India has thousands of ethnic craftsmen, handicraft workers, and other such local entrepreneurs who can no longer run their offline presence as a business. But they cannot sell their wares online because they don’t possess the know-how for setting up a payment gateway. Most of these small businesses are not even digitally savvy enough to know that they can sell on popular marketplaces like Amazon. This is the gap that Visa’s Bring India Home initiative seeks to fill. 

What’s the Bring India Home platform by Visa?

‘Bring India Home’ is a digital platform being launched by Visa which will take offline artisans and small businesses to the digital space. It will facilitate online shopping for these small businesses. BIH is a support initiative by the financial services company which will also serve as an educational platform to handhold the stakeholders in their digital transformation journey.

How BIH will help artisans and small businesses go digital

BIH will help artisans and small businesses go digital by helping them attract new consumers through incentives. Visa will also conduct instructional sessions for small businesses to educate them about digital payments, transactions, and about digital marketing techniques. 

Motive behind the initiative

The ‘Bring India Home’ initiative is in line with Visa’s global commitment to support over 50 Mn small businesses on digital. It’s also aimed at supporting the small business fraternity in India to create jobs for the Indian economy. Since consumers are now spending online, Visa wants to bridge the gap between local artisans and small businesses with digital purchases. 

Benefits for small businesses

Small businesses will be able to expand their product reach to digital shoppers. Local artisans will also be able to give millions of online Indian consumers access to their unique, Made-in-India products. Small businesses and artisans will be successfully able to survive and revive during the pandemic and beyond by taking the digital route. 

Scope of the initiative

The Bring India Home Initiative will cover 17 Indian states in India and will empower local artisans and small businesses in these states to list their products online. It will bring exposure to their products to online shoppers in India and thus facilitate digital sales for these small businesses which were previously offline. 

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.

The unicorn club of start-ups in India have come a long way and have created history in the start-up world. After successfully filing for IPOs, they are now turning their attention to profitable investments within their community. By doing this, they want to create an independent investment wing for the industry they belong to. Thus, aspiring start-ups who are following in their footsteps can avail funding without the need to approach other investors or struggle to acquire funds. 

What is a Start-up Investment Wing?

Start-ups which have raised the benchmark for the community and have reached high valuations are setting up a Venture Capital arm with a fixed corpus. These VCs are then identifying budding start-ups that belong to the same or similar industry and are displaying disruptive business models and million-dollar potential. Such VCs are called Start-up Investment Wings which are giving back to the start-up community. 

Why are India’s unicorns turning VCs?

India’s unicorns are turning venture capital investors because the unicorn club in India is steadily growing with 16 more to be added to the pool in 2021 alone. By 2025, the total number of unicorns in India will cross the 100 mark. Existing unicorns in India like Paytm and Dream11 have developed an increased appetite for growth. They have also developed the need to tap into adjacencies which is pushing these unicorns to set up funds and turn investors. 

Investment arms of Dream Sports and Paytm

DreamCap – $250 Mn Corpus

Dream Sports, the parent company of Dream11 (fantasy sports start-up) has rolled out a $250 Mn corpus to fund sports start-ups in India. This investment wing of India’s first gaming unicorn Dream11 will fund start-ups operating in the sports, gaming, and fitness tech spaces. 

One97 Mobility Fund – $100 Mn Corpus

One97 Mobility Fund is Paytm’s investment wing with a $100 Mn corpus which is investing in mobile-first early-stage start-ups. They have invested in companies like Oorja Analytics, LeapSky Wireless, Ciqual, TenCube, and Singapore-based TheMobileGamer. 

If you aren’t aware of the grocery market in India, BigBasket’s name can instantly remind you of the potential of this sector. BigBasket is currently one of the biggest players in the e-Grocery space. But over the years, many more hyperlocal firms have emerged like Jio Mart, Spar, Amazon Fresh, etc. Speaking of hyperlocal grocery apps, there’s also Grofers, India’s e-Grocery unicorn. 

