January 20, 2017 • Volume 9 • Issue 1 • D100

How MobiKwik is realising its vision of digitising India & embracing a cashless economy

The story of Sequoia-backed Pine Presented by Labs

Fino Paytech’s alternate banking revolution

How Prime Venture Partners-backed Happay is fixing expense management Fintech

In conversation with Kalaari Capital’s Bala Srinivasa on the opportunities in India’s fintech sector

Stories from India’s most exciting fintech entrepreneurs

CONTENTS The Smart CEO // Jan 20, 2017 • Volume 9, Issue 1 16 COVER STORY

Fintechntte

Every one of the 35 fintech entrepreneurs we spoke to, is bridging a gap in two segments; for MSMEs, the glaring gap in availability of finance, and for consumers, improving penetration of basic financial products. But, how conducive is the Indian ecosystem to support this growth?

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January 20, 2017 • Volume 9 • Issue 1

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6 • The Smart CEO | January 2017 Editor’s Note

This Suffix Called ‘Tech’

Recently, I had a very interesting conversation with a veteran Government, the unexpected catalyst: “There is no other banker and former CEO of a bank, on India’s startup ecosystem. country that has 24/7 real time, instant and low cost payment The topic of conversation was the ‘tech’ suffix – foodtech, infrastructure this sophisticated. UK is years behind and the US mediatech, insurancetech, fintech, healthtech, etc. – that is decades behind,” says, Lizzie Chapman, co-founder and CEO, entrepreneurs, investors and, of course, the media, seem to add Zest Money, one of the founders we interviewed. to various sectors. Everyone can win; It is not a ‘winner takes it all’ The banker, who views and analyses the entire ecosystem with sector: Kalaari Capital’s Bala Srinivasa, who recently authored a shaker of salt, was convinced that a majority of entrepreneurs a research report on the sector, says, “In the Western markets, in the ecosystem are pursuing loss-making ideas which will turn there is a near 100 per cent penetration of financial services. In profitable only at massive scale, which is often not possible for India, however, financial products are underpenetrated in almost everyone to build. any category. And, the opportunity lies in using technology and innovation to deliver financial services that can increase Further, our conversation revolved around what really was the adoption and expand the market itself.” end game going to be for a large proportion of these startups. Can some of these companies deliver stellar IPOs? Are we going The presence of experienced professionals: While there to have a Valley-style M&A ecosystem in India? And, many such are mixed opinions on the value of prior banking experience questions that we’ve now grown accustomed to. Typically, a to succeed as a fintech entrepreneur (For example, PayTM’s critic’s favorite scapegoat is often the foodtech sector, and I was Vijay Shekar Sharma is picking up his banking knowhow on the tired of hearing the same from several people I meet. job), there is no doubt that India has the advantage of having a large pool of professionals with deep understanding of financial But, this individual surprised me with a positive view on services. This, along with the technology talent pool, is critical ‘fintech’. His view was very unique, one that got me thinking for the sector. for days. He said, “I think fin-tech is probably the only tech- suffix sector where it is not a ‘winner takes it all’ market.” He backed it up with some rough data, all essentially pointing to the Investor Interest: Of course, probably the most important fact that financial services in India is largely unpenetrated and booster for the sector comes from the venture capital ecosystem over 400 million people could use the services of digital credit, which has invested USD 734 million into the fintech sector peer-to-peer lending, access to MSME finance, mobile money in 2016, compared to USD 552 million in 2015 (this, without transfers, wallets, and so on. He believed, unlike in foodtech or including Alibaba’s strategic investment in PayTM) (Source: even e-commerce, where two or three players would dominate, Venture Intelligence). fintech could potentially have multiple market leaders in various verticals and horizontals. In short, at Smart CEO, we’re certainly looking forward to a fintech revolution of sorts, maybe like the telecom revolution we This conversation gave us the impetus to pursue an elaborate witnessed last decade. The mobile phone certainly empowered cover story on the fintech sector. We simply said we’ll go out the whole Indian population, and if our fintech entrepreneurs and and talk to 35 entrepreneurs across the many sub-sectors. These investors move right, we may be in for something special. include companies building mobile wallets, platforms for MSME lending, technology-driven financial inclusion firms, insurance- Read on. We hope you enjoy reading this edition. Here’s wishing tech firms, payment infrastructure companies, data-driven you a wonderful, healthy, exciting 2017. companies aiding with credit score calculations, peer-to-peer lending, EMI payment enablers, and many such startups. Sincerely, Going by the conversations we had with these entrepreneurs, Prem Sivakumaran one aspect is very clear – there is indeed a fintech wave in the (Editor) country and predominantly there are four factors driving it.

January 2017 | The Smart CEO • 7 COVER STORY - FINTECH 35

The Fintech Wav e

8 • The Smart CEO | January 2017 Every one of the 35 fintech entrepreneurs we spoke to, is bridging a gap in two segments; for MSMEs, the glaring gap in availability of finance, and for consumers, improving penetration of basic financial products. But, how conducive is the Indian ecosystem to support this growth?

What is the one thing in common among and MobiKwik – are among the key Razorpay, Ezetap, Capital Float and innovations disrupting India’s financial Paytm, aside from the fact that they all services sector. So, what did the Indian fall under the ‘fintech’ category? If you startups do right (in India) that its Western observe their business models closely, you counterparts couldn’t? What makes India would notice that each of these ventures and Indian fintech businesses unique from find resonance and similarity with their the rest of the world? How different is Western and Asian counterparts. our addressable market? To understand this, let’s dig deeper into how the sector Let’s take the all too familiar Paytm, has evolved in the past decade and the for example. Founded initially as an regulations that govern it. internet venture under the banner One97 Communications, the company operated Understanding Fintech in India as a mobile recharge website, until the While the definition of fintech still mobile revolution post 2010 amped its remains a blur, it can be broadly defined growth with a foray into mobile VAS, as the evolving convergence of finance mobile commerce and primarily, mobile and technology, especially of 21st century payments & wallets, thus making it an businesses which create newer and more Indian counterpart to China’s Alipay. So innovative technologies to compete with is the case with Bengaluru-based Ezetap, and/or work alongside traditional banking which is capitalising on India’s one billion institutions and intermediaries, to deliver mobile users to build universal, electronic plug and play devices, creating what Square has built in the U.S. India is seeing a rise in another But, one may ask, when global companies form of partnership between banks have become market leaders in sectors like e-commerce, giving their Indian and fintech companies. The recent, counterparts a serious run for their money, notable ones include Capital Float’s why can’t the Stripes and Lending Clubs of the West do the same? The answer lies collaboration with IDFC Bank to in an old lesson that US-based PayPal extend digital lending to more (online payments company) learnt when it attempted to introduce India to a wallet small businesses in India, Yes Bank’s service, which allows the customer to partnership with NiYO to revolutionise hold money in the wallet indefinitely. The RBI, not too pleased with its proposition, employee benefits ecosystem in India, introduced regulations which mandated and ToneTag’s partnership with HDFC customers to earn not more than US $500 per allowance and transfer the cash to facilitate proximity payments to an Indian bank within seven days of to the latter’s three lakh partner receiving the payment. merchants. Ironically, today, wallets – led by PayTM

January 2017 | The Smart CEO • 9 COVER STORY - FINTECH 35

PE/VC Investments in Fintech Space

800 80 700 $ 734 70 THE FINTECH WAVE AND 600 62 mn 60 500 $ 552 50 OPPORTUNITY 400 mn 43 40 300 30

200 20 No. Of Deals The unique opportunity to serve an underpenetrated 100 10 Line represents market, where basic financial

Amount(US$M) 0 0 No.of deals products is yet to reach over 2015* 2016 400 million people

* Excludes an investment of US $677 million in 2015 from Alibaba in One97 Communications

Data Source: Venture Intelligence

last mile financial services to customers. now is; will Indian banks, especially Investor interest across PSUs, move fast enough to benefit from various sub-sectors within But, what makes India unique? this? As Kalaari’s Srinivasa opines, fintech “Compared to fintech companies in “There is good innovation available that the West, where there is a near 100 per can immediately help improve various cent penetration of financial services in bank processes. However, banks need many areas, India is still grappling with to change the perception of being hard a 400 million population which has little to work with – contract terms, speed of or no access to various basic financial execution, and pricing for example, to products including savings bank accounts, create an environment where start-ups Government initiatives like insurance and access to personal loans,” can build scalable businesses servicing India Stack, UPI, etc. which says Bala Srinivasa, Partner at VC firm incumbent banks.” Kalaari Capital. enable digitization and laying Working with banks a wonderful platform for firms Adding to this, all these years India Incidentally, it’s not all closed doors to build on has also lacked a broad-based financial for banks. Some have already taken the infrastructure that companies in the West first steps to welcome this change with rode on. This is currently being tackled an open mind. Take Mumbai-based by the Government with the introduction CreditVidya for instance. Every time an of India Stack, Aadhar and Pradhan NBFC, a bank or a lender wants to initiate A robust talent ecosystem Mantri Jan Dhan Yojana (under which 250 a loan, it sends the borrower’s details to million+ bank accounts have been created CreditVidya, which in turn uses traditional – with skill sets covering so far). and alternate credit insights from 10,000+ banking processes and data points of each customer (borrower), technology – to be shaped up With a financial infrastructure in place, on to arrive at a credit score. Traditionally, over time one hand, and newer technologies being there was no simplified data-driven way to introduced by fintech companies on the measure credit worthiness. other, the sector is taking strong strides in the right direction. However, the question Similarly, Aditya Birla Money

10 • The Smart CEO | January 2017 PE/VC Investments in Fintech Space (By Sector)

2016 US$ 110m US$ 103m PAYMENTS 17 12 LENDING Deals Deals US$ 25m OTHERS US$ 105m 4 19 Deals PERSONAL FINANCE Deals 2015 11 21 PAYMENTS Deals Deals US$ m 577 US$ 238m LENDING 11 10 Deals OTHERS Deals

PERSONAL FINANCE US$ 22m US$ 106m

Data Source: Venture Intelligence

MyUniverse allows any customer with Keeping these perspectives in mind, for startups, including Paytm and Freecharge any number of bank accounts to track this cover story, we approach fintech emerge in India. In 2016, according to the all their money in one place, get advice from an entrepreneurial perspective and report, there are over 300 angel or VC- on what to do with the money and interviewed founders and CEOs of 35 backed fintech firms. convert the advice to action, essentially such companies in India. Our list includes transacting in a paperless manner. As an companies from the various sub-sectors In terms of investments in the sector, individual, it eases the way you manage of fintech across verticals (digital lending, US $13 million was invested in fintech your own money, even with a traditional insurance tech, wallets, financial inclusion firms in 2010, and this touched US $1.4 enterprise like Aditya Birla Money. enablers, payment banks, personal billion in 2015. Of course, this included finance management and EMI enablers) Alibaba’s US $500 million strategic At a broader level, India is also seeing and horizontals (security software investment into PayTM; nevertheless, a rise in another form of partnership providers, chat bots for financial services, indicating rapid growth in investor interest between banks and fintech companies. payment infrastructure firms). From our in the sector. The recent, notable ones include Capital observations, while the vertical players Float’s collaboration with IDFC Bank seem to go after a clear target market Overall, two broad problems prevail. to extend digital lending to more serving either a consumer or merchants For MSMEs, there is a glaring gap in small businesses in India, Yes Bank’s or an SME, the horizontal players are availability of finance. From a consumer partnership with NiYO to revolutionise enabling various banks, financial services perspective, penetration of basic financial employee benefits ecosystem in India, firms and fintech startups with their tools products is still very low. Can fintech and ToneTag’s partnership with HDFC and technology like chat bots and credit firms help bridge these gaps? That is the to facilitate proximity payments to the data points. question every company on our Fintech latter’s three lakh partner merchants. On 35 list is gearing up to answer. If the the third front, banks are also creating Let’s look into some numbers to answer to both these questions is in the platforms and incubators to identify and understand the entrepreneurial gamut in affirmative, the next Airtel could very well support emerging fintech startups. fintech better. According to an October from this sector. And, fintech could very 2016 Traxcn Research Report on the well be the next big localized revolution The Road Ahead for Entrepreneurs Fintech Landscape in India, 2010 saw 60 after telecom.

January 2017 | The Smart CEO • 11 COVER STORY - FINTECH 35

OPPORTUNITY LIES IN USING TECHNOLOGY AND INNOVATION TO DELIVER FINANCIAL SERVICES THAT CAN INCREASE ADOPTION AND EXPAND THE MARKET ITSELF

Bala Srinivasa, Partner, Kalaari Capital, helps us understand the nuances of the fintech sector and the various opportunities available for the entrepreneurs.

POORNIMA KAVLEKAR

12 • The Smart CEO | January 2017 For Bala Srinivasa, the fact that he is of the fintech sector and the various able to get a ringside view of the bestF opportunities available for entrepreneurs. and brightest ideas and a chance to work with brilliant entrepreneurs reimagining Fintech is a very general definition almost every market space in India, is for companies falling under one of the key factors that makes his job as the Partner of Kalaari Capital very this sector. There is payments, exciting. He has been involved with personal finance, lending, banking young technology companies for more technology, data analytics, and than 20 years and was part of management so on. And, these are defined by teams at two successful analytics startups certain dynamics of their own. (in the U.S. and India), where he ran the sales, marketing and product management a.What really unites all these sub-sectors functions. His interest in the history (or does it not) and out of this wide range of technology and entrepreneur-led of sectors, which ones do you think will innovation that creates new market spaces have strong growth going forward? is quite evident in the kind of companies he supports and the sectors that he works Fintech is simply an umbrella term for in. Some of his portfolio companies technology startups taking on traditional BALA SRINIVASA, PARTNER, include Credit Vidya, Afford Plan, Active. financial services. There are a dozens of KALAARI CAPITAL ai, Instamojo, Mettl, Rubique and Scoop sub-segments within financial services. Whoop. Most banking and financial services are still run based on systems and processes In fact, Bala, who spent the first part of that were developed decades ago. Fintech his career as an equity analyst in Silicon startups are in the business of reimagining Valley has a big focus on the financial these financial products/processes using technology space. He and his team have new technology, and a higher focus on recently come out with a report titled consumer experience. “Fintech India innovation for the next 400 million”, where they have surveyed over b. What gaps do you see in the fintech 350 companies and identified trends for sector that a new entrepreneur can the fintech entrepreneurs to build upon. capitalise on? “We expect to lot action to take place in the fintech sector in 2017, thanks to Opportunities in fintech are different in demonetization, GST and the growing the West when compared to in India. In business momentum of fintech startups,” the Western markets, there is a near 100 said Bala. per cent penetration of financial services in many areas such as consumer lending, Continuing on this note, in this interview, insurance, small business credit, credit Bala helps us understand the nuances scores and such. Fintech in these markets

January 2017 | The Smart CEO • 13 COVER STORY - FINTECH 35

is more about improving consumer – contract terms, speed of execution, is innovation around building segment experience with better technology and and pricing for example, to create an specific vertical products unique to gaining market share from incumbents. environment where start-ups can build India and the needs of the next 400 In India, however, financial services is a scalable businesses servicing incumbent million customers. We are seeing some very underpenetrated offering in almost banks. early examples that include small ticket any category. And, the opportunity lies unsecured loans, pre-paid plans for in using technology and innovation to How advanced is the Indian fintech single medical procedures, instant point deliver financial services that can increase of sale credit, pay per day insurance, sector when compared to the global micro-investment products among others. adoption and expand the market itself. financial hubs of the world? And One of the largest opportunities in India The key for these startups is to deeply is around improving credit availability what lessons do you think India understand the segment and create for consumers, small businesses, supply still has left to learn from the solutions that are usable, affordable and chains, healthcare financing and such. global fintech leaders? profitable at a micro offering level. The same applies for the SME market where There are two types of fintech The fintech sector in India is fairly young there are a plethora of opportunities to satisfy strong demand for small business companies – ones that collaborate but the underpinnings of the India fintech opportunities are very different. In my working capital, trade finance, and leasing with banks, and the others which opinion, there aren’t too many lessons compete with them. How do you we can take from other markets, other The second play is around building think banks can integrate these than the fact that fintech disruption is horizontal platforms that assist incumbent services and work together in real. It manifests itself differently in large financial services providers and the scaling up their business in the economies based on local constraints and vertical fintech start-ups discussed earlier. For example, we see credit scoring using coming years? challenges. The combination of the India Stack (Aadhar, eKYC, UPI and digital alternate data (transactional, social, geo- spatial, etc.) as being a horizontal utility Few large economies can expect to see locker) and smartphone penetration, over the India stack. Similarly, there is a the kind of financial services growth along with government impetus (GST, big opportunity to become the consumer that India is likely to witness over the Demonetizaton, Jan Dhan accounts) has interface of choice to manage UPI based next decade. This represents a massive created an unprecedented environment phone-to-phone payments. There are also opportunity for incumbent banks and for growth in digital financial services. white spaces in managing digital customer new providers. The question is whether Within the next decade, India will have interaction via messaging platforms, or Indian banks, especially PSUs, can one of the the world’s most advanced horizontal platforms that can manage the move fast enough to benefit from this. financial infrastructure, with hundreds of flow of verified and secure documents on Senior leadership at most banks are millions of Indians using digital financial top of the government-approved digital aware of the opportunity and risks and products that significantly enhance their locker program. have made innovation/technology a lives, in turn boosting economic growth. key focus area at the board level. The Fintech companies in India do have the challenge is in translating this into action What kind of opportunities do dual challenge of small ticket sizes and and also aligning it with the rest of the you think fintech companies can needing to scale to high volumes to build organization. While many banks have capitalise on for their growth in the sustainable businesses. We see a lot of started accelerators, pilot programs with coming years? Alternatively, what focus on technology and product but startups and are hosting demo days, are some challenges this sector is significant gaps in go-to-market strategy there is still significant scepticism in that can drive large volume. Each Indian both camps. There is good innovation likely to face? fintech start-up has to solve for this based available that can immediately help on its product and customer segment. improve various bank processes. In our view there are two broad types However, banks need to change the of market opportunities that present perception of being hard to work with themselves at this juncture. The first

14 • The Smart CEO | January 2017

COVER STORY - FINTECH 35 01 A chatbot for banks Founded by banking veterans, Active.ai wants to enable better customer experience for banks using artificial intelligence.

