current financial year. They also plan to offer a hyper-personalised suite of products and services in the retail personal finance domain.

Purpose, implementation and success of the platform

The purpose of the platform is to eventually enable the migration of millions of social lending transactions from the cash economy to a formal economy. The platform is implemented right amidst customers’ lending/borrowing social circle or personal contacts. It tracks users’ lending/borrowing activities. The platform eliminates the grey area in loan repayment among friends by making clear terms for each loan in customers’ social circle.

SaveIN witnessed 45-50 thousand users join the app in the first few months of launch. Their early adopters shared enthusiastic responses. Financially savvy users were onboarded as lenders on SaveIN. The company has seen hyperbolic growth within a few months since its launch.

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The platform institutionalises borrowing and money lending arrangements between friends and family by facilitating discovery, matchmaking, record keeping, and digital payments of such transactions.

What’s in it for me?

The neo-banking sector in fintech has been booming. Social credit and financing services is a part of the neo-banking domain that has remained unaddressed. Start-ups venturing into this sector have a vast market opportunity awaiting them since a large segment of the general public does not have easy access to formal credit. Social finance is a largely untapped and unorganised market. SaveIN is currently India’s very first social financing platform. There is a lot of space for more start-ups to venture into this sector to give them competition and to disrupt the market with innovations.

Social borrowing and lending transactions for short term-loans is a very large market . This market is growing steadily and has huge potential in growing economies like India where trust factor among close-knit relations is more important for availing loans compared to approaching a bank or financial institution. The Challenger bank sector is seeing a lot of activity with more firms emerging. Since social finance is still at the very fundamental stage, start-ups aspiring to venture into this market can follow in SaveIN’s wake.

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GalaxyCard, Customer Base Of 600 Towns Plus Growing

Anju Nambiar — Thu, 12 Aug 2021 08:35:07 +0000

The low-income workforce in India is a very self-reliant, hard-working lot who face rejection when availing credit and applying for loans. Banks have categorised them with low creditworthiness when the fact is that most of them are highly credit worthy with real financial needs. GalaxyCard is a fintech start-up that’s catering to this segment.

What is GalaxyCard?

GalaxyCard is one of the top Fintech companies in India that is offering instantly approved credit cards in India. Their eponymous product, the GalaxyCard is a digital credit card with easy accessibility for consumers. Based in Gurugram, the start-up was founded in 2018 and stands out in the fintech space owing to their full-digitised mobile-based credit card.

Everything you need to know about the GalaxyCard

Features

The Galaxy Card can be instantly made available to consumers in a record time of under 3 minutes. This app-based card can be used to make online purchases, payments for utility bills, phone recharges, and can even be swiped at roadside stalls.

How to avail the card

To avail the card, consumers need to only download the GalaxyCard app, and make a free online registration for processing. The application process is purely digital requiring three basic documentation, the PAN Card, Aadhar Card, and Bank Statements.

Benefits for consumers

Consumers can enjoy zero annual, joining, and interest charges. The GalaxyCard targets consumers with income below INR 30,000 per month and is aimed at enabling access for credit to them. Unlike the traditional lending process, customers will find that there is no elaborative paperwork or long processing durations involved while availing the GalaxyCard.

The Fintech’s expansion plans – 600 towns and counting

The fintech start-up has acquired a massive consumer base comprising 600 towns in India. They are harbouring ambitious expansion plans to cater to a wider audience, and they will be adding more types of cards to suit different customer categories and financial needs to achieve this. The company will soon be scaling up their business and expanding their team. GalaxyCard aims to become the largest provider of digital cards in India.

Customer acquisition strategy – How they covered more than 600 towns

Since its inception, GalaxyCard has managed to cover close to 700 towns in India and their acquisition strategy is growing their customer base by 50% every month. They also have plans to increase this number by 5X within the next 4 months. GalaxyCard has adopted an aggressive customer acquisition strategy right from the start to establish itself as a key player in the market.

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Based in Gurugram, GalaxyCard was founded in 2018 and stands out in the fintech space owing to its fully digital mobile based credit card.