Most of these names were offline supermarkets and hypermarkets which have quickly pivoted to an online presence during the pandemic. Digital Transactions have allowed them to quickly go online. It’s not just these big names, but the small brick-and mortar Kirana shops were able to survive and revive during the pandemic due to Fintech products and services. 

Grocery challenges and needs during the pandemic

For a very long time, householders loved to physically walk into a store and pick up fresh fruits, vegetables, pulses, grains, and bakery products. But the pandemic has made this impossibile. Now both homemakers and working professionals simply place monthly orders for groceries on e-Grocery apps depending on who is offering the most attractive discounts and prices. 

Fintech and Grocery partnership 

The fintech and e-Grocery partnership has been long-standing. Even before the pandemic, digital wallets like Citrus, PayUMoney, MobiKwik, and Paytm were partnered with prominent e-Grocery companies like Grofers. They were mutually making profits by offering cashbacks, discounts, and reward points. But since the pandemic, their partnership has taken on a whole new level. 

Kirana store partnership for essential items delivery 

Hundreds and thousands of Kirana shops which were providing fresh grocery items had to suddenly go online and compete with e-Grocery giants. Fintech firms stepped up to help them in their digital transformation by providing digital payments services. Fintech companies have been launching apps and deploying POS systems for them. 

Now, even the smallest Kirana shops in India have the PhonePe QR codes on their counters. Paytm also provides all-in-one QR codes for local shops and merchants to accept payments via Paytm wallet, Rupay cards, and UPI based payment apps. The local mom-and-pop stores even started accepting orders on WhatsApp and providing e-payment options through mobile wallets, apps, and cards. 

A convenient payment model – BNPL

Buy Now Pay Later is facilitating robust partnerships between the fintech and grocery industry. The BNPL model works by extending a small-ticket loan to an e-Grocery shopper placing orders and making purchases for monthly or daily groceries online. The loans are instantly accrued either on the fintech app (the grocery platform redirects to the BNPL app). 

In most cases, the BNPL service is integrated as a payment method during checkout in the e-Grocery platform. The BNPL model facilitates instant payments and bite-sized credit which are accessed by the shopper alongside the purchase. BNPL pays for your order free of interest but levies a minor late charge per day if you miss the repayment date. 

For example, while checking out on BigBasket, you can choose the BNPL option on Simpl (A BNPL service). You will get redirected to Simpl’s login page and upon logging in, Simpl will pay for your grocery order and add the charge to your account which you can pay at a later date. 

An instant real-time payment system

e-Grocery online shoppers can choose the UPI payment option while placing orders on smartphone apps. UPI is available as a payment option on RBI approved smartphones successfully verified and linked to one or multiple UPI accounts like Google Pay, Bhim UPI, PhonePe, etc. The UPI payment method is reflected on the checkout page where customers can choose their preferred UPI app. The amount will get directly debited from the customer’s bank account linked to their UPI ID. Grofers for instance, had earlier rolled out UPI for android devices. 

UPI penetration has seeped into every household making this the most popular payment mode on e-grocery apps. UPI providers like Google Pay, Phone Pe, Paytm have partnered with grocery firms. In Google Pay, you can purchase daily essential items. You can view Google Pay’s partnerships with hyperlocal small businesses in the grocery sector in the ‘Business’ section on their app. Even Paytm features small businesses in the e-grocery segment on their ‘Paytm Mall’ section where they offer attractive discounts and deals for everyday essentials. 

How this fintech startup took offline grocery online

An example of a partnership between fintech and e-Grocery has been PayNearby’s initiative to take offline grocery stores online. PayNearby is a fintech start-up which offers a hyperlocal delivery and purchase app. They onboarded more than 2 lakh pan-India Kirana shops on their hyperlocal discovery and purchase app to enable customers to order a wide range of products from their local Kirana stores. 

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. 

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.