S Meera

Singapore-headquartered Active.ai, is Siri and various messaging platforms. working towards a grand vision of using In India, the company serves several AI-based Chatbots to help banks not customers including Axis Bank and it is only handle customer service but also focused on expanding its customer base in eventually complete transactions. “Our Asia and North America. expertise enables our platform to be deeply connected to a financial platform In November 2016, the company raised via APIs or messaging interfaces, thereby US $3.5 million from Kalaari Capital automating customer service at a lower and IDG Ventures India, with the goal of cost,” explains Ravi Shankar, co-founder becominga significant player in banking and CEO, who was formerly group technology, serving a few hundred million executive vice president at Yes Bank. He customers in the next three years. In considers the team’s deep expertise of short, it wants to become a leader in the over two decades in Financial Technology RAVI SHANKAR, CO-FOUNDER, messaging-based mobile banking space. (before the word ‘fintech’ became ACTIVE.AI popular) as a key differentiator for the SNAPSHOT firm. So we built a platform which is easy to use and simplifies banking,” he explains. Active.ai Challenges and Opportunities He details it further, calling it as easy “In our industry, we are constantly as sending a message on Facebook challenged by regulations, customer messenger to a friend. “Now imagine adoption to newer technologies and you need to know your account balance. Founders: competing with big and established On our platform, all you need to do is Ravi Shankar, Shankar Narayanan technology players,” says he. This apart, send a message via messenger to your security and data protection are key bank bot – “What’s my balance?”Or, aspects that need to be built into any simply, ‘Balance kya hai?’” The platform banking technology product. will connect to the customer’s bank and get that information. Especially Funding: US $3 million from Kalaari Capital, IDG Of course, there are also several from a financial inclusion perspective, opportunities emerging – including he believes this (using bots) will be the Ventures; US $ 0.5 million from Kalaari’s mobile and messaging adoption, which simplest way to get millions of customers incubator, KStart are expected to completely disrupt the banking. way banking is done. “We understand customers are struggling with solutions Active.ai can be used to get an account out there today which are clunky and balance, pay bills and even transfer Focus: payments, through simple messages. The require a certain knowledge to get SaaS, AI-based engagement platform for banking processes or payments done. SaaS-based platform can be integrated with Facebook Messenger, Amazon Echo, financial services companies

16 • The Smart CEO | January 2017 January 2017 | The Smart CEO • 17 COVER STORY - FINTECH 35 02 Making BFSI software agile

Founded by Kalpesh Desai, the former COO of 3i Infotech EMEA, Agile Financial Technologies (Agile FT) has made a serious dent on the InsuranceTech segment, thanks to the domain expertise of its founder.

S Meera

insurance companies operating under one entity, these enterprises had to select multiple vendors to cater to their various We have proudly seen start-up product lines.” In addition, they would insurance companies who had find providers who would only be focused on policy administration or claims signed up for our systems in management. Similarly, asset managers 2008, become market leaders in had to invest in different systems for the the regions they operate in front, mid and back-office operations. With Agile FT’s platform – called Agilis – these organisations can not only cut their operating cost for software systems, but A also transform their processes and adapt to digital channels rapidly. BancAssurance platform is a pioneer Agile Financial Technologies (Agile in insurance product distribution for FT), with its offices in Dubai, New York As a result, Agile has seen many banks covering front, mid and back- and Mumbai, was launched in 2008 to customers – be it small enterprises, start- office functionality. Agilis Investment cater to the BFSI sector with its core up asset managers or insurers – transition Management covers wealth and fund fintech products for insurance, investment from larger players to Agile FT’s management and is used by large private management, bancassurance and financial platform. banks in the Middle East and Africa. inclusion. Agile FT was initially funded with seed capital from angels and the The Pillars Over 95 per cent of Agile’s business is company’s founder - Kalpesh Desai and Agilis is a unified brand name across sourced through channel partners who are subsequently raised a Series-A of US $5.7 all its product suites, including core enabled to sell, service and support their million led by IDG Ventures. offerings for insurance, bancassurance products, and over 75 per cent of their and investment management. One of projects are executed by channel partners. The BFSI sector had to contend with the few global software providers in This has allowed the venture to remain procuring fragmented, disjointed systems the InsuranceTech space, Agile has a lean and rapidly expand its customer leaving institutions with no choice but complete offering for general (P&C/ footprint across 22 countries in North to engage multiple software providers to Non-Life), life, pensions and health America, Africa, ME and South East Asia. automate their operations. Desai says, insurance covering the entire business Agile FT has a few marquee customers in “In the insurance sector in emerging process of distribution, underwriting, India, where the preference is for tailor- markets, where you find composite claims, reinsurance and accounting. Its made systems, believes the founder.

18 • The Smart CEO | January 2017 a clutch. Financial firms, including Agile FT offers both a perpetual licensing insurance companies, will have to quickly model (where the customers pay upfront transition to digital channels and digital SNAPSHOT for their licenses and pay an annual payments, and when they realize that the support fee every year), and an annuity current platforms being used to drive their Agile Financial Technologies licensing model (where customers sign up business need to be turned around, there for limited term licenses which are paid will be a renewed opportunity for fintech annually). It has also launched a private product companies such as Agile FT to cloud offering that enables customers step into the space,” he opines. Founded in to leverage a “digital-ready” platform 2008 without having to invest in capex and The longer term vision transitioning to a usage based pricing Agile serves CEOs of mid-market model. financial institutions, providing them with a foundation to grow their businesses. Founded by: Desai expects that with demonetization, “We have seen start-up insurance the market dynamics are changing. “The companies who had signed up for our Kalpesh Desai long term effect of demonetization will systems in 2008 become market leaders in be good for FinTech companies, even the regions they operate in. Our customers enterprises like ours who are not in the have won accolades for client servicing, payment space directly. “ According and for the best use of technology, and Funded by: to him, money has been raked into the this is what keeps giving us the energy to Angel investors, Founder, IDG Ventures banking system, and lending will soon push ourselves to the next frontier,” he receive a thrust, also bringing down points out. inflation. This will give rise to new wealth being generated and the demand Agile FT is continuing to see growth in Focus: for long term insurance (life), health and emerging markets across the Americas, investment products. “Digital will become Europe, ME, Africa and Asia and intends BFSI software products with a special focus on the new norm, and we have already seen to continue growing at its pace of 22 per Insurance Tech and Asset Management these paradigms shifting gears without cent per annum.

January 2017 | The Smart CEO • 19 COVER STORY - FINTECH 35 03 Deal makers go digital

With its mid-market deal origination platform, BankerBay aims to challenge the traditional means by which capital is sought world over. Currently, it brokers over 600 deals a month and has recently entered the Chinese market.

Divya M Chandramouli

Imagine a Tinder for deals in the banking world. Well, that’s just what BankerBay is; an investment banking deal origination platform that uses a complex algorithmic The information flow in the middle engine to match those in need of capital market was and still is the most with global institutional investors of capital for private equity, M&A and real fragmented, so we felt this is estate transactions. The company, with where we can offer the greatest a base in Singapore and Bengaluru, was founded in 2014 by lawyer Ash Narain value. and Romesh Jayawickrama with the latter holding investment banking experience of over 18 years. At present, BankerBay has a global presence including North I America, Western Europe and Asia-Pacific and its focus area is the mid-market segment which sees transaction values and funds alike.” He elaborates on the up to US$ 250 million. “The information systemic problems the industry faces flow in the middle market was and still where processes are predicated on human is the most fragmented, so we felt this is capital and since the global financial where we can offer the greatest value,” crisis of 2008, a large chunk of this reasons Jayawickrama. human capital has been removed, leaving behind a void in the system. A lack of Challenging tradition transparency in how deals are made only Speaking on the genesis of the idea, CEO exacerbates the problem often leaving Jayawickrama says, “This whole process meritorious investors in the lurch. This has traditionally run on a who-you- realisation prompted the founders to apply know basis, resulting in very narrow and a combination of technology and the study often sub-optimal choices for corporates of contemporary consumer behaviour to arrive at the company’s current model

20 • The Smart CEO | January 2017 which offers a wide range of subscriptions the size of the market, the opportunity to SNAPSHOT for capital seekers to choose from. Today, make a significant impact is huge,” he BankerBay BankerBay receives over 600 new deals a says. Beyond China, in the first half of the month, with a deal value of over US $18 next fiscal, BankerBay intends to open billion per month. “We have over 12,000 an office in London and cater more to users with 500-600 new users joining the the U.K. and European markets. Having platform every month and we also receive made a dynamic start, the key to its Founders: consistent deal flow from 145 countries,” future success lies in constantly evolving Ash Narain and Romesh Jayawickrama adds Jayawickrama. As the company and moving up the value curve with its facilitates cross-border transactions, it was offering. faced with the difficulty of gaining critical mass in multiple geographies and sectors Year: simultaneously and it has recently gained 2014 momentum to tide over this challenge. While the regulations and policies remain challenges for all the China in the mix players in the financial market, In this fiscal, Bankerbay aims to open an office in Shangai and make its presence they don’t impact the ambitions Concept: felt in China. Currently, China is one of of budding companies like us and BankerBay is an investment banking deal the top three sources of foreign investment origination platform that matches those in and Jayawickrama feels that providing an given the size of the market, the need of capital with investors enterprise solution to investors in China opportunity to make a significant will streamline deal-making between impact is huge it and the rest of the world. “While the regulations and policies remain challenges Investment: for all the players in the financial market, Raised US$ 5 million from unnamed investors, they don’t impact the ambitions of budding companies like us and given over three rounds

January 2017 | The Smart CEO • 21 COVER STORY - FINTECH 35 04 Easy Access to Foreign Exchange Bookmyforex.com has a slew of offerings related to foreign exchange, aimed at making travelling abroad easy for Indians.

S Meera

“When you are travelling, right from Initially, the services were semi-automatic booking rooms to hiring a porter, you with BPOs roped in to take care of the rest could order online. But the currency of the flow. But now, it is fully automated that you need to pay for all this – you and has registered Rs. 500 crore worth cannot!”Sudarshan Motwani, currently, of transactions this year. It has 50 banks the founder and CEO of BookMyForex. as channel partners in 5000 locations com, was struck by this irony, that led him across 650 cities. In 185 cities, it offers to take the entrepreneurial plunge. offer door-to-door delivery through its 50 SUDARSHAN MOTWANI, FOUNDER & channel partners. CEO, BOOKMYFOREX Of course, Motwani was an expert in foreign exchange processes; After all External Capital, the key on building good underlying technology he was head of foreign exchange at Bookmyforex.com had the first mover and digital marketing processes. In terms ING Vysya Bank and prior to that led advantage, but also the disadvantage of of turnover, the company clocks Rs. the practice at HDFC. His son, Nitin not having any precedents to benchmark 16 crore month on month and expects Motwani, had an entrepreneurial bent it against. As a result, getting funding to touch Rs. 100 crore by May. While of mind and urged his father to turn to became challenging. The first break came initially recruitment was a challenge, now business, and thus the father-son duo when the promoter of a private bank many are eager to join and the company launched BookMyForex. where Motwani had worked invested has very little attrition, says the founder. half a million dollars in the venture. In A Step at a Time February 2016, they received US $2 “We have delivered on our promise to In the first year, the bootstrapped company million from Aditya Parekh-led Faering customers, and that is why our greatest had an exclusive arrangement with Axis Capital. It is now preparing for a Series B, marketing tool has been word of mouth,” bank to create a flow on bookmyforex. and is positive, as many have expressed adds Motwani. com to make buying forex easy online. A interest in investing already. Its positive customer could create a self-declaration unit economics with 85 per cent lead-to- SNAPSHOT and make the payment, which would be conversion rate also works in its favour. Bookmyforex.com reflected in the treasury. But as it was bootstrapped, the solution could not be Offerings and Reach Started: scaled. “For the first two years, we did not have any competition. Then many came and 2013 From 2014 onwards, the company started went. Now most money changers are offering a wider range of services such online but are struggling because of Funded: as buying and selling forex, making differential rates between their stores and Angel Investor, Faering Capital remittances, travelers’ cheque – anything the web,” explains Motwani. to do with making currency available Focus: during travels abroad. As must be the case of any digital venture, Digital Platform to convert foreign exchange Bookmyforex.com has put a lot of focus

22 • The Smart CEO | January 2017

COVER STORY - FINTECH 35 05 Scaling up digital lending

Capital Float is an online lending platform which provides collateral-free working capital loans to small-time entrepreneurs, with a focus on Tier II and Tier III regions as well.

Madhumita Prabhakar

Gaurav Hinduja and Sashank Rishyasringa founded Capital Float in 2013, taking inspiration from the US- based Lending Club, which enables G businesses to obtain loans and investors to purchase notes backed by payments made on loans. It was founded as an online lending platform to support small time entrepreneurs in India. “The SMEs we address lie in the interim, between ones supported by MFIs and ones supported by large banks. They face several challenges in accessing finance, and our goal is to actively reach out to these segments, particularly in the Tier II and Tier III regions,” indicates Rishyasringa.

The company currently offers four products; online seller finance for merchants transacting with ecommerce companies, term finance for manufacturers, traders and distributors, invoice finance and merchant cash SASHANK RISHYASRINGA AND GAURAV HINDUJA, FOUNDERS, CAPITAL FLOAT advance.

24 • The Smart CEO | January 2017 Unlike traditional lenders, who rely on experience, profitability and collaterals to determine loan processing, Capital Float analyses the credit worthiness of a business by understanding the profile of the promoter (their personal attitude towards business, their past business decisions and responsibility towards managing credit), their customer sentiment (reviews on online and offline platforms) and psychometric tests, to name a few SNAPSHOT Capital Float Typically, the company follows a three- run by his family) and his networks within step process to disburse loans to its the industry, and feet on street marketing. customer. First, the customer files an Once the platform started gaining traction Founder: application online, one that the founders among its customers, the company later Gaurav Hinduja and Sashank Rishyasringa say doesn’t take more than ten minutes. partnered with ecommerce portals such as Then, its team underwrites the customer’s Flipkart, Myntra and Snapdeal, and more business, analyses data sets provided by recently with Via.com, IDFC Bank and the company and from external sources, to PoS vendors such as mSwipe and Pine determine the feasibility of the business. Labs to understand the challenges faced Year: Lastly, it approves the loan, depending by them and provide them with collateral- 2013 on the customer’s nature of business and free working capital. requirement. Till date, the company has extended Carving A Niche In The Market financial support of Rs. 1,000 crore to City: Unlike traditional lenders, who rely on over 6,000 customers. Its loan size ranges Bengaluru experience, profitability and collaterals from Rs. 2 lakh to Rs. one crore, with the to determine loan processing, Capital average loan size being around Rs. 10 Float analyses the credit worthiness lakh to Rs. 15 lakh. On this, it charges an of a business through multiple other interest rate of 16 per cent to 20 per cent. parameters. For example, it understands Investors: the profile of the promoter (their personal In the next three years, the company Creation Investments Capital Management attitude towards business, their past has set clear goals for itself; to further LLC,Sequoia Capital, SAIF Partners and Aspada business decisions and responsibility scale up the business across the segment Investments towards managing credit), their customer and customers, to sustain product sentiment (reviews on online and offline innovation and launch new features (such platforms) and psychometric tests, to as loans for Uber drivers, travel agents name a few. and such) every quarter, and improve Products: its tech platform to provide greater Online seller finance, term finance, invoice Being a relatively new player in the customer experience. “In such a complex lending space three years ago, what ecosystem, our one big challenge and finance and merchant cash advance helped Capital Float earn its first ambition is to be a one stop shop for customers was Hinduja’s prior experience SMEs and offer them financial assistance in Gokaldas Exports (a garment business for every conceivable scenario.”

January 2017 | The Smart CEO • 25 COVER STORY - FINTECH 35 06

Attention to detail, the key Citrus Payments, which was recently acquired by Naspers-owned PayU, offers a range of digital payment solutions with detailed reporting and analytics especially for merchants. Jitendra Gupta, the founder believes that, attention to the finer needs of merchants and consumers is critical to winning their loyalty.

S Meera J Jitendra Gupta, now the founder of capital dollars chasing good startups. He community. It is like a real wallet, Citrus Payments, had over a decade had had his eureka moment and Citrus containing provision to load cash, credit of experience in the financial services Payments was born. card and ID. After the first transaction, industry across investment banking, details are stored for faster processing the retail and corporate banking. Through The Solution next time. these years, he got a good perspective of In 2011, Gupta started Citrus Pay with payment processes, the needs of banks Angel funding to develop a solution to Soon after, consumers too started signing and merchants and the typical challenges bridge the expectations of merchants up for the Citrus Wallet and in 2012, the involved. Sometime in 2010, Gupta took versus what banks were offering. “Even company raised US $1.8 million from a break to explore some entrepreneurship basics such as connectivity issues and Sequoia Capital. opportunities. He realized that the reporting were not being addressed. We payments industry in India needed a created software and connectivity layers Recently, the company got bought over makeover. And, globally – in the US, to address known issues,” explains the by PayU, an online payments company Europe and China – payments tech was founder. This led to a huge adoption of owned by South Africa’s Naspers, for US a booming sector, with ton of venture Citrus’ payment solutions by the merchant $130 million and offers a comprehensive

26 • The Smart CEO | January 2017 range of digital payment solutions, The process for onboarding of merchants including UPI – unified payment has also been simplified and within interface. This makes money movement 10 minutes, they can start receiving between individuals and individual to payments. Gupta is of the firm belief banks easier and all it needs is creating a that paying attention to the nitty-gritty is virtual payment address that can be linked critical to win in the payments space, and to any bank, and enables cross platform that has been Citrus’ strategy all through. payment. Fintech Challenges The other area the company is focusing on “One of the greatest challenges in this is analytics, since data plays an important segment is that you cannot do it alone role today. For example, with this, it but need a very supportive ecosystem – Our focus is to create solutions also hopes to recreate the trust common banks, compliance, technology, to name between kirana stores and their regular a few key aspects. The time to market is that customers can intuitively use customers, where buying on credit is dependent on the speed of these partners rather than make them change their common practice. “Our focus is to create as well. thinking solutions that customers can intuitively use rather than make them change their The second challenge has been the kind thinking,” explains Gupta. of noise other players make without necessarily having the backing of a sound product. This affects consumer perception SNAPSHOT and impacts the market. “Say, for example, Wallet is only 2 per cent of the Citrus Payments acquired by Payu Biz total digital payment market, but because of this miscommunication, the media attention turns to that,” he points out.

Started: Moving Forward 2011 Gupta has set his sights high but he believes it is doable – create a digital bank in India which requires no visits from the customer. “We expect to achieve this through our app. This segment is going Focus: to experience lot of disruptions,” he says Digital payments with confidence. Leveraging experience and intelligence around consumer behavior, personalization of services will enhance the banking experience for Funds: consumers, all this will be done digitally, Angel, Sequoia Capital, Bought over by Payu explains Gupta, as he wraps up. JITENDRA GUPTA, CEO, PAYU BIZ

January 2017 | The Smart CEO • 27 COVER STORY - FINTECH 35

07 The Business of E-Tax Filing

ClearTax was initially founded with a goal of making tax filings easy for individuals, SMBs and large corporations. However, currently, with a million end users and 20,000 CAs and employees using its service, it is now introducing a slew of B2B and B2C products such as helping users maximise tax savings and aiding startups in filing for incorporation at ease.