What’s in it for me?

In the fintech sector, the blue-collar worker segment is one of the most underserved but has a very massive potential. The potential of this segment is over 200 Mn people. Indians with lower income are still largely neglected by financial institutions. Fintech start-ups have a golden opportunity waiting to be explored here. Low-income workers who often face rejection by banks while availing credit can be targeted by fintech start-ups in the credit card space.

Target Tier II cities since the market gap here is huge and the opportunity awaiting fintech startups is robust. Other lucrative markets to explore include students seeking financial products and credit for their educational expenses. By solving core problems of customers in these segments, you can scale up faster. The blue-collar worker segment consists of drivers, security guards, small shop owners, semi-skilled labourers, daily wage earners, gig-economy workers, and the youth who are creditworthy. By building a scalable fintech model for these consumers, you can expect smooth growth in business and low friction with the customers.

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Advent of Open Banking, A Fintech Revolution

DU Desk — Wed, 04 Aug 2021 03:33:53 +0000

A few years ago, banks guarded their data with utmost security and privacy. In fact, they were more reluctant to share customer and financial data than they were about parting with their money. But with the growth of fintech start-ups, banks are now realising that to stick to rigorous banking methods is to become irrelevant. They are now much more flexible and ready to share data through APIs for fintech start-ups and are thus siding with the competition. As a result, both the banking as well as the fintech sector are growing together and have become mutually beneficial to each other.

What is open banking?

Open Banking is an initiative which is fostering innovation in the fintech sector. It transforms the banking sector into a more inclusive and convenient medium for users. Besides financial inclusion, it is pivotal in driving innovation in the banking industry. Open banking cuts the dependency on legacy infrastructure among banks. It’s the bridge that’s culminating in more partnerships and collaborations between traditional banks and the fintech sector, thus encouraging innovation in fintech and leading to higher fintech adoptions among consumers.

How open banking is driving SME success in Fintech

The fintech sector is riddled with disruptive players especially among start-ups and SMEs. These fintech players are collaborating with banks and leveraging APIs to create digital solutions that are democratising financial services. This has been possible only because of the prevalence of the open banking system.

How MSMEs in Fintech are benefitting

Open Credit

India has high demand for credit and in this regard the Open Credit and Open Credit Enablement Network (OCEN) have emerged to democratise credit for the vulnerable segments like MSMEs and small businesses. By providing credit access to the severely underpenetrated MSME sector, OCEN is a valuable technology framework that’s giving rise to the open data economy. On the other hand, it nurtures multiple service providers including technology companies in fintech to extend credit services through innovative solutions.

Funded by data

Through open banking, banks are making valuable data available via APIs. This is funding small and mid-size enterprises (SMEs) with a more valuable asset than hard capital ‘data’, which is driving fintech success. The data they harvest is endowing SMEs with real value. Data sharing implementations like the AA (Account Aggregators) architecture and the DEPA (Data Empowerment and Protection Architecture) are helping lenders in fintech to lend money to individuals and small businesses both in the fintech and non-fintech space within minutes. With data flowing freely, subsectors in fintech are thriving with new players venturing into sub-sectors like lending, wealth management, personal finance management, accounting, etc.

India’s Open Banking Ecosystem and UPI

India’s Open Banking system is based on a hybrid model comprising IndiaStack, a Government API initiative and software platform for businesses, start-ups and developers. UPI (Unified Payments Interface) is a subset of IndiaStack that’s a classic example of the introduction of open banking in the country.

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Open banking cuts the dependency on legacy infrastructure among banks. It's the bridge that’s culminating in more partnerships and collaborations between traditional banks and the fintech sector, thus encouraging innovation in fintech and leading to higher fintech adoptions among consumers.

What’s in it for me?

Fintech start-ups can either develop data driven solutions for the payment’s ecosystem or partner/cross-collaborate with other fintech players to avail these solutions. Open Banking and the Open Data Economy have made available large repositories of data to the fintech sector. By leveraging these data repositories, fintech start-ups have huge potential currently in the market.

