My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.

Startup Funding

Open Banking is Disrupting the Traditional Banking System and Indian Neo Banks are Gearing up for it

Neo-banking platform Open has raised $30 million in a Series B round from Tiger Global Management
Open Banking is Disrupting the Traditional Banking System and Indian Neo Banks are Gearing up for it
Image credit: Entrepreneur India
Entrepreneur Staff
Senior Correspondent, Entrepreneur India
4 min read

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

In today’s age of digitisation, it is all about the customer and improving his/her experience. To achieve this goal, banks and fintech companies have to support each other. This change in the ecosystem has invented the concept of neo banking which can be rightly dubbed as the new era of the banking industry. 

Neo-banking platform Open has raised $30 million, roughly around INR 210 crore, in a Series B round. The recent funding was led by Tiger Global Management along with Tanglin Venture Partners Advisors and existing investors 3one4 Capital, Speedinvest and Better Capital AngelList Syndicate have also participated in the round.

Though globally, especially in the US and Europe, neo-banking is a well-known concept, In India, the model is yet to gain pace and there are no more than five-six start-ups in this space. 

“There are more than 16 neo banking companies globally and most of them are doing really well. In other words, banks are open to partner with neo banks and clients are open to adopting a digital bank.  So we felt like, there is a good opportunity to bring this model to the Indian market as domestic SMEs are adopting online services more than ever,” Anish Achuthan, Founder of Open said to Entrepreneur India in a previous interview.

The Opportunity 

Since most of the traditional banks are overloaded by its legacy-based infrastructure they fail to help SMEs with cash flow management and other multi-use interfaces for services like a payment gateway, separate invoicing software, accounting tools as against an integrated platform.

With most of the banks now realizing that open banking is the next big thing, bankers are now discussing to open their APIs to fintech startups to build solutions around it. Achuthan opines that there are a lot of opportunities for businesses to innovate with this operating model. 

“Neo- banking is not just about financial inclusion; it's also about bundling banking services with other financial services.  So in India, neo banking can work as an extension to solve for the financial inclusion challenges. Secondly, we are seeing fintech start-ups build niche solutions focusing on blue collar jobs and that’s the way forward,” he added.

The Investor Attraction

According to company’s press release, Open is planning to new use the fresh funds to scale up the team, launch more products and value-added services while expanding  its reach to 1 million SMEs in the next one year. Presently, the platform works with about 1 lakh SMEs.

On an immediate basis, the start-up will launch two new products to enhance its business banking proposition i.e. the Open+ card, a business credit card with a 30-day interest-free credit line for venture-backed start-ups and Layer, a unique programmable bank account for developers.

The start-up is also looking to enhance its API banking suite with the introduction of Layer - a programmable bank account. This feature will enable developers to control money programmatically, build their own features on top of the bank account and securely integrate with other services, Open added in its statement.

Talking about what makes Open attractive in the fintech space, the startup’s existing investor  Anil Joshi from Unicorn says there is no doubt that digital banking is disrupting the banking sector. It not only helps bank retain clients but also helps them host digital services over normal banking services.

 “As Open is helping in easing banking services with a layer of digital services is preferred for all customers. Since the market is wide and virgin it offers a lot of scope to scale up and hence investors finding it attractive,” he added.

With open banking already disrupting the global banking ecosystem, it is only a matter of time and the Indian ecosystem would say hello to new banks..oops we mean neo bank!

More from Entrepreneur

New York Times bestselling author Nicole Lapin can help you pitch your brand to press and strengthen your media training.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Create your business plan in half the time with twice the impact using Entrepreneur's BIZ PLANNING PLUS powered by LivePlan. Try risk free for 60 days.

Latest on Entrepreneur