Madhumita Prabhakar

In 2011, Archit Gupta had a simple goal and the numberI of filings began to double among its launches is the ClearTax for his maiden venture, Cleartax; to build every year. The startup introduced a slew Startup, a program that equips a navigable, easy-to-understand tax filing of B2B and B2C products and features entrepreneurs with the required tools to platform for working professionals who such as a self-filing platform for business manage their business. In other words, were still learning the ropes on pay slips, returns, determining next steps when a for a flat fee of under Rs. 20,000, the PAN cards, Form 16S, ITR 4S and the customer receives a demand notice from company gives entrepreneurs access to a like. the Government, ClearSave, a robot web interface with a step-by-step guide advisory platform which helps users for company registration, financing, IP, The Pivot maximize their tax savings and ClearTDS, government incentives, organization What began as a DIY platform for tax which helps SMB’s/CA’s generate Form structure and the like. filing, grew into a silo of allied products 16s and prepare and file TDS Returns. when Chartered Accountants, SMBs, The External Factor NRIs and the like took to the platform, The most recent and first-of-its-kind Although competing neck-to-neck with

28 • The Smart CEO | January 2017 ARCHIT GUPTA, FOUNDER, CLEARTAX

SNAPSHOT competitors such as Tax Mantra and Cleartax MakeYourTax, Gupta is clear that its goal for ClearTax lies in creating a viable alternate for the tax department’s excel/ Java-based software. “We want to focus We want to focus on simplicity and on simplicity and design of our software Year: design of our software and user and user experience, and encourage users 2011 to file their own returns instead of relying experience, and encourage users on chartered accountants or other offline to file their own returns instead of channels,” he says. relying on chartered accountants or City: With a million end users and 20,000 CAs other offline channels Bengaluru and employees using its service, ClearTax is generating revenues by offering paid and assisted plans to businesses and NRIs, and charging SMBs and corporations for using its products for TDS and Form-16 Concept: generation. An online platform for individuals, businesses and NRIs to file their taxes In fact, with the recent demonetization move by the Central Government, and From the current 1.2 million tax filings the likely introduction of the GST bill, (between April and August 2016), the founder notes that more customers Gupta hopes that the lesson he learnt at Investors: have resorted to declaring their revenues Y-Combinator; of creating something Y Combinator, Max Levchin, the PayPal and filing taxes more meticulously. “The people want; will lead him to record five co-founder, Neeraj Arora, business head demonetization move has pushed more million tax filings in roughly the next three years. “Of course, with the right of Whatsapp, Navan Ravikant, AngelList’s people into the mainstream and that’s driving higher customer influx for us. team and products, we’re sure we’ll fulfill founder, Founders Fund, Sequoia Capital, SAIF With GST, we hope to capture at least 18 our goals as planned,” he states on a Partners to 20 per cent of the market,” Gupta notes. concluding note.

January 2017 | The Smart CEO • 29 COVER STORY - FINTECH 35 08

Covering all the angles

Accel & SAIF-backed Coverfox, an online insurance portal that sells general insurance products, has understood that the only way to fuel the growth in this sector is by making it extremely transparent to understand and easy to transact. With this built into its solution, the company is all set to touch Rs. 1,000 crore in premium billing by 2019.

Poornima Kavlekar W When Devendra Rane and Varun Dua company created middleware and web figure is minuscule compared to the world started their entrepreneurial journey in experiences for users to facilitate online average in terms of customer base and 2011 with Glitterbug Technologies, they transactions. With e-commerce catching premiums, there is tremendous potential were building middleware technologies up fast and customers willing to buy in the sector that can be achieved in the for leading insurance companies. Then, complicated electronic gadgets online, next few years,” opines Dua. Insurance companies worked with legacy the founders believed that if presented technologies trying to cater to new age well, customers would find it easier to buy While the team believes that mature online customers. “We noticed that in insurance online too. growth in this sector will come when a world where customers were using general insurance sector starts growing advanced interfaces such as Gmail and India has primarily been a life insurance faster, the only way to fuel it is by making Facebook, insurance online was still a market, currently at US $60 billion and the industry extremely transparent broken experience,” says Dua. He adds, growing at 12 per cent every year. General for people to understand and transact, “We decided to take the challenge head- insurance on the other hand is currently a whether it is with respect to premiums or on and became online insurance brokers US $11.44 billion market and growing at claim settlement. with Coverfox Insurance Broking.” The 17 per cent year on year. “Given that this

30 • The Smart CEO | January 2017 Creating awareness to them without an understanding of the India’s insurance penetration is not much intricacies of the product. when compared to developed nations. “People are not aware of the features they Coverfox.com was incorporated keeping should consider while buying Insurance. these factors in mind. It is not an People are not aware of the features They find it hard to arrive at a decision Insurance broker using technology but a they should consider while buying about choosing the right plan because technology company that happens to be Insurance. They find it hard to arrive the information is not readily available, an Insurance broker currently focussed or available in long documents full of only on car, bike, home, health and travel at a decision about choosing the right jargon,” says Dua. insurance, which need minimal customer plan because the information is not support interaction and are easier to The industry has also come to believe that research and buy. readily available, or available in long Insurance is a “push product” and hence, documents full of jargon sales are largely call-centre based. “This is The company has around 200 employees, a problem for the users who end up on the who, Dua shares are a combination of receiving side of those calls,” points out experts in e-commerce, social media and Dua accurately. Many customers end up marketing, insurance, technology and user buying policies which have been pushed interaction. Every policy feature is looked at from multiple perspectives to arrive at its representation for the user in a way he/ she understands it best. The company has an internal policy scoring engine, which SNAPSHOT goes through over five dozen parameters Coverfoz for each insurance product, taking into account user demographics and giving personalized scores to each product for every user.

Founders: The one thing that the company is doing Devendra Rane and Varun Dua very differently from the other insurance aggregators / brokers is helping its customers with claims. It has a claims cell, which handholds a customer through Year: the claims process and makes everything 2012 available at their fingertips. Regulatory roadblocks “Insurance is a regulated sector and our plan was to create an e-commerce portal Concept: for insurance,” says Dua. Hence, the It is an online insurance portal that focuses on company had challenges that not just car, bike, home, health and travel insurance, e-commerce players faced, but also those which need minimal customer support compounded with regulatory clearances interaction and is easier to research and buy. from IRDA. For example, the regulation requires a minimum net worth for the applicants, so it had to raise investments with zero business, since it couldn’t have Investors: sold without a license. The company overcame these challenges from the prior Raised two rounds (Series A&B) of funds to experience the founders had in running the tune of US $14 million from Accel Partners an insurance services setup. “Investors VARUN DUA, CO-FOUNDER, (India & Global) and SAIF Partners. and the regulatory body (IRDA) liked COVERFOX.COM our product-focused approach and the

January 2017 | The Smart CEO • 31 COVER STORY - FINTECH 35

business plan, which helped us mount all in place to help them through this task, which had always been part of insurance these challenges,” says Dua. thus making this a marriage between claims services, but weren’t taken that equals.” Currently, this service is available seriously,” says Dua. He continues, Finding angel investors who understood across 11 cities - Mumbai, Delhi, “Another big opportunity that digitization insurance and regulatory norms was also Bengaluru, Kolkata, Hyderabad, Pune, is bringing to our disposal is that a lot a big challenge. However, the company Ahmedabad, Chennai, Kochi, Guwahati more auxiliary services are coming online. managed to raised two rounds (Series and Coimbatore, and will soon reach all This opens up avenues for insurance to be A&B) of funds to the tune of US $14 Uber cities across India. bundled up with such services.” million from Accel Partners (India & Global) and SAIF Partners. Path ahead Talking about the company’s future plans, In the past couple of years, India has Dua says, “We are the second largest Making strong progress moved rapidly towards digitization. While online auto insurance player and aim to be Recently, Coverfox partnered with UBER on one hand, a generation of people the largest in the next few months.”The to provide assistance in insurance policy have grown up with the ease of using company sells about 8,000 to 10,000 purchases and facilitate car insurance e-commerce, Facebook and Google, on policies a month, and is witnessing a solutions for Uber’s driver partners as part the other, there is an entire generation steady growth of about 20 per cent month- of the latter’s reward-oriented programme, being introduced to the possibility that on-month in sales. Its team now comprises Uber-CLUB. Explaining the rationale even insurance could be purchased online. 200 employees, working across backend behind this move, Dua says, “Uber has “With digitization, we are already looking operations, marketing, technology and a growing, large pool of cars and they at trends where more customers are finance. The company is on course to needed assistance in ensuring overall willing to pay premiums online instead of book approximately Rs. 200 crore worth safety for their Uber driver partners. They paying cash to offline agents. People are of premiums in FY17 and aims to touch also wanted to simplify insurance and also getting more receptive to ideas like Rs. 1,000 crore in premium billing by claims for them. We had the right network cashless hospitals and cashless garages, 2019.

32 • The Smart CEO | January 2017 TAJ

The Taj West End – Bangalore, beckons you. For Reservations please contact +91 80 66605660 COVER STORY - FINTECH 35 09

Determining Your Financial Merit CreditVidya was initially founded to use traditional and alternate credit insights from 10,000+ data points of each customer (borrower), to arrive at a credit score for lenders, typically banks & NBFCs, to base their decisions on. In the near future, it aims to extend its proprietary technology to serve other verticals such as e-wallets, insurance companies and ecommerce firms.

Poornima Kavlekar & Madhumita Prabhakar W

When arriving at a differentiating because they don’t have a credit score,” ratings to potential borrowers, thus factor for his venture, CreditVidya, he points out. earning revenues per rating request (from Abhishek Agarwal rests on a term he the client’s end). calls the ‘credit invisible’; meaning, It’s on this premise too that Agarwal those individuals who have the ability and his co-founder Rajiv Raj rolled out So how does its proprietary technology and the intent to pay (back a loan), but CreditVidya in 2013. work? It uses a combination of traditional have not been formally recognized by a and alternate data, with latter comprising credit bureau such as CIBIL. While these The Business Model behavioral, transactional, location-based numbers range around 350 million, the Headquartered in Mumbai with a branch and social information (to name a few), target for CreditVidya is more specifically in Ahmedabad, CreditVidya today helps to assess a borrower. “Today, with an the Indian youth who fall within an lenders arrive at a credit score for their increasing penetration of smart phones income bracket of Rs. 2 lakh to Rs. 9 potential borrowers. What makes it unique and Internet, when a customer pays lakh. “This comprises about 20 per cent is, instead of investing in sourcing a bills or purchases online, he/she leaves of the Indian population. Many banks customer (borrower) to rate, they work a digital footprint, which acts as a data and NBFCs are reluctant to lend to them with banks & NBFCs to provide credit point to analyse and assess their credit

34 • The Smart CEO | January 2017 Today, with an increasing penetration SNAPSHOT of smart phones and Internet, when CreditVidya a customer pays bills or purchases

worthiness,” adds Agarwal. While there online, he/she leaves a digital are multiple parameters, depending on footprint, which acts as a data point Founders: the nature of loan a borrower seeks, for to analyse and assess their credit Abhishek Agarwal and Rajiv Raj a given individual, CreditVidya collects 10,000+ variables on each customer, with worthiness consistency of information being the key.

Year: The Scale-Up Journey While adopting of a relatively new, 2013 unfamiliar technology proved to be a challenge for CreditVidya’s potential customers, one aspect that helped it gain mileage in the initial days was bringing City: a reputable client such as Fulletron India Mumbai on board, which, Agarwal adds, acted as an enabler to sign more clients on to the platform. “Of course, now, since both Raj and I have done extensive networking in Concept: the industry, approaching clients is less of a challenge. Hiring Vipul Jain (who has The company helps lenders arrive at a credit earlier worked in business development score using alternate date for their potential roles with Equifax & Credit Bureau of borrowers India) also helped on this front,” shares Agarwal. ABHISHEK AGARWAL FOUNDER, CREDITVIDYA A second challenge the company faced Investors: and continues to, is identifying talent, of revenues, we’ve grown 400 percent last Siddharth Parekh (Paragon Ventures), Kalaari especially for analytics roles. “We’re year, and we became cash flow positive Capital, Munish Mehta (Silicon Valley-based talking machine learning, financial during the same period,” notes he. investor) data crunching, non-traditional data identification. I don’t think people from The Future Game Plan traditional banking institutions can take up While the immediate goal for CreditVidya this role. We need someone who can think is to score one million customers by end out of the box, especially in identifying of fiscal year, in the longer run, it aims Clients: alternate data,” he opines. Agarwal claims to score 100 million customers in five Fulletron India, Shriram Capital, Tata Capial, that the team is tackling this by keeping years, by further expanding its credit Capital First, Bajaj Finserv its sights set on reputed institutes such as rating services to other verticals such as the IITs. insurance, e-wallet and ecommerce, to name a few. “When you apply for a job Currently, it works with a 50-member or insurance in the US, having a credit Employees: team, a large share of who work on the score is mandatory. Back in India, given data front. With its recent Series A funding 50 the pace at which the country is adapting of US $2 million from Kalaari (with to newer technologies, there will soon be additional funding from earlier investor, a time when the demand for alternate data Siddharth Parekh of Paragon Ventures will increase and credit score will become and key employees of CreditVidya), the a mandate for many verticals. That’s the Offices: company plans to take its employee count opportunity we want to capitalize on, Mumbai, Ahmedabad to 70 by end of this fiscal year. “In terms starting now,” concludes Agarwal.

January 2017 | The Smart CEO • 35 COVER STORY - FINTECH 35 10 Breaking the silos Founded by a team that was part of the products division of Infosys Technologies, Customer XPS, aims to help banks identify frauds real-time and helps them take preventive action.

Poornima Kavlekar

RIVI VARGHESE CO-FOUNDER AND CEO, CUSTOMER XPS

Rivi Varghese, the co-founder of Customer XPS, believes that lady luck was on his side and helped in his entrepreneurial journey! In 1995, his first job at Infosys Technologies in 1995 is where he met his co-founders who were all part of the products Our USP is the ability to think and division of the company and working bring a brain-like and contextual on its core banking product, Finacle. Not just this. Varghese recalls, “We intelligence to the table in almost were part of the transformation of the 100 milliseconds to be able to product and often led it from the front. prevent fraud and influence a Interestingly each one of us rode this wave wearing different hats - while I transaction R saw it from product management, sales and marketing perspectives, Aditya saw it from the technology and architecture angle, Balaji saw this from the customer on-boarding, bank transformation and implementation aspect. Sandhya was into finance and control for one of the largest SBUs of Infosys.” And hence, after they

36 • The Smart CEO | January 2017 exited Infosys, doing something in the transaction,” he. Apart from fraud and The company’s goal for the next 1000 banking domain was a natural thought for compliance, banks can also do contextual days is to increase the global accounts them. In 2006, the four founders setup cross selling to its customers. on its platform to half a billion from the Customer XPS, a company that uses current 250 million; manage 100 billion artificial intelligence to offer customer Another factor that differentiates transactions from the current 6 billion; experience management, enterprise fraud Customer XPS is that most of the existing be present more than 30 countries from management software and services, anti- companies, due to their legacy, are still 5 countries now; be present in 100+ money laundering solutions and services thinking in silos. “We are putting all this banks from the current 15. With these to companies in banking, finance, telecom together now to get a solution and, hence, plans chalked out for the next 1000 days, and retail domains. In 2010, the company silo-based approach is not there with us,” Varghese and his team are all set to take raised series A to the tune of US $ 4 says Varghese. Customer XPS to greater heights. million by JAFCO (Nomura’s premier investment banking arm). Powering the banks “When you look at fintech companies, Since then it has expanded significantly many times, it is considered a competitor and has grown to a team of 70 members, to banks,” opines Varghese. Giving an with geographical footprint in Asia analogy of a book store, he says that and Middle East. It works with more between a regular store and an online SNAPSHOT than 15 banks, including Fortune 500 store, an online store is gaining on the institutions, and been voted as the best inefficiencies of the regular book store. Customer XPS Fraud Detection Product by OpRisk and Applying this to fintech companies, he has been positioned as Enterprise Product says, “If you look at peer-to-peer lending, in Chartis RiskTech Quadrant. fintech companies survive due to the inefficiency of the existing bank systems. Founders: Making a grand entry We power the banks to think like a Rivi Varghese, Aditya Lal, Balaji Suryanarayana, “Ten years back, we realised that peer-to-peer lender and put their best Sandhya. V among all the industries, banking is the food forward. The moment you put that only sector where the entire life of the athma there, you have a more information customer is registered,” recalls Varghese. about the customer and are able to tap He continues, “If you are with a bank the transactions.” The company plugs the for five years, there is enough collective gap between the fintech company that Year: wisdom about you, the customer, competes with the banks and the bank’s 2006 like your earnings, your family, your inability to handle all these inefficiencies, travel routine and so on.” He calls this operating more like an enabler to the intelligence the athma of the customer. bank. The team at Customer XPS wanted to Concept: leverage this information so that it can Where to from here? The company focuses on Banking Fraud offer personalised solutions whenever Varghese says that he spent the last few Management, Anti-Money Laundering and any activity pertaining to an individual weeks with few prominent banks in New Customer Experience under the product brand customer happens inthe bank. “Despite York and in Europe and realised that the name, Clari5. banks having all these athma-like problem that the company is trying to intelligence available, they were operating solve isn’t unique to India. “They have in silos. We wanted to integrate this been buying solutions in silos and we and make it highly personalised,” says realised that we have created this structure Varghese. This effectively helps take care out of India,” says he. The company is Investors: of fraud or compliance as the transaction already present in a few countries and Series A by JAFCO (Nomura’s premier is presented in real-time to the banks. aims to expand this number further. In investment banking arm) in 2010 fact, it has already signed POC with some “Our USP is the ability to think and bring global banks and is looking at aggressive a brain-like and contextual intelligence expansion to the U.S. and Europe,to name to the table in almost 100 milliseconds to a few. be able to prevent fraud and influence a

January 2017 | The Smart CEO • 37 38 • The Smart CEO | January 2017 January 2017 | The Smart CEO • 39 COVER STORY - FINTECH 35 11 The electronic payment network Aavishkar, Apis Partners and Asia Participation B.V-funded Electronic Payment and Services is a prominent retail banking technology and Automated Teller Machine (ATM) services provider. Since incorporation, the company has grown steadily and aims to focus on ATM deployment and related services and expand its ATM services portfolio to 15,000 machines by 2017.