The trend is here to stay in the fintech space, and more banks are coming out of their hard shells to embrace and aid fintechs in the process. Ever since the open banking ecosystem began including NBFCs (non-banking financial companies) in 2020, the trend has only grown and picked up pace with the rising demand in digital financial services by consumers.

Start-ups in this space are attracting huge levels of funding since open banking is strengthening the bond between technology and the economy. If the open data economy becomes a reality and open banking is fully unleashed, the fintech start-up sector will be at the forefront and will lead the banking revolution that’s already happening.

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How Fintech Startup MoneyTap made Personal Loan Available on a ‘Tap’

Koyna Mitra — Sun, 04 Jul 2021 10:35:05 +0000

Holding on to your salary till the end of the month is tough. Taking a personal loan from the bank to pay for your monthly Netflix subscription or some dinner takeouts, seems too far-fetched, right? Not to forget the never-ending paperwork that accompanies a personal loan. Therefore, a paperless, hassle-free, access to free-flowing credit, available at the tap of your fingers would feel like a godsend. That’s exactly what MoneyTap did; it made personal loans available as easily as a few taps on the smartphone.

What is MoneyTap and How Did it Come about?

Founded by IIT and ISB alumni Anuj Kacker, Bala Parthasarathy and Kunal Varma, MoneyTap caters to the credit needs of the middle class. Personal loans and credit cards are not very popular among the salaried and middle class of India because of the incessant hassles of paperwork and the high-interest rates on credit card loans. Therefore, founding a company that provides a credit line up to 5 lakhs to its consumers was an ambitious feat.

In 2014, Bala Parthasarathy, Sanjay Swamy and Shripati Acharya, started a Seed stage investment firm called Prime Ventures Partners which invested in startups like HackerEarth, Nimble Wireless, Ezetap and Happay.

After two years with Prime Ventures, Bala was once again allured by the idea of entrepreneurship and this time it was the enticing world of fintech. TapStart founders Kunal Verma and Anuj Kacker followed Bala into founding this fintech startup. The duo sold off their stakes in TapStart in 2015, to venture into MoneyTap.

The founders noticed that the monetary needs of the middle class can be easily solved with a small credit line. So, in 2015, they launched an app, in partnership with RBL Bank and several NBFCs, which became India’s first app-based personal line of credit financing. Going with the ‘cashless India’ culture, MoneyTap brings a flow of personal credit lines to your fingertips.

The app leads a 100 per cent paperless process. Anyone, between the age of 23 to 55 with a minimum salary of 15,000, a smartphone and a PAN can check for their eligible credit limit in less than 15 minutes through the app. The credit limit approved can go up to 5 lakhs but the consumer only has to pay the interest on the amount that they choose to borrow. Once the credit line is approved and set up, the customer can transfer money to their bank account or even spend it directly with the credit card that comes with the MoneyTap account. One can also check their spendings, repayments and credit limits on the app.

Personal loans and credit cards are a rare thing in India owing to the fact that the interest rates are very high. Staying true to their word of providing affordable and easy access to credit, MoneyTap offers loans at an interest rate as low as 1.08 per cent per month, and 13 per cent to 18 per cent per annum, and flexible loan tenures of 2 to 36 months. The loan can be repaid in monthly installments within the duration of 36 months and once all the EMIs are paid back, the credit limit gets replenished making it viable for borrowing again.

One of the initial challenges that the company faced was the conservative nature of banks. It has been very difficult to raise money and also comply with the rules and regulations of the banks and NBFC. Another challenge has been the difficulty in catering to demanding customers. With the banks being conservative, consumers expect flexibility and good customer service from the app. The two rounds of funding has seemed to bring a balance and has bridged the gap between the conservative banks and demanding customers.

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The app owes its quick success to the tech-savvy millennial of the country who despise tedium, and what screams ‘tedium’ more than the long application process for a personal loan at the bank.