Where pandemic hampered the operations of Indian businesses bringing it closer to the jaws of closure, surprisingly it could not deter some startups across fintech, agritech, healthtech, retail, e-commerce and fintech gain the unicorn status. In 2020, the startup ecosystem got a total of 11 unicorns and 2021, within 6 months, saw 16 startups join the unicorn bandwagon thus taking the count of 50 unicorn startups.

With the rise of multiple unicorns emerging in a short span, India has truly retained the title of third-largest in the world right after the US and China with 124 and 92 unicorn startups respectively. A joint report from Nasscom and Zinnov anticipates that India is on track to be a 50-plus strong unicorn club in 2021 and holds the potential to be a 100 unicorn club by 2025.

Despite challenges in the pandemic that disrupted business continuity, entrepreneurs have quickly responded to varying consumer behaviour and chose to understand the business opportunities laid by the crisis to get the benefit of first-mover advantage.

Why is India able to give birth to Unicorn startups?

The reasons for the growth in India’s unicorn can be attributed to:

• Leveraging new-age technologies such as Artificial Intelligence, Internet Of Things, data analytics, big data, robotics, etc. focussing on customer personalisation and bridging gaps resulting in product acceptance and sales
• Disruptive solutions in the conventional systems
• Product or service innovation
• High-quality talent
• Investors are willing to invest in Indian startups. Since 2015, India has seen an inflow of $250 billion of foreign direct investment (FDI). Out of which, 75% of this FDI, i.e. $184 billion, has come in through venture capital and private equity funding.
• Increasing internet penetration

Stressed by mounting debts, weakened finances, low to zero sales, and inability to cope up with the unprecedented times of the pandemic has left small businesses on the brink of closures. The number of small businesses shutting themselves has gone to a staggering high, which according to a survey done by LocalCircles states that 59 percent of the start-ups and MSMEs are likely to scale down, shut down or sell themselves in 2021. Only 22 percent of start-ups and MSMEs can sustain themselves up to 3 months, 41 percent are out of funds or have only one month of funds left.

According to the Ministry of Corporate Affairs, between April 2020 and February 2021, more than 10,000 small businesses have voluntarily shut down. Unlike larger businesses, there is no concept of mergers and acquisition (M&A) for small businesses. It is either a sale of assets or investors infusing funds to help them stay afloat. The precarious condition of MSMEs is indeed a matter of concern, as it forms the backbone of India’s GDP by contributing a significant 30 percent and employing 120 million according to CII (Confederation of Indian Industry). In such grim scenarios, only financial assistance can prevent small businesses from a downfall. 

The Emergency Credit Line Guarantee Scheme (ECLGS), an initiative from the government to aid covid-hit MSMEs is less than 12 percent which means only 33 lakh MSMEs can gain benefits that form a meagre 5 percent out of the total pie of 6.34 crore MSMEs. Besides, the traditional banks are always known to be shy to lend MSMEs, for which poorly organised lending, improper regulatory processes, and bureaucratic design are to be blamed. Banks find it cumbersome to distribute a Rs 1000 crore loan into a hundred Rs 10 crore loan or thousand 1 crore loan. According to the Association of Chartered Certified Accountants, there are nearly 50.7 million enterprises that lack access to traditional lending challenges, which comprises about 80% of the total 63.4 million MSMEs in India. This pushes small businesses to seek financial help from informal financiers, friends, family and other such personal channels.

Why is Fintech Keen to Lend Small Businesses Now?

Access to affordable formal credit has always remained a hurdle for the MSMEs in India and the disruptions to businesses by covid-19 has strained the liquidity that has further worsened the problem.  Several fintech platforms with their innovative financial solutions are bridging this funding gap for MSMEs. They can do this due to two reasons, the first being the fintech platforms have lower customer acquisition costs unlike banks and other traditional lending institutions and can fulfill the credit needs of small businesses that require small value loans. 