Poornima Kavlekar

MANI MAMALLAN, FOUNDER, ELECTRONIC PAYMENT AND SERVICES (EPS)

Electronic Payment and Services (EPS) was incorporated in 2011 by Mani Mamallan with an aim of providing cost effective banking and transaction related services While the growth of ATMs in and establishing a dependable electronic payment network in the country. Led by developed countries has been professionals with experience in banking, saturated, there is a lot of room technology and retail payments domain, EPS has become a prominent retail banking for the growth of ATM industry in technology and Automated Teller Machine emerging countries such as India. (ATM) services provider. India is one amongst Asia’s largest Apart from providing end-to-end ATM ATM markets due to its high services to banks, EPS has developed economic growth rate of 7 per cent E its own specialized monitoring tool on technology and automation platform, providing analytics about the ATM network. In 2014, the company launched its centralized ATM managed services centre with the aim of improving ATM operations. It offers a range of bespoke ATM managed services and payment solutions

40 • The Smart CEO | January 2017 which include a focused business challenges wherein deployment of ATM model and specialized resources for at remote and rural areas faced electricity setting up of datacenter infrastructure, and connectivity issues,” says Mamallan. financial transaction switching, tools The company countered this by installing implementation and assessment, managed extra solar powered systems for ATMs SNAPSHOT services and SLA management. to stay up and running. Also, it made additional capital expenditure in installing Electronic Payment And Services (P) “While the growth of ATMs in developed more UPS batteries and increasing the Ltd. countries has become saturated, there capacity of UPS power, thereby enabling is a lot of room for the growth of ATM more electricity and making ATMs industry in emerging countries such as available to rural customers. India. India is one amongst Asia’s largest Founders: ATM markets due to its high economic “Major cash depletion in ATMs in rural growth rate of 7 per cent,” states pockets were observed and hence, we Mani Mamallan Mamallan. He continues, “The fact that enabled cash replenishment agencies in it is the world’s second most populous these areas with distance of 150 kms from country with 1.3 billion people underlines cash pick up points,” says Mamallan. the huge potential of the market.” ATM/ cash monitoring was yet another Year: Accordingly, the number of ATMs challenge which was solved by the 2011 deployed in India increased from 17,000 launch of EPS Centralised ATM managed ATMs in March 2005 to 2.75 lakhs by services centre on 24X7X365 basis, 2016 and is expected to touch 5.50 lakhs thereby offering around the clock ATM by 2021. “It is further expected to witness services to rural customers. Concept: a high growth curve given the financial inclusion impetus of the Government of Green is the colour! Being highly adept at end-to-end ATM India,” says the founder. “The accelerating growth in electronic operations and outsourcing services, EPS payments, from cash to less cash offers a holistic range of bespokeATM Till date, EPS has deployed over 6,000 economy, will further facilitate the trend managed services and payment solutions ATMs for 26 banks in urban and rural of mobile-first mindset wherein mobile thus enabling banks to concentrate on core locations across India, in support of the would materialize as the payments and banking functions. This includes a focused Ministry of Finance (Govt. of India) led commerce platform,” says Mamallan. He business model and specialized resources mission to drive financial inclusion. quotes from the PricewaterhouseCoopers for setting up of datacenter infrastructure, report: With the large unbanked financial transaction switching, tools It has raised funds from Aavishkaar (Rs. population and the growing regulatory implementation and assessment, managed 20 crores in September 2012 and Rs. 33 agenda to absorb them into the financial crores in July 2013), Rs. 33 crores from system, emerging markets are in a unique services & SLA management Asia Participation B.V, a wholly owned position to drive growth in the payments subsidiary of FMO In December 2013 industry. The financial services industry and US $ 25 million from Apis Partners in is equipped to an extent to handle the January 2016. However, there was a round changes that are constantly taking place. Investors: in June 2016 also where both Aavishkaar 2016 so far has been momentous with the Aavishkaar(Rs. 20 crore in September 2012 and FMO infused Rs.15 crores each. government’s move on demonetization, and Rs. 33 crore in July 2013), Rs. 33 crore launch of UPI, multiple digital wallets, from Asia Participation B.V, a wholly owned Clearing the rough patches all of which are steps towards attaining subsidiary of FMO in December 2013 and US As far as challenges go, EPS finds it a less cash economy. “We still believe $25 million from Apis Partners in January tough to offer banking solutions to a lot more must be achieved in terms of remote locations. However, its PayPerUse infrastructure, at this point we have a base 2016. In June 2016, Aavishkaar and FMO transaction is a solution that makes on which we can pave way for further infused Rs.15 Crores each. this project sustainable and helps EPS development,” adds he. win continuous orders with banks on deployment of ATMs. “The company’s ATMs have evolved from being mere project execution also faced many cash dispensers to multi-utility service

January 2017 | The Smart CEO • 41 COVER STORY - FINTECH 35

providers. And India is one of the unbanked people into the banking system, using this application in real-time, from largest ATM markets in Asia, and they adding to demand.The runaway growth a centralized location which further revolutionized the banking industry by seen in many Asian markets is set to helps banks reconcile their transactions, lessening the frequency of visits to banks continue for the foreseeable future, and verify and settle customer claims. “With even for basic financial transactions. “This the key challenge for banks there is the ongoing Digital India mission, we has been further facilitated by the recent getting enough ATMs installed to deliver aim to expand our service portfolio and rise of cashless payments. To keep up with cash to their customers. transform into India’s leading payment the changing times we are trying to adapt and technology service provider by to the environmental and technological Operating in this environment, EPS has offering intelligent ATMs, transaction challenges and keep moving forward with grown steadily in this environment with processing platforms, mobile PoS, mobile zeal,” adds he. a strong leadership team that has vast wallet etc,” says Mamallan. experience in the sector coupled with Where to from here the financial inclusion initiatives of the And to aid its growth going forward, “At present, we are at an inflection point Government of India. Its revenues have the company has recently acquired and foresee multiple opportunities for exceeded Rs. 170 crores at the end of CISB ATM Services Pvt. Ltd., from CIS exponential growth in the future,” says FY2016 alongwith an increasing client Bureaus Facility Services Pvt. Ltd. (CISB) Mamallan. Demand for cash from ATMs base in India. “We came out with a first (now EPS ATM Services (P) Ltd.) “This in Asia Pacific is growing dramatically as of its kind ATM transaction based model collaboration brought EPS closer to the the banked population expands. The value known as Disruptive Business Model (Pay designated clientele, thus strengthening its of cash withdrawn from ATMs in eleven per use) which is unique to the world. business relationships and increasing its major Asia-Pacific markets has increased This has led to higher ATM uptime for participation in higher growth segments,” by 50 per cent since 2011. In 2015 alone, banks thus leading to higher revenue says the founder. The company will the value of cash withdrawals grew by streams,” adds Mamallan. further focus on ATM deployment and more than 15 per cent in the Philippines, related services and aims to expand Vietnam, Indonesia and India. Many of In 2015, EPS developed an ATM its ATM services portfolio to 15,000 the region’s economies are cash-intensive, Electronic Journal (EJ) pulling services machines by 2017 to support banks and financial inclusion programmes are which enables financial institutions to with fully integrated and transformative bringing large numbers of previously obtain status of their ATM transactions portfolio of ATM services and solutions.

42 • The Smart CEO | January 2017

COVER STORY - FINTECH 35 12 The integrated payment acceptance platform

Targeted at retailers, Ezetap’s plug and play device is creating a universal payment solution to adapt to any existing or newer payment methods that may arise in the market.

Madhumita Prabhakar

ABHIJIT BOSE, CO-FOUNDER, EZETAP

Imagine this. Today, in a move to make India a cashless economy, on one hand, players like MasterCard and Visa, and wallet brands are selling their products to customers (many brands selling to one customer), and on the other, every India is going through two customer who purchases at a retail outlet revolutions now; one is digitization is paying through multiple modes of payment such as wallet, card and UPI. of the economy and two is While customers have enough brands merchants now moving away from traversing them away from a cash terminals and leaning towards economy, merchants are left to grapple with multiple modes of payment, many app-based payments. The need not integrated to the main systems. of the hour is not just payment I Herein, Ezetap, the Bengaluru-based fintech startup has identified a solution acceptance but integrated payment to bring in a universal payment solution, acceptance. That’s what we do which can adapt to any existing or newer payment methods that may arise in the market. “India is going through two revolutions now; one is digitization of the economy and two is merchants now

44 • The Smart CEO | January 2017 SNAPSHOT Ezetap

Year: 2011

moving away from terminals and leaning Unlike most players that expect the towards app-based payments. The need of merchant or the client to set up the City: the hour is not just payment acceptance infrastructure to initiate digital payments Bengaluru but integrated payment acceptance. That’s on their platform, Ezetap has developed what we do,” explains Abhijit Bose, its its own hardware, primarily to compete CEO and co-founder. on price points that a U.S. or Europe cannot match. “For example, we sell our Founders: Founded in 2011 by Shripati Acharya, hardware at US $50 instead of at US Abhijit Bose, Bhaktha Keshavachar, Bala $150, and instead of taking a transaction Shripati Acharya, Abhijit Bose, Bhaktha Parthasarathy and Sanjay Swamy, Ezetap, fee (which these countries can afford Keshavachar, Bala Parthasarathy and Sanjay which officially launched its product in because their margins are high), we Swamy the market in 2013, has deployed 1,30,000 charge them for the software,” notes Bose. devices in the market, and is recording five million transactions a month. Ezetap being a player which offers plug and play devices to its customers; its Investors: The Addressable Market main challenge doesn’t lie in the lack Social+Capital, Helion Advisors, Berggruen “We look for sectors where we are unique of adequate infrastructure but in taking Holdings, Horizon Ventures, Capricon instead of throwing a terminal in the vigilant steps while scaling in a market as Investment Group, Peter Thiel, American hands of merchants,” opines Bose. The huge. target for Ezetap is clearly laid out; one, Express, AngelPrime (Prime Ventures) the enterprise customers such as Airtel The Larger Vision and Amazon, which transact every day in Having already touched a GMV of US large numbers and find multiple payment $120 million a month, with monthly modes challenging. Secondly, instead transactions growing at 20 per cent, Impact: of reaching merchants directly, it sells Ezetap tap has set a market pace to Deployed 1,30,000 devices in the market, its device to banks like SBI and HDFC, digitize India’s cash economy with an recording 5 million transactions a month which in turn offer it to their customers. eye on being in the business for the long “In the former, we happen to be the haul. “We want to be the OS of commerce first player to introduce SDK (Software in this country. Our goal is to ensure that Development Kit) on mobile. We are also every Indian transacts with us at least the pioneers in building an SaaS-based once a week, and that might happen Monthly GMV: payments model for customers,” claims soon,” he claims on a concluding note. US $120 million he.

January 2017 | The Smart CEO • 45 COVER STORY - FINTECH 35 13 The peer-to-peer lending platform Faircent founder Rajat Gandhi got the idea that peer-to-peer lending would work, thanks to observing a colleague buy a bullet by borrowing credit from a bunch of friends. Today, Faircent processes over Rs. 1 crore worth of loans per month, all through peer-to-peer lending.

S Meera

RAJAT GANDHI, FOUNDER & CEO, FAIRCENT An idea can be ignited even from a small spark. The story of the inception of Currently, we have 30,000 Gurgaon-based Faircent is also one such. registered borrowers and we In 2011, Faircent founder and CEO Rajat Gandhi’s then colleague used to borrow are adding 3,000 registered small loans from multiple friends to fulfil borrowers every month his needs at a specific point of time. “He once wanted to buy a Bullet and posted a request on Facebook asking his friends and family to part fund the purchase. In a week, he was riding his Bullet to office,” Gandhi recollects. This incident, funding from Singapore-based M&S coupled with his understanding of the Partners and Bangalore-based Aarin opportunities in the consumer Internet Capital Partners in 2016. Active angel A space (he had worked at Times Internet investor and Manipal Global Education’s on TimesJobs.com, SimplyMarry.com TV Mohandas Pai has also invested in and MagicBricks.com), gave him the the venture through 3One4 Capital and confidence to start Faircent, a peer-to-peer joined the advisory board. In addition, lending platform. Faircent received US$ 1.5 million funding from Brand Capital, the ad-for-equity Incorporated in 2013, Faircent built and investment arm of Bennett Coleman and launched its platform in 2014. It received Co (BCCL). “Recently, we diluted 9.84

46 • The Smart CEO | January 2017 per cent of our stake to JM Financial time, and is in the process of launching Products, a subsidiary of JM Financial facilities such as ‘Robo-lending’ and Ltd,” he adds. Individual investors such as ‘Pool-in-online-wallet’, to automate part Arun Tadanki (former managing director of the process and cut costs. Yahoo Asia), Doreswamy Nandkishore (ex-member of the global board of FinTech Opportunity Nestle) and Kshitij Jain (US-based serial “With demonetization, fintech companies entrepreneur and founder of Mobolt) have have suddenly been thrust in to the SNAPSHOT also invested in the company. limelight,” Gandhi opines. According to a Faircent report by P2PFA, the cumulative lending Peer-to-Peer Lending: How It through P2P platforms globally at the Works end of Q4 of 2015 has reached 4.4 billion Faircent has built the underlying GBP. Lending through P2P has grown technology to provide credit on demand dramatically from 2.2 million GBP in Founded in: at a reduced cost quickly. The tech- 2012 to 4.4 billion GBP in 2015. “Similar 2014 enabled algorithms rejects over 90 per potential lies within the Indian market cent of the borrowers who apply for loans. which can attain a size of US $ 4 billion Each borrower registered on Faircent is to US $5 billion in the next 5-6 years. evaluated based on his ability, stability The potential is immense,” believes the Focus: and intention to repay based on an entrepreneur. Peer to peer credit borrowing analysis of over 120 parameters and 400 data points. Lenders are encouraged to The Faircent platform has over 6,000 spread their risks by building portfolio registered lenders and the average ticket across borrowers of different risk buckets. size of loans is Rs 2 lacs. “We have 30,000 registered borrowers and we are Funded by: The Faircent P2P lending marketplace adding 3,000 registered borrowers every M&S Partners, Aarin Capital Partners, 3One4 transparently showcases the performance month,” he adds. Capital, Brand Capital, JM Financial Products, data of all its borrowers including loan individual investors amount, interest rate, timely/delayed Faircent is witnessing, on an average, Rs. payments etc. This empowers investors 1 crore worth of loan transactions every (peers who lend to them) to take informed month and has disbursed loans amounting decisions. to more than Rs. 10 crore in the last two years.“We aim to reach Rs. 400 crores It also offers android and iOS app for its in loans disbursed in the next two-three lenders to trade on the platform in real years,” he projected.

January 2017 | The Smart CEO • 47 COVER STORY - FINTECH 35 14

Transforming into a payments bank Incubated by ICICI Bank, FinoPaytech is a payments technology company that pioneered biometrics smart card solutions that helped banks, MFIs and other financial institutions identify customers and facilitate financial transactions inemote r rural areas. By Q4 2016-17, the company expects to transform into a payments bank.

Poornima Kavlekar F Incubated by ICICI Bank and entered the space as a corporate BC (banking, Direct Benefit Transfer (DBT) incorporated in 2006, FinoPaytech was providing last mile delivery channel payments, UID enrollment, eKYC, setup as a payments technology company. or agents to banks. It combined its domestic remittance services, lending and The company came out with biometrics technology business with the delivery large scale enrollment projects); ability smart card solutions that helped banks, channel and offered end-to-end financial to scale up business, team with banking MFIs and other financial institutions delivery solutions – right from technology experience, infrastructure and investment identify customers and facilitate financial development, device management to in technology,” states Rishi Gupta, MD transactions in remote rural areas. last mile implementation and delivery of and CEO of the company. services through business correspondent This is also when the RBI introduced agents. The company soon intends to transform business correspondent (BC) model as into a payments bank, which, it claims part of its financial inclusion agenda. “What really differentiates us is our is a first of its kind concept. In fact, it is Following this directive, the company capability to offer a wide range of services in the closing stages of applying to the

48 • The Smart CEO | January 2017 Our payments bank launch couldn’t have come at a better time when the transformation to digital is taking shape across the country. The awareness generated currently will help people adopt digital platforms faster, which will further boost digital SNAPSHOT payments Fino Paytech

RISHI GUPTA, MD & CEO, FINO PAYTECH Founders: Rishi Gupta and Rajeev Arora RBI for the final license and expects to Fino at the forefront,” adds Gupta. launch in Q4 2016-17. “We are already offerings all the services that a payments While the BC business was corporate and bank is supposed to. As a payments bank, B2B in nature, the company ventured into Year: we will have our own customers, our own B2C business through FINO Money Mart 2006 products and we will focus on making outlets, offering domestic remittance, them available across both physical and utility bill payments, lending, insurance digital platforms. Customer convenience and other payment services to its urban will be key,” adds Gupta. and rural customers. “These outlets would Concept: be converted into payments bank branches Filling the gap when we launch our operations in the Fino Paytech was setup as a payments Talking a about the fintech industry, future,” adds Gupta. technology company that came out with Gupta states, “A decade ago more than biometrics smart card solutions that helped 50 per cent of the adult population in the Taking growth strides banks, MFIs and other financial institutions country did not have bank accounts and Tracing the company’s growth, Gupta identify customers and facilitate financial majority of them resided in remote rural says, “We achieved break-even in 2010 transactions in remote rural areas. The areas, where banks had no reach.”The and have been profitable since then.”The company is soon transforming into payments company’s technology enabled BC agents company closed more than Rs. 300 crore bank. have filled that gap by reaching out to in revenue, out of which Fino received more than 60,000 villages across 28 60 per cent from corporate business states. (corporate BC, UID enrolments) and the remaining 40 per cent from its retail During this period, FinoPayTech has business (domestic remittance, utility Investors: worked with over 20 public and private bill payments, insurance and lending). Since inception in 2006, Fino raised four sector banks, insurance firms and Its focus currently is on retail business, rounds of funding - between 2007 and 2011; Government agencies for various projects which it forayed into in 2014, with a ICICI Bank was its first investor. Later, Black and has enrolled around 100 million current double digit growth year-on-year. Stone (Rs. 150 crore) invested last, in 2011. individuals using biometric smart cards. The division now has a network of over The company closed funding of Rs. 400 crore, “The steps towards digitization of rural 10,000 points including 400 company including Rs. 251 crore from Bharat Petroleum banking were taken a decade ago with owned Money Marts. Corporation Limited (BPCL).