MoneyTap’s Sure-Footed Business and Revenue Model

The business of money lending is a very risky one and is prone to fraud. The increasing number of fraudulent cases is the reason that the banks increased the interest rates on credit cards. Therefore, MoneyTap is very conservative about who it gives credit to. When signing up for the service, the customer goes through a chatbot interface that connects to the banking system and the credit bureau to investigate the customer’s credit history. The approval depends on this. The app happens to reject about 60-70 per cent of the application.

Every credit line comes with an initial processing fee of Rs.500, which is another way to ensure the genuineness of the customers. Despite its high rejection rate, the company was successful in making a customer base of 300,000 registered users from 14 cities in India, within eight months of its inception. In 5 years, the company has expanded to 60 Indian cities, and the plan is to expand to 200 soon. The app has been downloaded over 10 million times and disburses more than Rs. 2500 crore annually.

Being the first of its kind, MoneyTap has made a strong customer base with 90 percent of active customers, drawing credit multiple times from the app. The initial processing fee and the interest on the borrowed amount of credit line bring about a strong revenue for the company. The app owes its quick success to the tech-savvy millennials of the country who despise tedium, and what screams ‘tedium’ more than the long application process for a personal loan at the bank.

With two rounds of funding, MoneyTap has raised an amount of $82.3 Million. The latest round of funding took place in January 2020 and raised a funding of $70 Million. Its prime investors are Sequoia Capital India and Bala Parthasarathy’s own firm Prime Venture Partners. The second round of funding brought in new investors such as RTP Global, Aquiline Technology Growth & MegaDelta Capital.

MoneyTap: A Forerunner for Major Credit Lending Businesses

Since the inception of MoneyTap, a number of credit line financing startups have cropped up. Startups like PaySense and ZestMoney are MoneyTap’s biggest competitors, having been founded in the same year and offering similar services. MoneyTap not only has the upper hand in the competition being the first of its kind but it also offers lower interest rates.

In 2019, MoneyTap was awarded a Non-Banking Finance Company licence by the RBI. Their aim was to use the licence to enter into co-lending with their lending partners and offer better interest rates to their customers. The NBFC licence bolstered their market position. Shortly after getting the licence, MoneyTap raised its second round of funding of $70 Million. The acquisition of these fundings affirmed MoneyTap’s leading position in the fintech sector. The funding would be used to scale their business as they plan to 200 Indian cities in 2021. It will also be used to innovate their data backed lending models. MoneyTap’s surefooted steps have helped it create a loan book of Rs. 1000 Crore. The company has been on a 4 fold growth trajectory since 2019 and with the NBFC licence plans and the fundings raised, plans to accelerate it further.

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Their plan was to grow slowly and ensure the reliability of their customer base before expanding into new horizons.

Keeping the Competition at Bay

Finomena was one of MoneyTap’s biggest competitors till its untimely fall in 2017. It was a fintech company that helped students and young professionals in buying electronic devices and appliances by providing them small-ticket loans. The concept was quite like MoneyTap, except that it was focused on a particular segment of the community and very specific on how the loan is used.

The odd specifics of the customer base put it at a disadvantage in the market where it was competing with major fintech lending startups like MoneyTap and ZestMoney. In two years’ time, the reserves dried up due to high cash burn. What caused the reserves to dry up? Again, the oddly specific demographic. As mentioned earlier, the money lending business needs a keen eye. What MoneyTap does when signing up a customer for their service, is check if they have a regular source of income and its reliability. A customer base of students and young professionals is hardly expected to have a regular source of income.

What MoneyTap did differently was to keep the rejection rates high. Their plan was to grow slowly and ensure the reliability of their customer base before expanding into new horizons. While offering an easy and affordable credit line to their customers, MoneyTap ensures increasing their revenue through low-cost and tech-friendly solutions.

The Post-Pandemic Cashless Culture

Since the onset of the pandemic last year, there has been a rise in fintech companies. Paytm and UPI have restored trust in the fintech businesses and the pandemic has made people wary of stepping out and doing their transactions through cash. Therefore, the cashless culture will see a new trend in the post-pandemic scenario, a trend that will work in the favor of MoneyTap.

