Leading Financial Inclusion for MSMEs Through Innovation and Technology: Niyogin Fintech The conversation delved into the company's dynamic growth trajectory, innovative approaches, ambitious plans, and how it addresses the needs of underserved MSMEs

In a discussion with Tashwinder Singh, CEO and managing director of Niyogin Fintech Limited, the conversation delved into the company's dynamic growth trajectory, innovative approaches, ambitious plans, and how it addresses the needs of underserved MSMEs (Micro, Small, and Medium Enterprises) in India. When asked about the acquisition of SuperScan, a cutting-edge optical character recognition (OCR) platform developed with AI toolkits, Singh explained, "We are a technology company, and we continuously look for innovators building better tech stacks. Sometimes it's easier to acquire something unique rather than build it yourself. This acquisition allows us to not only use the platform but also productize and sell it."

Niyogin's operations are rooted in technology, with a strong focus on efficiency and scalability. The company operates a partnership-led, branchless NBFC model that uses technology for client acquisition, underwriting, and collections. Singh said, "Our philosophy is to create operating leverage. We cap fixed expenses and ensure that incremental revenue comes with minimal marginal cost. This allows us to scale efficiently while keeping costs under control."

Niyogin has also made strides through past acquisitions like Moneyfront, a wealth platform, and iServeU, a subsidiary providing banking-as-a-service solutions to banks, fintechs, and retailers. The latter powers 25,000+ pin codes across India, enabling financial services delivery through a robust tech stack.

Tackling challenges for MSMEs

Addressing the challenges faced by underserved MSMEs, Singh highlighted the acute shortage of capital in India, especially for smaller businesses with limited credit history. "We partner with fintechs and other platforms to originate loans. For instance, a fintech company, selling accounting solutions to retailers helps us reach these customers. While the partners handle origination, we manage credit underwriting and collections," he said. This approach eliminates the need for large sales teams, leveraging partners' existing networks for greater operational efficiency.

Expanding into smaller cities and rural areas comes with its unique challenges, particularly in collections. Singh emphasized the role of technology in overcoming these hurdles. "The deeper you go, the more difficult and expensive collections become. We've implemented innovative solutions like QR codes for payments and partnerships for collections. For MSMEs, our average ticket size of INR 2-3 lakh provides a substantial impact while keeping operations manageable," Singh revealed.

A standout innovation from Niyogin is its micro ATM and AEPS (Aadhaar Enabled Payment System) solutions. Retailers are equipped with technology at no upfront cost, enabling them to offer ATM-like services. Singh explains, "For every transaction, banks pay us, and we share the earnings with the retailer. It's a win-win model where retailers earn from day one without incurring heavy costs. This approach aligns with our mission to enhance financial inclusion."

Scaling operations

Looking ahead, Niyogin has ambitious plans for both domestic and international expansion. Singh shares, "Our lending business will continue scaling as we onboard more partners. On the technology side, we see immense potential in international markets like Southeast Asia and the Middle East, where we've already received inbound interest."

The company is also enhancing its SaaS offerings, including solutions for prepaid and credit cards. Singh expressed optimism about exponential growth in SaaS revenues over the next two years.

Discussing the evolving fintech regulatory landscape in India, Singh welcomed the clarity brought by recent guidelines. "Clear regulations help define boundaries, making it easier to innovate within set frameworks. While initial compliance can be challenging, it ultimately creates a more stable ecosystem. Risk creates opportunity, and we embrace that mindset."

However, Singh noted that certain norms, like the 5 per cent risk participation cap for fintechs, could be more accommodative to encourage greater financial inclusion.

The road ahead

Niyogin's focus over the next two years is on scaling profitability and relevance. Singh highlighted their priorities, stating, "We've built the tech stacks we need. Now, it's about scaling these products, driving adoption, and expanding globally. Our proof of concepts in international markets are paving the way for future revenue streams."

Closing with advice for budding entrepreneurs, Singh emphasized persistence. "Entrepreneurship is filled with reasons to quit. But staying committed and agile in the face of challenges is what creates success. Be persistent and adapt to changes, like evolving regulations, to stay ahead," he concluded.

Niyogin Fintech's financial performance for Q2 highlights a turbulent road. For Q2 FY25, the adjusted EBITDA (Ex-ESOP) loss was consolidated to INR 0.5 crore, a whiff of improvement compared to the INR 6.6 crore loss in Q1 FY25 and the INR 8.2 crore loss recorded in Q2 FY24. Similarly, the Non-GAAP (generally accepted accounting principles ) profit before tax (PBT) loss also reduced to INR 3.4 crore in Q2 FY25 from INR 9.1 crore in Q1 FY25 and INR 10.1 crore in Q2 FY24.