January 2017 | The Smart CEO • 49 COVER STORY - FINTECH 35

As an organization, the combined network thrown open immense opportunities to adopt technology and continuity. of 30,000 transactions points comprises improve banking access and financial 20,000 BC points and over 10,000 retail services delivery in a low cost and However, the growth opportunities points. This entire network handles around efficient manner. Low value and high are aplenty too. Undoubtedly, 85 million transactions annually and in the volume is the nature of payments bank digitization is the biggest takeaway process manages close to Rs 10,000 crores business. Those who are able to crack from demonetization. It will have a in cash (NREGA, Pension payments this code, while keeping their costs transformational effect not just on banking under DBT, domestic remittance low, will grow. “Before we embark on but on every aspect of our lives where transactions and utility payments, cash our payments bank journey, we made a cash is involved. “Our payments bank management services and more). new beginning last week. We will move launch couldn’t have come at a better forward with a new identity, new logo, time when the transformation to digital Making strategic moves new energy and vigour that will redefine is taking shape across the country. The Since inception in 2006, Fino raised four us in the market,” states Gupta. awareness generated currently will rounds of funding- between 2007 and help people adopt digital platforms 2011; ICICI Bank was its first investor. Growth opportunities faster, which will further boost digital Then, Black Stone (Rs. 150 crore) was “When you talk about providing banking payments,” says Gupta. With rapid the last one in 2011. More recently, to access using technology and digital changes happening on the technology initiate a foray into payments bank, it platforms, there has to be supporting and business front, the company will be closed funding of Rs 400 crore, including infrastructure,” states Gupta. According to focused on the current business and aims Rs 251 crore from Bharat Petroleum him, some challenges that need immediate for its agile, low cost technology driven Corporation Limited (BPCL). The freshly attention include data connectivity payments bank to completely transform raised funds will be utilized for setting to facilitate financial transactions, the banking habits of its target customers. up IT infrastructure, branch expansion, availability of PoS machines / micro marketing and branding. ATMs, trained staff, awareness among customers about importance of banking The emergence of digital platforms have and use of technology, willingness to

50 • The Smart CEO | January 2017 Grover Zampa Vineyards is introducing the world to some of the finest 74 AWARDS products, that are a best expression of the Indian terroir. Its endeavour to bring you world-class products, made in India, has yet again received international acclaim by winning 17 awards in 2016 and 74 in last 36 months. With exports in over 24 countries, Grover Zampa has carved a niche for itself 3 YEARS and continues to deliver art in every bottle.

At the First Asian Wine & Spirit Forum and Tasting - The Silk Route, held recently in Beijing, La Réserve won a Gold, while Soirée Brut & Vijay Amritraj Reserve Collection Red won Silver. At The Drinks Business Global Sparkling Wine Masters 2016, Soirée Brut Rosé won a Silver, and at Decanter Asia Wine Awards 2016, Vijay Amritraj Reserve Collection Red, Soirée Brut, Soirée Brut Rosé, La Réserve Red and Art Collection Viognier won Bronze. COVER STORY - FINTECH 35 15 A retail platform for mutual funds

Faering Capital-backed Funds India is a platform focused on mutual funds for retail investors. It is all set to expand its customer reach across the country and plans to enhance its service offerings especially using mobile platforms and seeks to grow its market share from the current two per cent to 15 per cent over the next five years.

Poornima Kavlekar

“We set up our fintech company even the-art, user-friendly digital platform before fintech was an ‘in-thing’,” states (mobile and web) to implement the Srikanth Meenakshi, co-founder and advice. It is an omni-channel service COO of FundsIndia. Both the founders,C. provider wherein customers can get R. Chandrasekar and Srikanth, gained insightseither by talking to their personal considerable experience in the American advisor or by engaging with its online financial services market and have worked platforms. Similarly, execution can also in technology in the financial sector. be conducted either through a mobile “We had blind faith in the mutual funds device or web platform. “The individual SRIKANTH MEENAKSHI, CO-FOUNDER AND COO, FUNDSINDIA industry. Given its performance and strengths of our research and advisory how it is a must-have product in every services combined with the technology are American household, we thought such a the factors that distinguish the company transition would be inevitable in India as from the rest in the market,” states a proud well,” says he. Srikanth.

Hence, they launched the financial In 2010, Funds India raised Rs. 3 crore services platform, FundsIndia, in 2009 to from Inventus, following which it started The company has also launched an help mutual fund investors invest in funds getting serious with digital marketing and e-KYC service for new customers, in a single place using digital channel began expanding its scope. The company without any paper work.“There was a received Rs. 20 crore from Silicon Valley- which facilitates on-boarding of perceptible need in the market for such based Foundation Capital in 2012, which clients using Aadhaar number, a platform which was simultaneously aided the scale up of its digital marketing thus ensuring zero paperwork. independent (without any bank or efforts and led to significant growth in financial institution tie-up) and capable of terms of customer traction. In 2015, providing full service,” says Srikanth. the company raised funds from Faering capital and others to the tune of US $11 The company offers customized million and it is utilising these funds to investment advice as well as a state-of- widen its reach across the country and to

52 • The Smart CEO | January 2017 enhance its service offering, especially more returns on their idle money without vision of becoming a full-service, using mobile platforms. losing any convenience when it comes to comprehensive investment platform for liquidity and money availability,” adds the Indians. “We are there to a certain extent Taking long strides COO. from a product and services perspective, Funds India has witnessed a strong growth but we really need to go further when it in 2016 and has made good progress A strict regulator comes to reach and expansion of customer with respect to its product and platform. “We have a very stern regulator in our base. In five years, we seek to grow our It has grown three times year-on-year sector that has been particularly impactful market share from our current one to two with respect to inflows and assets, and for us,” says Srikanth. A strong regulator per cent to 10 to 15 per cent,” concludes has more than 100,000 customers and works very advantageously in terms Srikanth. is processing close to 120,000 SIP of building market confidence in the transactions a month. products (mutual funds) that the company sells. However, it has its flipside too. He The company has recently launched two says, “This comes at the cost of having platform features. One, an integrated to keep changing our processes, systems, robo-advisory service named ‘Money and sometimes, the business model to SNAPSHOT Mitr’ which advises investors on one- keep with the changes in regulations that FundsIndia time or SIP investments, goal-oriented or can come fast and thick.” Regulations ad-hoc investments, and so on. Two, an concerning KYC registrations, for in-house mutual fund ratings service that example, have changed about five times in enables its platform to be a comprehensive the last seven years, causing the company mutual fund research and data service to adjust what it does and how it gets data Founders: provider for the customers along with from its customers. C. R. Chandrasekar and Srikanth Meenakshi advisory and transactional services. Another challenge is the level of The company has also launched an awareness about the products in the e-KYC service for new customers which market. Mutual fund penetration in the Year: facilitates on-boarding of clients using retail financial market is very low (less 2009 Aadhaar number, thus ensuring zero than four per cent), and it is largely due paperwork. “This has made a significant to a lack of awareness about its benefits. difference to our on-boarding process – “As a small, online company, we face the both to our customers as well as to our challenge of having to grow the market processes and our on-boarding team,” while going after existing investors,” Concept: states Srikanth. By entering the Aadhaar states he. It is an online investment platform that number and one-time-password, KYC provides investors access to a range of registration for a customer is complete Looking at the bigger picture investment products like mutual funds from and they can start investing immediately. Despite these odds, there is no doubt that leading fund houses in India, corporate fixed “The elimination of paper work has been the sector is poised for growth as a couple deposits and stocks. a welcome move for our customers and it of big opportunities wait at the anvil. One has quickened our on-boarding process by is, the ability of the customer to invest more than 50 per cent,” says he. using their Wallet, from service providers such as Paytm. “This will help customers Recently, the company also launched a make regular monthly investments with Investors: SIP-Insure service that enables customers much more convenience and speed than In 2010, Funds India raised Rs. 3 crore from who invest in SIPs from leading AMCs otherwise,” opines Srikanth. Secondly, Inventus. The company received Rs. 20 crore get free life insurance coverage upto Rs the consolidated, central KYC will from Silicon Valley-based Foundation Capital 25 lakh. “We are also planning to launch completely eliminate the need for doing in 2012 and in 2015, it raised funds from a ‘Super FD’ product which will help KYC for fresh customers. “This will bring Faering capital and others to the tune of US customers get a superior alternative to down costs and speed up on-boarding of $11 million. fixed deposits in these days of falling customers,” adds he. interest rates. And a ‘SuperSavings Account’ product will enable them to get All these factors will aid in the company’s

January 2017 | The Smart CEO • 53 COVER STORY - FINTECH 35 16 Expense management for enterprise

Angel Prime-backed Happay, a customers business expense management solutions company, aims to take its product deeper into the B2B segment and handle all their expense management needs. It also plans to onboard around 10,000 businesses in the next two years.

Poornima Kavlekar

VARUN RATHI AND ANSHUL RAI, FOUNDERS, HAPPAY

When IIT Kharagpur alumni, Anshul Rai and Varun Rathi, first conceptualised Happay and setup the company in 2012, it was a customer product that was targeted at students and young professionals to solve their peer-to-peer payment issues. However, they understood that it was a very consumer driven product and the Happay aims to get deeper into cost of acquisition and retention of the the b2b segment and handle all customer was high. In the meantime, the duo also noticed that there was a gap in their expense management needs. the B2B space as companies approached The market is also becoming more them for a solution which can be used to receptive to this concept of a optimise their internal operations. This set them thinking and after some research combined solution to manage all they found that businesses are not getting their expenses. W anything apart from the current account to manage their expenses. Rathi says, “There was no solution for corporates to manage their expenses and hence, they were forced to mould their processes based on what was on offer instead of the other way around.” This made the duo

54 • The Smart CEO | January 2017 enter this space in early 2015 and build Beware of fraudsters Explaining further, Rathi says, “You a completely horizontal product which A very specific challenge that companies have been dealing with a simple current integrates well with the current processes from this sector face is that of fraudulent account, but all the businesses need plus of the user organisation. users. “It is specific to our segment as it is of that which helps them cater to every lucrative and it is hard to identify the right expense going into the system and manage Today, Happay is an expense management ones from the wrong ones. That is where the workflow, not just the payments.” solution consisting of Happay Prepaid we have to draw the line and not entertain With all these strategies in place, Happay Visa Cards that can be managed and such businesses,” says Rathi. aims to on-board about 10,000 businesses controlled via desktop and mobile. Its in the next two years and take long strides solution streamlines the expense workflow Growth strategy in the fintech sector. of an organisation from end-to-end In the last 20 months, Happay has (expense reporting to reconciliation) and launched many modules in the business gives them real-time visibility and control expense management space. It has grown over business spends. These cards are from a simple expense management given to all the employees who spend solution provider, meant for small on the company’s behalf for any kind companies, to an enterprise product with of business expense. It now has almost eight to 10 modules which can cater to all SNAPSHOT 2,000 customers across 40 verticals the business expenses of an organisation; which include manufacturing, restaurants, like employee reimbursement, Happay retail stores, IT services, pharmaceutical tax benefits, food and medical companies and so on. The company is reimbursements and so on. It has also onboarding around 100 to 150 companies launched a digital marketing expenses every month. The annual volume of product targeted at marketing teams of Founders: business is around Rs. 450 crore and the companies. “This is a good alternate to Varun Rathi and Anshul Rai company aims to reach Rs. 800 crore by personal credit cards, which they typically March 2017. The team size has grown 10 use,” says he. It has a product module for times in the last 20 months. vendor payment and a specific module for people travelling outside India. All these Year: The company raised US $500,000 in 2015 are part of the same solution. from Prime Venture Partners (renamed 2012 from AngelPrime), a seed-stage fund Recently, as a direct outcome of based in Bengaluru and is using these demonetisation, the company has funds to develop products, improve launched a product specific to the marketing and expand its technical and transportation sector. All businesses which Concept: sales team. run heavily on cash realised the value of Happay is an expense management solution going cashless and are coming forward consisting of Happay Prepaid Visa Cards that Taking it to the market to take that step. “Our product allows can be managed and controlled via desktop As far as its marketing goes, Happay has a them to issue cards to the driver, do bulk and mobile. Employees use Happay Prepaid large on ground presence, but 20 per cent payment and save a lot of time for them,” Cards for business expenses like travel, fuel, to 30 per cent of its traffic comes through says Rathi. While currently, there is a the online advertisements or content demand from the transportation business, accommodation, utility payments, petty cash which it creates, specifically targeted at any sector depending heavily on cash can expenses etc. businesses. “A lot of second generation use this product. businessmen are signing up online for a demo even from remote areas and Going forward, the company aims to get these are businesses we have on-boarded deeper into the B2B segment and handle Investors: without meeting them,” says Rathi. all their expense management needs. “The US $500,000 from Prime Venture Partners The Happay team takes on face-to-face market is also becoming more receptive meetings with companies who either fall to this concept of a combined solution into the large and medium segment or the to manage all their expenses,” states SME segment. Rathi. The company plans to introduce the current account plusconcept soon.

January 2017 | The Smart CEO • 55 COVER STORY - FINTECH 35 17 Breaking the digital divide

IFMR Holdings sees technology as the means to product innovation that will change the way the underserved customer views and accesses finance in India.

Divya M Chandramouli I India’s best known financial inclusion IFMR Capital currently works with 100+ infrastructure for customer-centric platform, IFMR Holdings, has managed originators and 100+ investors, having operations at NBFCs in this space. to address unique gaps in the financial cumulatively facilitated debt of over US$ market through each of its verticals while 6 billion. This vertical is currently in the Technology at the fore never losing sight of its end goal, to process of expanding its operations into Through the spread and depth of better India’s access to financial services. multiple new sectors and geographies technology, IFMR Holdings has managed Its retail financial services arm, IFMR by entering sectors such as education to cross the hurdles that were in the way Rural Channels, has currently scaled finance, fintech and agriculture finance. It of service delivery. “ Mobile technology is up to over 220 branches in Tier-V and has also established its first international now enabling us to reach more customers VI villages across three states and has office in Singapore with the aim of and provide better customer experience cumulatively enabled over Rs. 21.5 increasing its coverage in the Asia-Pacific through door-step and instant service. We billion of financing, offered insurance to region. IFMR Rural Finance’s Kshetriya have already gone live with our mobility about 250,000 customers, opened over Gramin Financial Services (KGFS) has platform in several of our branches 2,20,000 savings accounts and facilitated three external clients and is on its way and the customer experience here has remittances of over Rs. 300 million. to building the required technology been much enhanced,” says Sucharita

56 • The Smart CEO | January 2017 Mobile technology is now enabling us to reach more customers and provide better customer experience through door-step and instant Mukherjee, CEO, IFMR Holdings. By service. We have already gone live going digital, there’s a wealth of data SNAPSHOT and insight on customer behaviour which with our mobility platform in several IFMR Holdings positively impacts product innovation. As of our branches and the customer Mukherjee adds, for IFMR Holdings, the excitement lies in using this innovation to experience here has been much foster and facilitate partnerships across the enhanced. spectrum that boost financial inclusion. Concept: IFMR Holdings through its different verticals As the future unfolds aims to provide financial inclusion in India IFMR Holdings’ opportunities lie in further changing the landscape of financial services to the underserved in India. At present, there exists a 90 Investment: per cent gap in micro-insurance, over 60 per cent gap in investment products In August 2015, raised US$ 25 million in and a large lack of access to convenient equity from Accion, a financial inclusion credit products and this is despite the pioneer, LeapFrog Investments, a specialist strides taken by microfinance institutions investor in emerging-market financial services across the nation. “ We plan to tap into and investor firm, Lok Capital. The company this opportunity to offer simple, relevant also raised US$1.8 million in a subsequent and customised products for our target round of funding from French development customer base. As a result, we should be financial institution Proparco SA in March able to increase the customer reach of our 2016 services by over 10x, to impact 50 million customers in the next five years,” says SUCHARITA MUKHERJEE, CEO, IFMR Mukherjee as she signs off. HOLDINGS

January 2017 | The Smart CEO • 57 COVER STORY - FINTECH 35 18 Reducing friction in MSME Lending Alok Mittal, the entrepreneur-turned-VC-turned-entrepreneur, wants to use big data to reduce friction and inefficiencies in the process of lending to MSMEs. At a macro level, he believes Indify and several companies of its ilk will play a crucial role in reducing the MSME financing gap in the country.