Bala Parthasarthy, Anuj Kacker, and Kunal Verma started this company with the vision to provide the middle class of India with easy and affordable access to credit lines without the hassle of several bank visits and tons of paperwork. The company expanded to 14 cities in the first eight months of its inception. In a matter of five years, it grew up to 60 with the majority of its users coming from the top metros like Delhi-NCR, Bengaluru Mumbai, and Chennai.

What the Future Holds

The founders plan to expand to 200 Indian cities in 2021. The post-pandemic cashless scenario might help them push forward with the plan as people from smaller cities of India take advantage of the app. The app has grown more user-friendly over the years. New features have been added that support Indian languages. It has attracted customers from Tier I and Tier II cities.

The app caters to the credit needs of the middle class. There is a dense concentration of the middle class in Tier I and Tier II cities. The app has seen a trend during the pandemic. Now that digital transactions are being favored, people are using their credit line for essentials, and Health and Education loans have seen an uprise.

The overly simplified process of the app attracts the tech-savvy millennials with the average age of the customer base of the app being 28-30. Judging by today’s scenario, the app might be successful in catering to an even older demographic. The company currently targets customers with average incomes of Rs. 30,000 to Rs. 40,000 per month, but it is planning to delve into the prospect of reaching out to groups having income as low as Rs. 10,000 to Rs. 15,000.

In September 2020, Renaud Laplanche who is considered the Godfather of Fintech joined the advisory board of MoneyTap. This means that MoneyTap is ready to test global waters. For now, they are looking to expand into Tier I and Tier II cities and the global expansion would start with SouthEast Asia and Middle East markets.

MoneyTap launched MoneyTap Labs at the beginning of this year with the vision to educate people on how to use financial products. They have been actively hiring engineers since last year. MoneyTap Labs have launched the SuperSplit app which would help users to track shared expenses and settle payments. More new products are in the pipeline.

The story of MoneyTap is the story of authenticity in innovation. It was found with the thought of catering a product to the middle class, despite knowing that the middle class seldom uses it. It nevertheless succeeds by keeping authenticity, reliability, and a sharp eye for detail at the core of its platform, making it a truly innovative product.

For more inspiring stories check out our Inspire section!

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Neobanks Emerging As A Key Segment For Growth In Indian Fintech

Vaishali Das — Tue, 29 Jun 2021 03:35:04 +0000

With change in the financial landscape, shifting more toward customer satisfaction and experience, a gap has been created between the offerings of traditional banks and customer’s needs.

What is a Neobank?

Neobank is a digital bank without any branches offering multiple financial services to the tech-savvy customers. It works entirely on online mode, providing services from money transfer, payments, lending to opening a bank account in a hassle-free and smooth manner. Neobanks partner with traditional banks to provide bank licensed services and in return it helps traditional banks in expanding their customer base in a seamless manner.

What are the Advantages?

Neobanks, being completely digital, open up a wide window of advantages for customers and change their banking perception. Right from opening a bank account by following a few simple steps from the comfort of your home, it provides seamless and user-friendly experiences to its customers.

Neobanks’ apps are very much accessible unlike the glitchy net-banking sites. With being quick in responses and smart reporting, they also provide a customizable way of keeping a track of one’s finances and helps them in managing it combined with constant advice.

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Every now and then there are new players in the market whose essential goal is to simplify the financial sector.

India’s Top 4 Neobanking Startups

Currently there are 10 neobanks in India with a couple of more in-process to enter the market or in beta stages.

Niyo

It is a Bangalore-based neobanking startup, established in 2015, catering the blue-collared sectors, salaried employees and Indians who travel globally. Niyo is helping salaried employees with solutions to make the most out of their salaries.

Niyo has also launched a global card dropping the need to purchase a forex card during international travels. Collaborating with Upwardly, it is educating customers on investments and financial benefits.

Open

This Bengaluru-based startup, when started in 2017, partnered with ICICI bank. Presently it has almost 11 banks as partners. It offers startups and new businesses with an online bank account and a credit card that consolidates banking, accounting and payments in a single platform.

