Neobanking Start-up Begins a New League with its Funding
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
The fintech industry is rolling with profit, disruptions and new terms. Neobanking is the newest term to join the business block.
But what does a neobank mean? They are banks without physical presences or branches. They are only present in the form of mobile apps. The digital place is emerging vigorously in today’s time. In such a robust ecosystem, neo banks are digital banks that facilitate financial services like accounting and credit but without having the licensing of a bank.
One of the firsts in the Indian business market community which can be sectioned in the neobanking category is Open, a Bangalore-based start-up. Founded in May 2017, the fintech start-up recently raised a Series A funding of 5 million USD led by Beenext, Speedinvest and 3one4 Capital. Open claims to be the fastest growing SME neobanking platform globally, adding 7500 merchants every month, processing USD 2 billion in transactions annually and powering business payments for 30,000 businesses currently.
Entrepreneur India finds out more about this in an email exchange with Anish Achuthan, Co-founder and CEO of Open on what makes neo banking an important term for the Indian fintech industry.
Inception of an Idea
Achuthan explains that in their previous stint at Citruspay and PayU, they realized that SMEs struggle a lot when it comes to managing their finances and tends to use multiple tools to do the same. “While payment gateways solved the collection problems, an entrepreneur typically spends 2-3hrs reconciling payments, making entries in accountant-friendly software, making and tracking payouts and categorizing his payments.”
This led to the inception of Open. “Open helps businesses by automatically reconciles all payments and comes pre-integrated with all tools for invoicing, online collections, making bulk payments, running & managing payroll, automated accounting, and expense management,” he adds.
The term that has been making waves in the fintech industry holds significance for its sheer advantageous nature of helping and empowering SMEs. “Neobanks are fintech arms that do not have a banking license of their own but ride on existing banks to solve core finance problems for business.”
Open claims to be the first SME-focused neo-banking platform in Asia and globally they are the fastest growing neo-banking startup a “Overall, we have 30000 businesses using our platform in the past 4 months of launch.”
Open, in a lot of ways, is disrupting the fintech industry and the “neobanking” nature of it is one of the biggest reasons.
A New, Rare Addition
SMEs struggle a lot when it comes to managing their finances and tend to use multiple tools to do the same says Achuthan. Open drives to remove the creases in the market for SMEs so that their growth or progress remains unhindered. “Open helps businesses by automatically reconciles all payments and comes pre-integrated with all tools for invoicing, online collections, making bulk payments, running & managing payroll, automated accounting, and expense management,” he says.
Even though the neo-banking industry may not be fiercely competitive but its belongingness to the fintech industry makes success a notch tougher. Achuthan argues that globally there are about 60 neo-banks of which only 16 are focused on SMEs. “Open is the first SME-focused neo-banking platform in Asia and globally we’re the fastest growing neo-banking startup.” In just 4 months, the result that it has seen is phenomenal. So, it can be inferred, that there is no room for worry when one talks about competition since what Open has set out to do is totally of a different league.
Plan of Action
Open endeavours to use their funding for specifically two areas. He says, “First, we plan to use the funds to grow and second, scale our 30 member team to keep up with the business growth. We also plan to use the funds to enhance our product offering.”
The stage for the neobanking industry is set especially in India.