S Meera

A World Bank Report suggests that about thereby improve transparency. Overall, 87 per cent of Indian MSMEs do not have big data is the holy grail of analysing access to finance and were self-financed. There are two major issues on credit worthiness of the end borrower, and Gurgaon-based Indifi, started by former the lending side - origination and helping lenders reduce their overall cost India head of venture capital firm Canaan underwriting of lending. Partners, Alok Mittal, is a technology firm that enables Indian micro and small enterprises to gain greater access to debt SNAPSHOT financing. Indifi a Series B round led by Omidyar Network Says Mittal, “There are two major issues in 2016. With this, the company plans to on the lending side – origination and scale up its operations, on-board more partners and MSMEs and enhance its underwriting.” To address these concerns, Founded by: Indifi has a segment-wise approach to technology platform. Currently, it serves Alok Mittal, former India head of Cannan help connect lenders and borrowers, MSMEs in sectors like e-commerce, catering to travel, transportation and retail. travel, hospitality, retail and trading. The Partners Indifi partners with large distributors key aspect Mittal is looking at is to rope in whose supply chain network has at least partners who could help on-board several 1000 MSMEs, thus providing the lenders MSMEs in one go – say, for example, - banks and NBFCs - on its platform with 1000s of online sellers of an e-commerce Founded: direct access to their target customers. portal. 2015 The distributors in turn benefit from a stronger relationship. Indifi overcame For lenders, the the value proposition lenders’ reservations through proof of offered by Indify is its technology concept. Apart from the potential client platform to enable payment management, Core focus: base, it also offers data collection and loan monitoring, data analysis, marketing analysis, on-ground documentation & CRM. Enabling MSME finance by aggregating several and verification services to ensure the MSMEs part of the same supply chain credibility of the borrowers. Mittal also expects the disruption caused by demonetisation to encourage Scaling Up movement towards not only a cashless USP: The startup, which had raised capital society but also encourage more formal using Big Data to reduce friction and close the credit to flow into the system. This from Accel Partners, Elevar Equity and lending process within 5 working days individuals in 2015, raised $10 million in will also improve the trail of data, and

58 • The Smart CEO | January 2017 WEDDING CELEBRATION AS PER YOUR BUDGET AT PRIDE HOTELS Kotak Mahindra Bank’s Phone Phone Mein Kotak Highlights branch visits to anytime, anywhere banking on several screens, InnovativeIndian Mobileweddings Banking are full Solutions of vibrant Ahmedabad and Nagpurmobile we being have the a most popularmagnificent and widely accessed.halls and breathtakingThe adoption lawns. colours. It’s the time when all the families Premium Silver packagerate of forour a mobile budgeted banking app is amongst the highest in the First comeBank intogether India to to Launch celebrate Bus this Booking special via Mobileevent. Banking If youApp want itcountry. more lavish,As pioneers we have in digital Our banking, wedding we packageoffer as manyincludes as 77 Venue for Travelday. Comingacross India’s months Kona are Konagoing to be Premium Gold package.myriad If services you want through to go our Décor,banking Barat app that Swagat, include Sumptuous mobile and menu full of music, dancing and celebration. for more premium packageDTH recharge, with 300 ecommerce or transactions,of Chappan etc.Bhog, We DJ are & highlighting Instrumental Mumbai,Astrology December and 16,stars 2015: are aligned,Kotak Mahindra family, Bank’smore (KMB) Guests, Phone our Kolkatasome of hotel our innovative will cater featuresmusic, through Sajan Phone Court, Phone Pooja Mein Vidhi Kotak.” (Hawan Phonefriends Mein andKotak well-wishers campaign showcases are preparing how forKMB’s tomobile your banking need. Kund), Photography & Videography, app andthe bigHashtag day. Yes!Banking It’s featuresthe wedding have season.transformed and simplified Deepak Sharma, EVP & HeadGourmet – Digital Wedding Initiatives, cake, Kotak Security, Mahindra Car the way people lead their lives. As a sequel to KMB’sFor popular your grand weddingBank said,celebration “Travel withis the largestvalet, e/m-commerce Honeymoon Suite segments for newly- weds, KonaDue Kona to Kotakdemonetization campaign, peoplePhone Phonehave less Mein Kotak700 explores – 900 Guests, ouraccounting Hotel at for Delhi over 60% of totalHomecoming transaction ceremony...asvolume, and it percontinues selected the changemoney thatin hand is sweeping and are acrossrethinking India on as theira result offersof technology, you exciting topackages grow at filleda fast pace.with We arepackage. focused on providing seamless innovation,budget and about customer their wedding orientation. celebration To further strengthensumptuous its Veg or Nontravel Veg solutions menu. for You customers within our app, thereby reducing mobileand banking functions. features, We at KMB Pride has Hotel become have India’s a firstcan bank choose to offer from Privilege,transaction Supreme failure andor offeringThe secured Pride Groupcheckout currently solution. has In additionPan India bookingwide of rangebus tickets of wedding on its mobilepackages banking suitable app. Royal Menu. to flight and hotel bookings, presencecustomers in can Pune, now Bangalore, book bus tickets Chennai, for every budget. 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If in all most all regions of the country customersvegetarian can make and non-vegetarianpayment directly kitchen from their bankyou account are planning or forPhone a simple, Phone intimate Mein Kotak pegsoffering on three world distinctive class hospitality features of standards, Kotak usingPride their Hotelscredit card. can caterThis innovationyour every expands need KMB’swedding travel suite function withMahindra’s the limited Banking budget Experience combined on Mobile: with Instant excellent Money ambience Transfer, and on theand app, is a which superb also setting includes for anflight unforgettable tickets and hotel for booking. 100 to 250 Guests,Tweet we to have Buy thata Book too and Flightquality Booking, service. which gives viewers a event. at our Chennai Hotel.perspective We can provideon the transactions they can do easily on their phone. 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69th edition-Edit.indd 81 24-12-2015 06:22:16 PM COVER STORY - FINTECH 35 19 India’s first invoice discounting platform Kredx, founded by experienced bankers, is betting on a financial product based on ‘receivables’, to help SMEs get collateral-free working capital.

S Meera

MANISH KUMAR, CEO, KREDX

The founders of KredX had always noticed – from their own business experiences – the problems that arose out of delayed payments from clients. “Delayed payments almost always resulted in cash flow issues and the Invoice Discounting is a complex existing working capital products were product but not a new one. Our mostly collateral based,” says Manish Kumar, now the founder & CEO of effort to setup a technology and Bangalore-based KredX, an invoice data driven platform to eliminate discounting fintech firm, explaining the risk generally associated with his early insight in spotting a business opportunity sometime in 2012. this product was a huge challenge for us T Thanks to the founders’ background in banking, Kumar and his co-founders realized that there was potential to build a business around helping businesses raise working capital, using the ‘receivables’ on the balance sheet. “These receivables are nothing but in a way, a pledge by their client to pay them within a pre-agreed due

60 • The Smart CEO | January 2017 date,” he explains. heavily on digital marketing and word of mouth/referrals to grow. In early 2013, the founders – Puneet Agarwal, Anurag Jain, Manish Kumar A fintech wave and Sankalp Mathur started researching The financial services landscape in India the concept of receivables deeply, is largely controlled by banks and NBFCs. exploring its legal and regulatory aspects. The role of private banks has been crucial Soon after, they came up with a way of and the government’s role in issuing new making ‘Unpaid Invoices’ a financial banking licences to the likes of Yes Bank, product that could help businesses sell Kotak Mahindra Bank and Axis Bank was their receivables at a discount to get an important inflection point. However, early payment on the dues, of course, there is still a huge gap between demand with the usage of technology and data. and supply of finance, especially for small Simultaneously, they also started working and mid-sized companies. Of course, on a minimum viable product and were lending against collateral is one way to ready to launch the product in the market solve it. But invoice discounting, when SNAPSHOT by 2015. implemented well, can be a game changer, Kredx believe the founders. The Product KredX is a unified invoice discounting “With the advent of technology, the platform that takes care of every aspect of sector has immense possibility to solve the invoice discounting process right from huge problems for small and medium Started in: sourcing, curating, rating and transaction enterprises,” says Kumar. 2013 to final settlement. The platform acts both as an exchange and a broker for Kumar believes this is potentially a USD this process, and it has been designed 100 billion market in India alone, arriving to have almost zero physical touch with at the market size. Post demonetization, Funded by: the customers. Kumar, its co-founder, the need for white money financing has Sequoia India and Prime Ventures Partners believes they have no competition in India increased tremendously, which has almost in this particular space. doubled the earlier financing gap of USD 60 billion existing in the market. “Over “Invoice Discounting is a complex the years, invoice discounting can help product but not a new one - though it bridge a sizable portion of this gap,” he Core focus: hasn’t gotten due credit till now. Our adds. Unified invoice discounting platform that effort to setup a technology and data takes care of every aspect of the invoice driven platform and eliminate the risk To capitalise on this opportunity, discounting process right from sourcing, generally associated with such a financial the company is investing heavily on curating, rating, transaction to final product was a huge challenge for us,” says technology and, specifically its data settlement he. Getting a buy-in that this product can platform, to create a seamless product for be effortless and one of the best ways to its customers. raise working capital for the companies was huge, considering Kredx was first Some Recommendations and only one in the country doing this, he The industry is at a very nascent stage adds.Of course, the founders background right now and government should be in banking played a crucial role in helping in a wait and watch mode to see how conceptualize and design a relevant this evolves. Any hard regulation from product that would find takers in the the government at this stage may kill marketplace. the innovation and experiments that is happening in the sector. But I also believe The startup, which raised $7 million in that some kind of soft regulation is two rounds of funding from Sequoia required to keep unwanted elements out of India and Prime Ventures Partners, relies the sector.

January 2017 | The Smart CEO • 61 COVER STORY - FINTECH 35 20 Carving A Niche in Online SME Lending

Lendingkart has developed a doctrine for credit comfort, wherein, it has identified proxies to evaluate a borrower, to enable online lending of up to Rs. 10 lakh for Indian SMEs. It counts its key differentiations to be a focus on simplicity (in application), up to 72-hour window to process loan disbursement, flexible repayment and renewal terms and minimal human intervention.

Madhumita Prabhakar W When Harshvardhan Lunia co-founded creating alternative credit mechanisms for Traditional vs Tech-Based Lending Lendingkart in 2014, it was something the SME community,” recalls Lunia. When the duo initially founded the of a second innings for him in the SME business, the goal was to understand the banking space. Having spent over six But, unlike many startups out there which needs of the SMEs instead of adopting years in retail lending and corporate still evaluated companies on conventional a one size fits all approach of traditional banking across HDFC, Standard parameters, Lunia and his co-founder, lending. “Accordingly, we identified three Chartered and ICICI Bank, he decided to Mukul Sachan developed a doctrine for to four components which were critical turn entrepreneur initially in 2011, with credit comfort. Meaning, they identified a for borrowing,” adds Lunia. First among Domestic Finance & Investment Pvt Ltd, lot of proxies to evaluate a borrower; such them was, the money has to be credited to a firm that arranged alternative modes of as business statement, industry segment, the borrower’s account within 72 hours, financing for SMEs. “After working on social profile and so on. “We would take because, typically many small lenders the idea for three years, we realised that all this information from the borrower’s require money for immediate stock or it is not scalable. That was also the year ecosystem and process the application raw material purchases. Second was, which saw a spurt in lending startups accordingly,” notes Lunia.

62 • The Smart CEO | January 2017 The company earns revenues through a processing fee and interest on loan (determined based on the credit worthiness of the applicant) and, its capital expenditure is also minimal given that it doesn’t need to invest in branch costs, overhead costs and more

SNAPSHOT LendingKart

Founders: Harshvardhan Lunia and Mukul Sachan HARSHVARDHAN LUNIA, FOUNDER, LENDINGKART

creating a simple application process as loan disbursements, with working capital opposed to filling elaborate forms with loans ranging between Rs. 50,000 to Rs. details of financial projections. “We 10 lakh. “Once we secure data to evaluate Year: understood that they neither have the a prospective borrower, we disburse the 2014 bandwidth nor knowledge to undergo loans through our lending partners within this,” he adds. Lastly, the duo noted that three days,” adds Lunia. the borrowers didn’t seek long-term loans, which could be covered in three to The Future Game Plan Concept: five years. Their (borrowers’) argument Lendingkart has so far raised two rounds Saama Capital, Mayfield Fund, India Quotient, was that they come from a conservative of funding totalling US $41 million Darrin Capital Management, Bertelsmann India family which is not comfortable with the from a string of notable investors such Investments and individual investors such as idea of a loan hanging on their heads. as Saama Capital, Mayfield Fund, India Moreover, in the event of a mishap, they Quotient, Darrin Capital Management, Ashvin Chadha and Shailesh Mehta didn’t want the loan burden to fall on their Bertelsmann India Investments and family members. “Eventually, we arrived individual investors such as Ashvin at a model which could cater to SME Chadha and Shailesh Mehta. With an requirements while also enabling us to acqui-hire of Kountmoney, an online Investors: earn handsome profits,” adds Lunia. lending marketplace, in October 2016, and Raised two rounds (Series A&B) of funds to the upcoming extension of its credit risk the tune of US $14 million from Accel Partners The company earns revenues through analytics software to financial institutions (India & Global) and SAIF Partners. a processing fee and interest on loan (from 2017), Lendingkart is creating a (determined based on the credit steadfast approach to expand its reach in worthiness of the applicant) and, its the online SME lending space in India. capital expenditure is also minimal given As its co-founder Lunia puts, “Our goal that it doesn’t need to invest in branch is to enhance our brand image, create Impact: costs, overhead costs and more. With a more awareness around our products, and 5,600 loans disbursed across 22 states presence across 397 cities in 28 states, aim for market leadership position in the Lendingkart has thus far completed 5,600 coming years.”

January 2017 | The Smart CEO • 63 COVER STORY - FINTECH 35 21

How MobiKwik serves 40 million end users

MobiKwik, an Indian wallet major with a network of over 2,50,000 direct merchants and 40 million users, is taking strong strides towards realising its vision of digitalising India and head towards a cashless economy.

Poornima Kavlekar F Founded in 2009 by BipinPreet Singh and is currently powering payments for that is less than 1 MB, it works on EDGE and Upasana Taku with an aim of making IRCTC, Uber, Meru Cabs, Big Bazaar, connections and will address challenges of mobile payments easier for the average OYO Rooms, Zomato, to name a few. slow data connectivity, thus enabling the Indian consumer, Mobikwik is an Indian The company raised three rounds of funds smartphone users in Indiawho are unable e-wallet company connecting 40 million (total of US $ 80 million) from Sequoia to access digital payments easily. This users with a network of over 250,000 Capital, American Express, Tree Line app will also serve the users from rural direct merchants. Going forward, the team Asia, MediaTek, GMO Payment Gateway, India which has the number of regional aims to take the wallet to a billion Indians Cisco Investments and Net1. language users. by driving product innovation and brand marketing. Taking a solid stride towards realising its The company’s “nearby” feature has vision, it recently launched MobiKwik helped users identify food and shopping Taking fast strides ‘Lite’, India’s lightest mobile wallet that is outlets around them that accept MobiKwik, an independent mobile easy to understand and helps unorganised MobiKwik payments. Users can also payments network, aims to be the largest retailers and shopkeepers across India in locate cash deposit locations around them source of digital transactions in India receiving payments seamlessly. An app with this feature.

64 • The Smart CEO | January 2017 Tapping all the channels The company has launched a Rs. 30 crore campaign across various channels which will continue till January 2017. “This increasein spend is almost four to five times,” admits Singh. But, the company is using vernacular channels of communications, radio ads in small towns to add new users from these untapped areas.

Big opportunities The company aims to enable every Indian to transact digitally. In fact, it has Our immediate competition is with cash. There is a struggle because there are people who are reluctant to move out from the cash transaction SNAPSHOT system MobiKwik increased its on ground workforce twelve times and MobiKwik payments will soon be accepted by an additional one million Founders: retailers. However, to reach every retailer Bipin Preet Singh and Upasana Taku in this country in the next two months, the company is launching MobiKwik Card in partnership with its investor, Net1. BIPIN PREET SINGH, FOUNDER AND This means that users will be able to use CEO, MOBIKWIK Year: MobiKwik for payments across all online announcement of currency notes ban on 2009 and offline retailers and shops, where November 9. credit and debit cards are accepted by January 2017.MobiKwik Card will help The path ahead users pay through their wallet without From only supporting bill payments having to worry about the merchant’s and mobile recharges, MobiKwik now Concept: inclusion in the company’s network. supports user-to-user transfer of funds Mobikwik is an Indian e-wallet company and has seen a 150 per cent increase in its connecting 40 million users with a network of Apart from this, the demonitisation move merchants base since the Government’s over 250,000 direct merchants by the Prime Minister Narendra Modi to announcement of demonetisation. curb black money in India is expected The company has revised its monthly to have positive effect on the company. annualised Gross Merchandise Value “Within a 50-day period, a billion Indians (GMV) sales target by 10 times to US $10 Investors: will change their payments behaviour - we billion by 2017. will move from cash only to a cash-free Three rounds of funds from Sequoia Capital, economy. This will benefit the growth American Express, Tree Line Asia, MediaTek, With all these factors favouring the sector, of digital payments and digital banking the company is taking strong strides GMO Payment Gateway, Cisco Investments and in India,” says Singh. The company’s towards realising its vision of digitalising Net1. user traffic and merchant queries have India and serve towards cashless also gone up by 200 per cent since the economy.

January 2017 | The Smart CEO • 65 COVER STORY - FINTECH 35 22 The automated financial advisor

MoneyView was initially designed as an app to help customers manage their finance by displaying expense and income-related information, bill payment reminders and similar features on a single platform. Now, it’s introducing newer features such as using customer data to understand their finance management patterns and recommend savings-related schemes with low risk profile that they can invest in.

Madhumita Prabhakar From spending over 15 years across McKinsey, Silicon Valley-based Bling Nation and Google and the like, the one learning that Puneet Agarwal had time and again, was how can one use technology PUNEET AGARWAL AND SANJAY to deliver solutions for customers? While AGGARWAL, FOUNDERS, MONEYVIEW the idea did emerge; that of giving people access to the right products while building a scalable business, the drive to initiate his business plan came when he realised that most of the existing products in India (two years ago) served the top one per cent, rather than the middle 60 per cent. “We wanted to create a product for the In a way, the MoneyView app acts F mass market, one that largely relied on as a financial manager, keeping technology, and could be scaled in an a tab on a customer’s day-to-day economically viable manner,” recalls Agarwal. transactions, thus not requiring them to spend much time or effort In 2014, he and his co-founder did just this. They founded MoneyView, an app on it that provides every customer a single platform view into what is happening with their money. “For example, if you have a savings account in one bank, and a salary account in another, once you register on the app, it will automatically show your current balance, spends, incomes and other transactions happening

66 • The Smart CEO | January 2017 in your account,” he explains. From a a customer invests through the app will larger perspective, it tries to analyse a be at least 1.5 to two percent higher than customer’s spending patterns, reminds market rates, and the customer has the them to pay bills on time, and develop a option of withdrawing the amount at any disciplined approach to saving as well. point without penalty. “Ultimately, what people want is for their money to be safe. But, who is this app addressed at? Instead of it lying in a bank account, it SNAPSHOT “Anyone with a bank account and can be invested with higher returns,” he MoneyView smartphone,” Agarwal adds. Roughly, he opines. claims to be targeting an audience of 200 million customers, of which only a small Designing Policies With A Tech portion comprehend finance management. Sense “In a way, the app acts as a financial With the Centre announcing the Founders: manager, keeping a tab on their day-to- demonetisation move in the recent past, Puneet Agarwal and Sanjay Aggarwal day transactions, thus not requiring a MoneyView has capitalised on this customer to spend much time or effort on opportunity by launching a feature that it,” he opines. allows its customers to locate the nearest ATMs with available cash. While this Year: Thus far, the app has recorded close to 10 and several other features (that are still in 2014 million downloads on the app store. prototype stage) remain on the founders’ game plan to drive more revenues into Establishing A Revenue Model the business, Agarwal points out that While MoneyView doesn’t charge the there is still a need-gap when it comes to customer for using its services, a recent startups leveraging the infrastructure the Investors: feature the team has introduced, hopes Government has put in place. Elaborating Tiger Global, Accel India, Ribbit Capital to drive revenues into the business. on this, he shares an example of the One among them is to present financial need to undergo KYC before consuming products to customers, based on their any financial services products. “When spending and saving patterns. For technology was still at an early stage, Employees: example, it has partnered with ICICI this policy made sense. Now, given the 50+ Prudential to offer savings scheme to capabilities we have built from a tech its customers; which will be targeted standpoint, a customer should be allowed specifically based on the profile of to invest without having to go through an the customer. “We’re still working on elaborate process such as this,” he opines. building further partnerships. In this While lauding initiatives such as Aadhar Impact: case, every time a customer invests in and IMPS, Agarwal clearly states that 10 million app downloads a product, we get a commission,” notes there is a need for more nimble policies Agarwal. He believes this is a compelling which can take advantage of the changing feature, for the return on investments if technology adoption in India.