As a result, it is easing up hectic procedure of the current banking system. It also helps SMEs in automating bulk payments and digitising financial services.

RazorpayX

A startup within a startup is a neobanking platform of India’s Newest Unicorn Razorpay. It is simplifying and accelerating every aspect of financial operations from payments and management of cash flow to reconciling transactions and flexible payouts.

It also eases the refund process for e-commerce businesses with their API and dashboard payout platform. Also, with the help of opfin, a payroll and HR management software company, it manages tax filing and compliance through a unified platform.

InstantPay

The startup delivers hassle-free banking experiences by offering instant activation, money tracking and cash deposit features to individuals and businesses of all sizes.

With its API banking platform, which is a super scalable cloud platform, it auto scales from zero to a million transactions in a single day. It also provides users with a digital bank account and for startups and SMEs, a smart bank account.

Business Owners Who Aspire To Be In Neobanking

With RBI focusing on digitalization and financial inclusion, collaboration of Fintech and banks has become an emerging space in the banking sector in India.

Neobanks are taking over the Fintech industry by a storm on a worldwide level. Every now and then there are new players in the market whose essential goal is to simplify the financial sector.

India is moving towards an era of rising Fintech sector. With the increase in the number of people adapting the online mode of banking and bridging the gaps between traditional banks and customers, the potential of the neobanks market is very promising.

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RBI gives BharatPe In-Principle Approval to Start a Bank

Shalmoli Sarkar — Wed, 23 Jun 2021 05:35:02 +0000

In September 2019, Punjab and Maharashtra Co-operative Bank (PMC Bank) met with its sad fate by becoming the single largest lender to HDIL (Housing Development and Infrastructure Ltd) that accounted for 75 percent of its loans. HDIL’s failure to pay the loans resulted in the collapse of PMC Bank that led RBI to intervene by approving Centrum Financial Services Limited and BharatPe to take over the cash-strapped bank to form a small finance bank.

The joint venture between Centrum and BharatPe will infuse a total of Rs 1800 crores which will be equally divided between the two entities out of which Rs 900 crores will be invested in the first half of the year and the bank will commence its operation with a value of Rs 500 crore from day one.

There is nothing unusual about the collapse and taking over of a bank, but what is rare about the deal is a three-year-old fintech company taking the reins of a beleaguered bank to become its half owner.

BharatPe-A Three-Year-Old fintech company winning a rare banking license

BharatPe a fintech platform enabling Indian merchants and small business owners to accept digital payments, was eyeing to receive an NBFC license for a long time. The collapse of the PMC Bank was a shot in the arm for BharatPe as it first submitted its nomination along with Centrum to RBI for becoming potential bidders to take over the bank and earn a banking license. BharatPe aspires to join the Unicorn club with its ongoing talks with Tiger-Global for an E-Series funding of $250 million required for opening a new-age bank. This takeover is beneficial for BharatPe as it presents the opportunity of raising deposits and public deposits that is supposedly the cheapest source of capital for lending. It also lowers the cost of capital from a lending perspective.

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The joint venture between Centrum and BharatPe will infuse a total of Rs 1800 crores which will be equally divided between the two entities out of which Rs 900 crores will be invested in the first half of the year

What Services BharatPe is expected to Provide in the New Bank?

This small finance bank intends to aim at the underserved markets of India. Small and medium enterprises in India have limited to zero financial infrastructure thus, forcing them to rely on personal relationships with wholesalers for credit. Centrum the owner of the other half offers investment banking solutions to mid-corporates and SME lending, broking for institutions and retail. It also provides MSME credit, wealth management, affordable housing, and micro-lending, apart from private debt and venture capital. Both entities complement each other as they serve the same target audience. BharatPe working jointly with Centrum will introduce new-age fintech products catering to the payment, investment, and credit needs of the retailers and small businesses.