Second, the fintech space with its technology leverage can develop alternate forms of credit risk analysis using tools such as Artificial intelligence and big data which helps to understand and measure credit risk effectively and quickly. The access to GST-linked data of potential small business borrowers helps fintech platforms to analyse the business and cash flow cycles. 

How Fintech is Helping to Aid Small Businesses to get Financial Assistance?

Here are some ways that how Fintech is offering a hassle free experience financial assistance to small businesses: 

• Finding proper sources of investment

   Using intuitive tools and predictive algorithms fintech is helping small businesses find the proper sources of investment. Investors are at times unable to identify businesses that may need investment. 

• AI-Enabled Virtual Financial Advisors:

   Through artificial intelligence, fintech players have created virtual financial advisors for small business owners that address their queries be it knowing about the full form of MSME or how to apply for MSME registration and loan application. 

• Help in filing tax returns and financial planning:

   Fintech companies help small business owners to file their tax returns and help in financial planning that requires a tool whose algorithms help to create financial plans for them. 

• Risk Assessment and evaluation:

   Risk analysis of small businesses is vital for the lender to provide loans. Several banks deploy fintech to create a risk profile of consumers basis which banks can provide loans. Fintech platforms by leveraging mathematical models and systems can provide an accurate risk profile of consumers in a short time.

The buy now pay later (BNPL) financing model that remained in its absolute infancy is gradually gaining ground in India. Amid job losses, business closures and pay cuts induced by the pandemic, credit card limits have been lowered, resulting in discretionary spending taking a backseat. For small businesses, traditional lenders are denying loans looking at the negative business environment.   

Such pandemic-induced economic change is driving consumers and small business owners to find alternate ways of financing at low or zero interest to fund their purchases and sustain business in such grim times. This is where BNPL has emerged to be the most convenient payment option that provides customers make payments for essential and aspirational purchases with 15-30 buffer days for repayment at 0% free interest rates without worrying about the irregularities in salary. 

To boost festive sales in its platform e-commerce majors Flipkart and Amazon introduced pay later options. To which Flipkart witnessed a 7 times increase in consumer spends on introducing the BNPL option and 1.7 times higher adoption of the EMI schemes. 

It is anticipated that e-commerce and BNPL will have a promising future. A report by Goldman Sachs reveals India’s e-commerce market to become a $99 billion market by 2024 and BNPL will become the fastest growing online payment method that is poised to grow from 3 percent in 2020 to 9 percent in 2024. 

The Buy Now Pay Later for MSMEs 

In such a weak economic slowdown, the traditional lenders are apprehensive about offering loans to small business owners. With BNPL making inroads in the consumer retail sector, new-age digital lenders, fintech and NBFCs are introducing this model to offer convenience and financial flexibility to the MSME sector, which are already staring at closures. 

Digital lending platforms like SOLV, a B2B e-commerce marketplace for small businesses along with its network of financial service providers are offering BNPL finance solutions to suffice the financial needs of MSMEs to run their daily operational requirements of the business with adequate time for payback. 

In the past 6 years, fintech start-ups have revolutionised the manner of payments in India, such that currently, people are not considering carrying a wallet in the markets. Moreover, the necessity to go contactless has further proliferated the usage of fintech payments. According to a joint study by Boston Consulting Group (BCG) and the Federation of Indian Chambers of Commerce and Industry (FICCI), fintech is expected to reach USD 150-160 Bn by 2025, resulting in a USD 100 Bn value creation opportunity.

The fintech landscape in India at its peak of value creation that is exploring and expanding its offerings to new geographies, new consumer cohorts like- teenagers, millennials, and Gen Z, cryptocurrencies, money transfers, loans for small businesses, investments thus not limiting itself to online payments only. 

We Indians are spoiled with the ‘The more the Better’ ideology. With the penetration of smartphones and falling data plans in rural India, it presents a host of opportunities in the fintech space to mushroom fintech companies to create disruptions in money matters. 

This story presents a checklist for the aspiring entrepreneur who wants to launch their fintech company.