January 2017 | The Smart CEO • 67 COVER STORY - FINTECH 35 23 A Universal Investment Gateway Aditya Birla Money’s MyUniverse allows the customers to track all their money in one place, get advice on what to do with the money and convert the advice to action, essentially transacting in a paperless manner.

Madhumita Prabhakar

Aditya Birla Money’s MyUniverse, The idea for a business such as this arose the HNIs, usually in the age group of 40 founded in 2012, caters to the consumer when the companys held a consumer to 45. “This, combined with the abysmal side of personal finance management. In research to identify why, despite Indians penetration of wealth generating financial other words, the app allows the customers being great savers and the growth of the products, exposed a large opportunity in to track all their money in one place, get Indian economy contributing to increasing terms of expanding the known financial advice on what to do with the money and household incomes (over the past decade), services market, by serving this large, convert the advice to action, essentially it has not resulted in wealth creation for under-served, digitally native category,” transacting in a paperless manner. many. “We identified three possible causes explains he. for why many still preferred to invest in Currently headed by Rahul Parikh, Fixed Deposits, Gold and Real Estate, So, how does it work? the company has thus far signed three instead of in wealth creating instruments Typically, a one-time secure setup ensures million customers on board, with overall like Mutual Funds and Stocks,” adds that all transactions are automatically aggregated money touching over US Parikh. A primary cause was the lack imported and the balances are kept $3 billion. “We are now developing a of a clear, consolidated picture of his/ current. On the investment front, the mobile app which will help users simplify her finances: how much one is spending, app provides unbiased, automated, personal finance, get personalised advice where one can save, and the best place customized investment advice, which can on investments and transact on the to invest. Secondly, although India is be converted into action on the platform platform, all at once,” shares Parikh. seeing a rise in digital young native itself. Moreover, a paperless account Indians, traditional wealth management opening process combined with eKYC Where It All Began and financial advisors still prefer to serve allows the customer to start investing

68 • The Smart CEO | January 2017 instantaneously. Take for example, The lack of a clear, consolidated ZipSip, a feature it launched last year. Positioned as an instant SIP product to picture of a customer’s finances and life, paperless feature, it allows even non- offers them customised features to the abysmal penetration of wealth KYC investors to start investing, with the save every time they swipe their card. generating financial products, entire process of investing reduced to two A second feature it launched was an minutes flat. “Within a year, we broke into exposed a large opportunity in terms automated instant personal loan, which the top 10 rank in terms of new SIPs per enables funds to be credited to his/her of expanding the known financial month amongst online and offline players. account, once they complete the loan In fact, recently, we have also bolstered services market, by serving this application process. “Furthermore, our mutual fund offerings through goal- we’ve strengthened our multi-product large, under-served, digitally native based investing, which allows one to plan, proposition by launching other financial category invest and track investments against each products like equities, insurance and of one’s life goals,” comments Parikh. credit card market place. We also invested significantly in our analytics capability It followed this launch with a series of to offer personalized and contextually other products; first among them being relevant advisory,” shares Parikh. Maxit, which understands customers’ location and spending patterns and Capitalising On Opportunities Demonetisation, as is the case for most SNAPSHOT other fintech players, has presented a good growth opportunity for MyUniverse, Aditya Birla Money MyUniverse as much as the expansion of digital infrastructure has. On the latter, Parikh believes Aadhar-based eKYC and central KYC will streamline the entire process Year: and make it a one time, all pervasive 2012 process.

The introduction of UPI is another opportunity which has opened the gates for digital payments to create better Company Head: products for the customer, by analyzing Rahul Parikh his usage patterns. Secondly, the newly RAHUL PARIKH, HEAD, ADITYA BIRLA introduced NACH, Parikh feels, will also MONEY MYUNIVERSE make paper ECS mandates a thing of the past. “eSign will remove the necessity of towards financial freedom within this Customer Penetration: wet signatures on most forms and make period. More specifically, in the current 3 Million all processes truly paperless,” he adds. year, it seeks to multiply its revenues Apart from these, penetration of data and with newer propositions on the platform, analytics, which will build personalization and capture considerable market share of offerings, and conversational UX, across all product offerings; especially machine learning and API-fication are mutual funds, personal loans and credit Financial Impact: some prospects the company is banking cards. “The game plan to achieve this is to Overall aggregated money touched over US on, to improve fintech penetration. ensure that the acquisition to transaction $3 billion funnel conversions improve manifold, The Five Year Vision and we have a healthy active user base The company envisions being among leveraging the analytics on aggregated the top three digital intermediaries in the data provided by customers, to offer Five Year Vision: next five years, across all products, and relevant and personalized propositions,” he explains, on a concluding note. Rank among top three digital intermediaries wants to empower one million Indians

January 2017 | The Smart CEO • 69 COVER STORY - FINTECH 35 24 Paying attention to unit economics Omidyar Network, IIFL Seed Ventures, Khosla Ventures and Aspada Investment Company funded NeoGrowth facilitates digital lending to consumer facing small businesses and aims to build a sustainable competitive advantage around achieving scale, favourable unit economics and superior customer experience.

Poornima Kavlekar

“According to the BCG Google report managing director of the company. improvement in credit history, financial - Digital Payments 2020, the digital inclusion, encouraged entrepreneurship payments transaction in India is expected The company raised three rounds of and business growth for many of its to touch US $500 billion by 2020. This funds to aid its growth. In 2013-2014, it customers. rapid evolution seen in digital consumer raised Rs. 450 million from promoters, payments on the back of digital and Omidyar Network and Aspada Investment Some of its unique solutions include technology revolution has opened a great Company. In Series A funding in 2015, NeoCash Online, designed exclusively opportunity for digital lending,” states NeoGrowth raised again Rs. 450 million for online sellers on e-commerce Piyush Khaitan. Driven by the optimistic from Khosla Impact Fund, Accion marketplaces and retailers selling online outlook for the sector, Dhruv Khaitan Frontier Inclusion Fund and existing through independent portals. It has and Piyush Khaitan entered the digital investors. In 2016’s Series B round of AdvanceSuite, an in-house technology lending sector by setting up NeoGrowth funding, it raised Rs. 1,073 million from platform, which covers the work flow Credit Pvt Ltd in the year 2013. The IIFL Seed Ventures Fund and existing management, entire loan engine and company was built on an important investors. complete risk management. It has a insight that traditional underwriting “30-minute loan” mobile application methods in India exclude more than Unique solutions for quick loan sanction and disbursal, 50 per cent of creditworthy small and While the company offers credit to the dynamic repayment model depending on medium enterprises. Hence, NeoGrowth small business enterprises, it has its own sales and automated collections and daily does digital lending to consumer filters to assess their credit worthiness. settlements facing small business enterprises by Some methods it uses are its unique providing unsecured loans repaid by card customer acquisition channels (direct Filling the gaps receivables, e-commerce sales and other agents, referral Agents and telesales), new The NeoGrowth team believes that there non-cash payments. “More than half of payment datasets for credit assessment, is inadequate credit footprint and financial the loans by NeoGrowth are less than Rs. non-traditional scoring, dynamic history for a customer and, hence, banks 1 million and greater than 80 per cent of repayment and automated collections to face a tough time in credit assessment. loans have been given to proprietorship identify and serve these potential credit- Therefore, the company uses alternative and partnership firms,” says Piyush, the worthy merchants. In fact, it has enabled data for credit assessment. There is also

70 • The Smart CEO | January 2017 The company’s non-traditional business model identifies and serves credit-worthy merchants, who a lack of collateral in the sector. Indian otherwise get excluded by traditional market has limited to no option for underwriting methods unsecured loans which is why NeoGrowth ventured into unsecured short term lending. SNAPSHOT NeoGrowth Credit Pvt Ltd This apart, there is limited working capital fund with strict repayment schedule and to counter this, the company came out with automated collections based on business Founders: performance. Finally, traditional banks Dhruv Khaitan and. Piyush Khaitan have lengthy processes with stringent documentation. Daunted by this lengthy and cumbersome process, NeoGrowth came up minimal documentation with doorstep service and quick funds. Year: 2013 Big opportunities “The digital payment space is bigger than what we imagined,” says Piyush. The current environment has so many data PIYUSH KHAITAN, MANAGING Concept: sources (online media, offline datasets) DIRECTOR, NEOGROWTH CREDIT PVT NeoGrowth does digital lending to consumer and interfaces in place. India is going LT D digital through initiatives like India Stack, facing small business enterprises by Unified Payments Interface and there are A peek into the future providing unsecured loans repaid by card Government policies for Digital India, The company’s marketing strategy receivables, e-commerce sales and other non- Cashless Society, make in India, Start Up revolves around digital marketing cash payments. India etc. “All this means a very large initiatives to reach its consumer segment. market opportunity. NeoGrowth is looking It does campaigns integrated with its at leading this market in India,” adds the traditional channel to have a broader founder. but relevant visibility. “We engage with Investors: channel partners at different levels to Raised had three rounds of funding to aid But all these come with its own set of promote NeoGrowth as an innovator in SME digital lending space. We do SEO, its growth. At the Seed Stage in 2013- challenges. The biggest is getting your customer onboarded with the idea of SEM and responsive website to maximise 2014, company raised Rs. 450 million from digital lending. Since, the concept is our reach,” adds Piyush. promoters, Omidyar Network and Aspada new in India, the first onboarding stage Investment Company. In Series A funding in is the most crucial stage. “Hence the With its marketing strategies in place, the 2015, company raised again Rs. 450 million cost of customer acquisition must be company aims to be a niche player in the from Khosla Impact Fund, Accion Frontier kept minimal to scale the business,” says digital lending space over the next few Inclusion Fund and existing investors. Piyush. years. “We want to be the leader in terms In Series B round of funding in 2016, company of market share in digital lending. To raised Rs. 1,073 Million from IIFL Seed Another important challenge is achieve this, we are building a sustainable Ventures Fund and existing investors. maintaining the unit economics. “Since, competitive advantage around achieving we are in small ticket short tenure loans, scale, favourable unit economics, superior we need to limit the cost of each unit customer experience and eliminating thereby improving our per unit margin,” balance sheet friction,” says Piyush on a adds he. concluding note.

January 2017 | The Smart CEO • 71 COVER STORY - FINTECH 35 25 “We believe our biggest competitor is cash.” Paynear Solutions, a transactions processing company which builds solutions for payment processing, customer and store management, aims to serve more than one million merchants and process billions of transactions in the coming years.

Poornima Kavlekar

DR. PRITI SHAH, CO-FOUNDER AND CEO, PAYNEAR

Incorporated in 2013 by Prabhu Ram and Dr. Priti Shah, Paynear aims to help make India a cashless economy. The founders believe that accepting card payments should not be complicated with Changing the mindset from cash high-cost infrastructure. And hence, they built a product that provides a simple and payment to a digital mode of affordable solution for businesses of all payment is the main challenge I sizes - from an Individual to multi-million dollar enterprise to accept hassle free card payments.

To aid its expansion and improve its technical expertise, the company also raised US $ 2.5 million from serial investor Mitesh Majithia in December 2015.

72 • The Smart CEO | January 2017 Ready to transform mind the various needs of merchant across With an experience of deploying more all segments and this is what differentiates than 10,000 devices in 150 cities and us from rest in the industry,” states Shah. towns, the company is equipped to meet the emerging needs of card and Advantage Fintech SNAPSHOT digital payments landscape with its The management team of Paynear has Paynear fully compliant payment solutions. been in the payments industry for the last It’s “Paynear ONE” is a solution that 12 years and understands this sector very transforms merchant’s Smartphone/ well. “We have aspired, inspired and Tablet/PC to a card payment acceptance respired payments for more than a decade device. The solution connects to a chip and it’s our passion to innovate in this Founders: and pin, EMVCo certified PED to process industry,” says a passionate Shah. This Prabhu Ram and Dr. Priti Shah payment transactions. It also offers an helps them understand the unit economics end-to-end merchant-centric solution that and the pain of merchants and as a result, aids in store management, active customer come up with solutions that are relevant to engagement, and rewards, sales tracking the segment. Year: apart from payment acceptance. 2013 Challenges “We are the only company in India today “It’s not the mind but the mindset which to offer an omni-channel payment solution is the issue,” states Shah. She elaborates, facilitating a merchant to offer more than “Changing the mindset from cash 40 payment options to customer including payment to a digital mode of payment is Concept: cards, Internet banking, wallets, EMI the main challenge.”But, she believes that Paynear Solutions is a transactions processing along with value added services like India is well poised for this big change company, which builds solutions for payment money transfer, bill payments, recharges and things are slowly but surely changing. processing, customer and store management, and much more,” states a proud Priti “We believe our biggest competitor is and enabling merchants to offer lots of value Shah, co-founder and chief executive cash,” says she. added services to their customers, which in officer of the company. This apart, a turn increases their revenue merchant can also offer mini ATM Future growth path services to their customers. Merchant In next five years, the company aims to can now earn additional income through serve more than one million merchants a single unified app, all in one by just and process billions of transactions. “We downloading the app from google store or foresee Paynear serving even the grass Investors: app store. This solution is offered to small root level merchants and helping them Raised US $ 2.5 million from serial investor merchants right upto large enterprises, to be a part of financial inclusion thus Mitesh Majithia in December 2015 depending on the need of the merchant. playing our part for our nation,” concludes “This solution was designed keeping in Shah.

January 2017 | The Smart CEO • 73 COVER STORY - FINTECH 35 26 Bringing simplicity into PoS Systems

Pine Labs provides retail PoS solutions which simplify payment acceptance (for merchants), while also offering a host of features to benefit the issuer, merchant, brand and customers.

Madhumita Prabhakar

LOKVIR KAPOOR, CEO, PINE LABS

While Pine Labs made a foray into the financial technology space in early 2000, it took the company close to a decade to With a strong belief that the card carve a niche in the payments technology space. Albeit a silent player, the company system (credit and debit card has made significant strides in the market, usage) is here to stay, the company with Rs. 150 crore in revenues (in the eventually began developing last fiscal), with PoS networks deployed across 1,50,000 retail touch points, ancillary features based on it, such through marquee clients such as Future as accepting sodexo vouchers, Group, Shoppers Stop, Samsung, Airtel, BPCL and the like. partnering with wallet companies to initiate payments, enabling W So, what do they do? merchants to avail loans through Pine Labs provides retail PoS solutions which simplify payment acceptance (for the network and redeeming loyalty merchants), while also offering a host of points features to benefit the issuer, merchant, brand and customers. For example, in early 2000s, when brands such as Future Group and Shoppers Stop were expanding at a rapid pace, they faced recurring

74 • The Smart CEO | January 2017 challenges in dealing with multiple Overcoming Challenges PoS terminals for different banks. Being a tech-driven organisation, Pine SNAPSHOT Furthermore, the payment processing Labs did face its fair share of challenges, Pine Labs from each terminal was not integrated primarily around the lack of adequate into its mainstream operations. “To ease infrastructure to setup its systems. “While this process, we developed a network that we have made significant investments in would integrate the transactions directly ensuring quality deliverables to brands Year: from the PoS to the main systems, with a and merchants, the Government itself has choice of the different banks the brands taken several strides to ease this challenge 1998 preferred to work with,” recalls Lokvir for us,” he opines. Second challenge, of Kapoor, its CEO. course, lay in the initial hesitation among customers to adapt to a technology that While this was the initial model at Pine was seemingly new. “We overcame this City: Labs, with a strong belief that the card as more merchants began taking to the Noida system (credit and debit card usage) technology and found it to be effective. is here to stay, it eventually began From our end, we also began offering developing ancillary features such as better features to ensure ease of adoption,” accepting sodexo vouchers, partnering he adds. with wallet companies to initiate Investors: payments, enabling merchants to avail Global & India Impact Sequoia Capital loans through the network and redeeming Having already captured 20 per cent of loyalty points. “For example, we have a the market footprint in India and with partnership with Bajaj Finance, wherein, a presence across 200 cities, the goal our customers can approach Bajaj for Pine Labs is to take this number to Impact: Finance through our network, request for 40 per cent in the next couple of years. PoS networks deployed across 1,50,000 retail credit and process it directly instead of In fact, it has recently forayed into touch points, presence across 200 cities in approaching a bank otherwise,” explains Singapore (its current headquarters) and India Kapoor. Similarly, loyalty points can setup a subsidiary in Malaysia, where be redeemed through its paybypoints it intends to go live with its products technology which integrates the top by June 2017. “As for our revenues, loyalty reward programs in India onto a owing to a successful festive season and single platform, thus enabling customers demonetization, we it will cross Rs. 200 Clients: to avail it at the time of purchase. crore this year, and we’re targeting Rs. Future Group, Shoppers Stop, Samsung, Airtel, 500 to Rs. 600 crore by March 2018,” BPCL and the like Currently, while 70 per cent of its revenue shares Kapoor. comes from core payments, 30 per cent is driven through its value added services.

January 2017 | The Smart CEO • 75 COVER STORY - FINTECH 35 27 Seeing through it all clearly Set up with transparency as its core policy, PolicyBazaar. com is an online insurance comparison portal that has sold about Rs.1000 crore of premium since its inception in 2008. Over the next four years, the company aims to take this number to Rs.10,000 crores.

Poornima Kavlekar

YASHISH DAHIYA, CO-FOUNDER & CEO, POLICYBAZAAR.COM

For Yashish Dahiya, the co-founder and CEO of PolicyBazaar.com, the drive to set up his company stemmed from his father’s experience. He recalls, “My father, during 2003 to 2008, had invested about Rs. 20 lakhs in what was sold him as guaranteed rate investments but were actually ULIPs with high charges. While Eventually our experience with the he was happy, that he got a return of consumer depends on what great about 4 per cent over the 5 years, what he did not realise that his returns were on a products we can bring to them market which had grown at 70 percent per F year in the 5 years of his investment. He did not realise how much money he had lost and had the market not grown at that 70 per cent, how much money he would have lost.”