Learnings for start-ups aspiring to hold ownership in banks or have a lending license

With more than 50 lakh merchants using BharatPe and manifold transactions up to 7 times till March 2021, it could have become a unicorn start-up with ease as no investors would have denied signing cheques. But BharatPe believes that it is a three-year-old company that has numerous milestones to achieve and does not want to be seen as a fintech company whose offerings are similar or product USPs blurring with fintech majors such as Paytm, PhonePe or Razorpay. Rather than following the unicorn suit it decided to foray into the banking vertical thus clinching the first movers’ advantage to offer its fintech services to a traditional co-operative bank and giving it a digital makeover.

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Fintech Start-up Fair, Differentiating Itself?

Anju Nambiar — Tue, 18 May 2021 08:35:05 +0000

Khalid Parekh the Founder and CEO of Fair Fintech Inc raised $20 M for his neo-banking start-up ‘Fair’ launched in the US in April this year. Fair is a multilingual neo-banking and Digital Financial Service Platform.

Driven by value and ethical responsibility, the membership based neo bank will target immigrants and the ‘unbanked’ people in the US to address the racial wealth gap in the country. The company is aimed at helping recent immigrants with ethnic minority backgrounds, fresh off the boat. Fair calls itself pro-consumer, equity-based, mobile-first alternative to traditional banking. Asserting, it values people over profit. In a way sounding more like a people’s movement than a start-up. Khalid attributes his vision for the platform to the banking challenges and opportunity gaps he faced as an immigrant from India.

Humble Beginning

Educated at the National Institute of Information Technology (NIIT), Khalid did not fit the description of a typical Fintech entrepreneur. Having emigrated to the US with just hundred dollars he went on to head the AMSYS group, a raging success of a firm valued at $350M, making $155 M in annual revenue. After a successful stint at AMSYS, the next stop for Khalid Parekh was the Fintech sector.

Khalid was taken aback by the absolute lack of banking and financial services available to immigrants. He found it cold and brazen that immigrants were undervalued. He had a clear vision in mind, to offer ethical transparent banking and insurance, retirement services to immigrants, basically people with low income in the United States. Fair aspires to propagate, a fair chance to accessible wealth – to start a business, buy a home and to invest. This level playing ground would be the foundation for the new comers’ future.

With Fair, Khalid is working to close the immigrant wealth gap and to alleviate the dilemmas of people struggling to cope with an unfriendly financial model. He wants to help all newcomers to the US get access to credit, qualify for business loans, and keep away from getting debt trapped. It will be a boon to those who are new to the country, as they have no credit or need access to interest-free loans, they now have options.

How Fair will aim to differentiate itself?

A Costco-like Fintech model

Fair’s portfolio of services resembles a ‘Costco-like’ model. The company is immigrant market friendly which means that it will largely be pro-consumer and very different from a regular neo-bank.

Access to Banks and Retailers

Although Fair is making its way into an over-saturated challenger bank market, it will provide customers access to a network of banks and retailers like Walmart and CVS. Its portfolio of services also goes beyond banking.

Differentiated from a ‘Challenger Bank’

Fair is less of a ‘Challenger Bank’ and more of a finance platform where consumers can do banking, lending, investments, and retirement all in one place. Consumers can avail interest free loans, invest, obtain insurance, and opt for retirement plans from a single platform.

Sustainable financial services

Fair’s biggest differentiator is that they are facilitating Socially Responsible Investing for their consumers. Their customers can enjoy instant access to interest-free micro loans through Fair’s platform. Another major differentiator is that Fair also practises Environment, Social, and Corporate Governance (ESG) investing with a prime focus on sustainability.

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Fair’s biggest differentiator is that they are facilitating Socially Responsible Investing for their consumers.

What’s in it for me?

The story of Fair and its founder shows how start-ups do not need to wait to receive funding from a VC. Fair obtained investors who connected with their story and weren’t necessarily full-fledged investors. Neo banking is a very hot sector in fintech currently. Even without a background or experience in finance, a good vision is all you need to build a fintech product/service that can address a real challenge in the fintech sector. Not to forget the biggest success stories in business has been those who were solution providers to a long existing problem. The membership model works very well in neo banking. Also, a lot of neo banks are targeting specific demographics just like Fair.

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