Hence, in 2008, Dahiya set up PolicyBazaar with the vision of

76 • The Smart CEO | January 2017 empowering consumers and help them thing, but for our industry it is a big deal compare and make an informed choice for as that is absolutely anti-distributor,” their various insurance needs. He says, states he and adds, “From a short term “There was a lot of mis-selling then and perspective, we are working against our I wanted people like my father to know best interests. Obviously, in the long run, what they were buying. The main reason this will help us gain consumers,” says for starting the company was to offer Dahiya. transparency and choice to the consumer.” Effectively, the company offers them While he admits that PolicyBazaar.com choice, transparency, makes them is not the only company in this space, aware of right products and makes their but is also quick to add that the company processes simpler. differentiates itself with the information it gives on all the products and a wider A market for growth SNAPSHOT range. The website also brings the pros Insurance is a large market. According and cons of the product and allows the to Dahiya, the coverage of insurance that Policybazaar.Com consumer to take an informed decision. consumers have (sum assured) in India is This has helped it grow steadily and from about 40 per cent of the GDP as against Rs. 10 crore to Rs. 15 crore of premium 3 to 5 times of the GDP of the other four years ago, it has grown by over 100 developing markets. “Clearly, there is a Founders: times and has touched Rs.1000 crores long way to go before we achieve that Yashish Dahiya of premium on its website. Almost two kind of sum assured,” opines he. And the million customers have bought products competition is intense too with almost from the website so far as against a 3 million agents and many banks in the number of 1000 four years back. “More sector. important is that we have stayed true to Year: our customers. Almost 70 per cent of the To operate in this competitive sector, 2008 products they buy still include health the company is differentiating itself insurance, pure life insurance, motor by identifying the kind of products a Insurance and low cost ULIPs. We barely consumer will need. And hence, it is sell any of the high cost products,” says working in partnership with insurance Concept: Dahiya. companies to create some new products It is an online insurance comparison portal for its consumers. “Eventually our that aims to empower the Indian consumers, Redefining a distributor’s role experience with the consumer depends “There are products that give us 3 times on what great products we can bring to help them compare and make an informed to 4 times more margin than the products them,” adds Dahiya. choice for their various insurance needs sold and there is no reason for us to sell low margin product. The only reason we To aid the growth of the company further, do so is that if a customer knew what he / Dahiya has joined the advisory board she was buying, they would not be buying of fitness start-up Fitso. PolicyBazaar Investors: this expensive product,” says Dahiya. sponsors events, including triathlons. In The company raised funds from PI Citing an example, he says, “If you are fact, the company has signed up to be Opportunities Fund (Premji Invest), Steadview buying car insurance and if you know title sponsor for some running events. Capital, InfoEdge (Naukri.com), Tiger Global that there is one available for Rs. 8000 “We are trying to take running to villages, Management, Inventus Capital, Intel and Ribbit premium and another for Rs. 5000 and especially targeting girls in the villages,” there is practically no difference between says he. The company spends about Rs. Capital the two, then why will you spend Rs. 40 crore in marketing every year and it 8000. The only reason is if you are not wants a part of this budget to go towards aware of the Rs. 5000 premium product.” sports events. Explaining this strategy, The company’s role here is to highlight all he says, “Most people participating in this transparently and allow the consumer sports are usually fitter than the rest of the to decide. “It might not seem like a big population and should be at lower risk. COVER STORY - FINTECH 35

We want to engage with that group and insurance products. And as a result, we would have ticked all the parameters make them insurance aware.” He also if people become fitter, their health that will make us IPO ready. It will be a has another reason. Asa national-level insurance claim will be lower. And this is commercial decision whether we do it or swimmer and tri-athlete, he understands a long term agenda driving the company not and not a capability decision,” says that besides cricket and of late kabaddi, in that direction. “So I would like more Dahiya. In the meanwhile, the company very few companies support any other fitness people buying health insurance is working towards crossing a premium events as there is low participation. “I through our company website,” says of Rs. 10,000 crores in the next four believe that it is a big opportunity for us to Dahiya. He believes that one has to put years from the current Rs.1000 crores. get involved in a small way. As we grow the ground effort a few years earlier as “I hope that 30 per cent to 40 per cent of from being a small brand into becoming it is a slow moving industry. And these Rs. 10,000 crore will come from products a larger brand, we would like to build efforts will reap the benefits a few years which we are planning to create in the our forte by having engagement in that from now. next 4 years which would cater to specific entire sector, which is unaddressed sports consumer needs. As I look at next to four category,”says he. Going forward years, our focus is on areas where we feel By March 2018, PolicyBazaar.com aims there is a gap and we are working with The company also has ideas on how to to be IPO ready. “Whether we do it or insurance companies to fulfil that gap,” start leveraging wellness and fitness into not will be a conscious decision. But says Dahiya on a concluding note.

78 • The Smart CEO | January 2017 January 2017 | The Smart CEO • 79 COVER STORY - FINTECH 35 28 The Razorpay Story RazorPay is an online payment gateway that allows merchants to collect payments through credit/debit card, net banking, or wallets such as MobiKwik, Freecharge, PayU and the like.

Madhumita Prabhakar

HARSHIL MATHUR AND SHASHANK KUMAR, FOUNDERS, RAZORPAY

Kumar, RazorPay is an online payment gateway that allows merchants to collect payments through credit/debit card, net banking, or wallets such as MobiKwik, In 2013, whenI RazorPay made an entry Freecharge, PayU and the like. While into the online payments space, it was up earlier, merchants had to enter two lines against a regulatory battle even US-based of code to integrate payments, within a We usually verify the authenticity PayPal couldn’t tackle; the mandate that day, on their platform, the process has customers cannot earn more than US $500 now been reduced to less than an hour. and credibility of merchants by per allowance, and he/she should transfer “We usually verify the authenticity and avoiding physical paperwork and the cash (from the wallet) to an Indian credibility of merchants by avoiding instead doing a background check bank within seven days of receiving the physical paperwork and instead of doing payment. a background check with the help of with the help of their PAN card, their PAN card, Aadhar Card or other Aadhar Card or other government Today, beating this and more odds, this government certificates,” explains Mathur. Indian startup has made significant strides certificates by working around every challenge, and Since its prototype stage, the company has setting up a platform which, in the last built in several features into its product; five months, has signed up 600 merchants such as cross platform payment form and recorded a 50 per cent growth in that can be embedded using single line transfer, month-on-month. of javascript, a payments dashboard for merchants, auto-updation of new and The Merchant Connect improved features, auto filling OTP with Founded by Harshil Mathur and Shashank Android SDK and more. “In fact, our

80 • The Smart CEO | January 2017 SNAPSHOT RAZORPAY

Founders: Year: Concept: Investors: Harshil Mathur and Shashank Kumar 2013 Similar to US-based Stripe, an Y Combinator, Matrix Partners, Tiger Global, Kunal Bahl and online Indian payment gateway Rohit Bansal (Snapdeal), Punit Soni (former Chief Product platform for Indian merchants Officer at Flipkart), Amit Gupta and Naveen Tewari (InMobi) and more.

mobile software has been built in a way during time of delivery. The feature has has now shifted to tech gaining an edge that it works even on 2G speeds,” adds been designed in a way that the payment over everything else. “That’s why we Mathur. mechanism will generate a PIN number don’t have a big sales team. Instead, we without Internet connectivity or wallet focus on building a great product team, The Need of the Hour login, which the customer receives at and carving our niche on the technology In the second half of 2016, the startup the time of delivery, making the process front,” he shares. has capitalised on several opportunities as simple as paying cash. “We’ve also to introduce new features to further launched a mobile app for integrating Believing that the secret to the company’s grow its business; key among them payments and it has recorded 10,000 success lies in technology and lending a being, the demonetisation move by the downloads so far,” he adds. close ear to customer feedback, Mathur Central Government and the adoption is clear that in the coming year, his goal of UPI (Unified Payments Interface). A Growth Chart remains to continue to grow the monthly For example, its eCOD feature replaces In the last decade, while the goal of transaction rate by 50 per cent, and Cash on Delivery by helping ecommerce fintech startups in the payments space hopefully become a market leader in the companies accept payments other than has been on bill payments and the sales next two to three years. cash, such as UPI or digital wallets, process, Mathur believes that the focus

January 2017 | The Smart CEO • 81 COVER STORY - FINTECH 35 29 The bot platform

Senseforth.ai’s intelligent action bots also perform tasks, resolve issues and make the right product recommendations besides answering queries.

S Meera F For the past few decades, computers were accuracy is our key differentiation,” merely tools in our hands to perform explains Shridhar Marri, CEO and Co- various tasks. What if we can infuse Founder, Senseforth.ai, who worked at learning and, maybe, even emotional Infosys for over 15 years prior to turning intelligence into software? What if entrepreneur. we create softwares that can mimic human cognitive abilities in reading and Bots in Fintech understanding the intent of the user? What Everything from macroeconomic if we can build softwares that can extend environment to politics to sudden shifts in From companies like Google and our perception, reasoning and ability business models have an immediate and to learn? These questions prompted the lasting impact on the financial services Facebook to emerging startups, AI inception of Bangalore-based Senseforth, sector, both in terms of opportunities and is going to be the next big inflection in 2012. The company was founded with challenges.“Successful financial sector the aim to make technology behave like a companies handle these challenges by point in the technology world friend. being most aggressive on efficiency, value creation and superfast response “We are one of the most comprehensive systems. Our Bot platform plugs in bot platforms in the world with the right at this intersection, thus steadily widest range of Intelligent Action Bots reducing support costs, lifting efficiency for any business. Industry leading and cumulatively enhancing the bottom

82 • The Smart CEO | January 2017 line for the client,” he explains, adding context, learning, analytics, intent and that this makes them the most preferred action. Essentially, the bot learns from AI partner for many large players in this user feedback, past experience and data. sector. It understands intent and has the ability to take action based on a set of possibilities. The speed at which institutions need to SNAPSHOT respond to changing customer demands Of course, A.ware finds use in various is the single biggest challenge faced by industries including e-commerce, travel Senseforth.ai financial sector today. And the second and hospitality. But, its value proposition biggest challenge is the digital disruption to banks and insurance processes is very that is fundamentally altering the business clear. It comes in handy to cross-sell and process dynamics. A robust AI platform up-sell after solving an issue for a client. Founder: like Senseforth addresses these challenges The key to delivering on this promise Shridhar Marri with instantaneous responses and is its NLP engine (natural language ‘botization of internal processes’. “Typical processing engine), that has been built to an AI platform, our biggest challenge is from ground-up. to infuse empathy into software and make it more human,” Marri adds. Marri believes that from companies Funded by: like Google and Facebook to emerging Bootstrapped In the financial services space, the startups, AI is going to be the next big company serves HDFC bank, ICICI Bank, inflection point. What we’re seeing HDFC Life Insurance and ICICI Lombard now is just the early stage, he says. “I General Insurance. am convinced that several aspects of Focus: our world will be driven by AI over the Intelligent Action Bot/AI platform called A.ware The underlying engine long-term. Many functions, processes and Senseforth has focused on building its outcomes will definitely be run by AI and AI platform called A.ware based on six we want be that AI platform of choice,” fundamental aspects – conversation, explains he.

January 2017 | The Smart CEO • 83 COVER STORY - FINTECH 35 30

Going beyond the common man

While Suvidhaa initially began by creating s-commerce boutiques to serve India’s common man, today it has introduced a host of fintech services, in partnership with leading banks and NBFCs, such as prepaid card programs for merchants and customers, nano-credits for merchants and mPOS and the Standard (Traditional) POS terminals for B2B customers.

Madhumita Prabhakar W

When Paresh Rajde founded Suvidhaa recharges, thus making an early foray into for its customers, in association with Axis Infoserve in November 2007, his initial the fintech space. Bank & MasterCard. While the Channel idea was to create neighbourhood Card provided instant connect to over services-commerce boutiques which The Product Journey 3,000 service providers, the Axis Bank – would act as a single point of transaction, It made its first pivot in 2011, when it Suvidhaa Card, riding on Aadhaar eKYC, whether a customer wants to purchase launched a Cash2Bank model of domestic provided instant activation, facilitated a railway ticket, an insurance cover, or remittance service, by partnering with money transfers and safekeeping of simply pay a telephone bill. By 2011, as Yes Bank and later with Axis Bank. money, besides offering ubiquitous access innovation and technology brought radical Then, between 2013 and 2015, it went to money. “Suvidhaa’s visioning was such change in the way traditional financial on to introduce prepaid card programs, that technology should be put to optimal and finance-based services are offered to one for Channel, viz., Channel Card in use to bring about utmost convenience consumers, it began introducing services association with Central Bank of India to the common man. The agent-assisted around payments, bill management and and MasterCard and the other in 2015, model of Suvidhaa has so far helped over

84 • The Smart CEO | January 2017 35 million unbanked and underbanked Suvidhaa’s visioning was such customers to benefit from technology without them being tech-savvy,” notes that technology should be put to Rajde. optimal use to bring about utmost Prepaid Card, after due process of convenience to the common man. An off-shoot of the prepaid card program documentation or due diligence. is what Suvidhaa has recently launched; The agent-assisted model of a nano credit program, offering term Of course, a second of its recent launches Suvidhaa has so far helped over 35 loan and overdraft to the unbanked and is SuvidhaaPay which marks its foray the underbanked segment. It has been into merchant acquiring services, in million unbanked and underbanked designed in a way that a customer can partnership with State Bank of India, customers to benefit from technology avail the loan in just couple of hours/same HDFC and shortly Axis Bank. Under without them being tech-savvy day on his/her Axis Bank – Suvidhaa this, it offers both mPOS and the Standard (Traditional) POS options to the merchants, while also ensuring ease of on-boarding, competitive MDR pricing SNAPSHOT and the ability for the merchant to become Suvidhaa eligible for credit, based on his or her transaction volumes. “This, we believe, makes for a highly compelling proposition Founder: (package) for the merchant. Our multiple- Paresh Rajde banks tie up enables Suvidhaa to de-risk the business, as such,” claims Rajde.

Tackling Infrastructural Challenges Year: Though Suvidhaa has created a pan- 2007 India distribution network, its challenge has always been in tapping the rural hinterlands. For example, cash collection being a value proposition that Services: the Suvidhaa ecosystem offers, when it Prepaid Cards for B2B & B2C customers, nano- comes to small villages of say less than 500 populations, it finds it challenging to credit programs through prepaid cards for sustain the channel. “To address this, we merchants, mPos & traditional PoS services propose a hub-based approach wherein for merchants, retail credit platform for Suvidhaa would create/set up its agent salaried B2C customers outlet in a town or village that connects four to five small villages, thus enabling the outlet to serve a larger population,” explains Rajde. PARESH RAJDE, FOUNDER, SUVIDHAA Banks Partnered With: Axis Bank, HDFC Bank, State Bank of India, Capitalising on Opportunities Central Bank of India, to name a few On the B2B front, Rajde sees On the B2C front, Suvidhaa is preparing demonetisation as a welcome change to launch a Retail Credit Platform for the for Suvidhaa to bring more customers salaried people and has so far completed on the digital platform. “The push for strategic tie-ups with leading Banks/ digitised transactions has created the need NBFCs. “We believe that the fintech space Impact: for 15 million additional point-of-sale offers ample opportunities and the recent Serves 35 million unique customers, and acceptance points to be introduced and demonetisation announcement has further operates through 90,000+ network of small we see this as a potential opportunity propelled opportunities in the merchant retailer touchpoints across India to further penetrate our presence in the acquiring space,” opines Rajde, on a market,” shares he. concluding note.

January 2017 | The Smart CEO • 85 COVER STORY - FINTECH 35

31 A grassroots approach to savings By addressing the fundamental problems of traditional investment methods through transparency and simplification of investments, Tauro Wealth is inculcating the habit of online investment in the stock market amongst India’s young population.

Divya M Chandramouli W With a savings rate of nearly 31 per cent investing along with thematic investing Education, the way forward of the nation’s GDP, Indians like saving to help investors generate better long One of the primary difficulties Tauro for a rainy day. Yet, only 30 per cent of term returns. Our suite of proprietary faces is to change the Indian mindset this capital is invested in financial assets portfolio building algorithms is optimised when it comes to investing in the stock due to a lack of financial knowledge to generate higher returns by eliminating market. Getting customers to make and the right tools at one’s disposal to human biases and errors from the process the shift from gold and real estate to make a sound investment, rues Harsh of investing,” explains Singh. While the equities is something the company still Vardhan Singh, co-founder, Tauro Wealth company was founded in 2015, it has considers a primary challenge. “This (Tauro). Through its investment platform, only been a month since Tauro went live problem is further compounded by the Tauro aims to encourage investors to and the initial response has been very fact that people have repeatedly been invest in the stock market by providing encouraging. “We already have 1,200 exposed to financial advisors and experts innovative options that are an alternate registered users and in the last one month that intentionally mislead them or are to traditional investment methods that that our platform has gone live, we have trying to make the most money by selling might be expensive, unreliable and more had a tremendous response from over complex or inappropriate products,” importantly, lack transparency. “Our 100 customers who have begun investing opines Singh. There is also the challenge product uses the benefits of passive through it,” says Singh. of delayed gratification as with a longer

86 • The Smart CEO | January 2017 SNAPSHOT Tauro Wealth

Founder: Harsh Vardhan Singh term investment, customers do not see the benefit for years together. To deal with these challenges, Tauro conducts Our suite of proprietary portfolio seminars and presentations for prospective customers and reaches out to a younger building algorithms is optimised Year: target audience to inculcate the habit of to generate higher returns 2015 investing, early on. by eliminating human biases Scope for growth and errors from the process of For Tauro to grow, the key lies in the investing. City: company being able to provide its Bengaluru customers a more efficient way to invest and access to better financial products. At present, the company’s strength is just six and in these early stages, it is looking to constantly upgrade its platform Concept: to ensure that it is on par with global initiatives such as Make-In-India and Tauro Wealth is an online stock market standards. Singh views the recent impetus Digital India. All these are tremendous investment platform that encourages users from the government towards cleaning developments for the long-term prospects to look beyond traditional means of investing up the system in positive light. “The of the Indian economy and also the stock government is focussed on bringing major market,” he states. Propelled by this and policy reforms to improve the strength of its own growth initiatives, Tauro hopes to our economy by controlling corruption, serve over one lakh Indian investors over reigning in the parallel black market Investors: the next five years. Undisclosed seed funding from TracxnLabs economy and also driving growth through

January 2017 | The Smart CEO • 87 COVER STORY - FINTECH 35 32 Focus on greater transaction experience Nirvana and Faering Capital India-backed Transerv, a payments enabler, was setup with the goal of building unique payments experience which not only facilitates payments but also delivers convenience and engagement to the consumer. Its goal for now remains consolidating its services and maintaining profitability through sustainable operations.

Poornima Kavlekar

“Back in 2010, the digital revolution led the Government and even consumers to a massive rise in smartphone adoption wanting to go cashless, we believe Udio as well as Internet penetration in India. brings in a community-driven aspect to As a result, the country’s economy – digital transactions,” adds the co-founder. which was driven by cash – witnessed Through the platform, one can utilise an exponential rise in the number of features such as bill-splitting, sending/ digital payments processed,” recalls requesting money and social gifting. The ANISH WILLIAMS, FOUNDER, Anish Williams. However, despite the company also has a digital/physical card TRANSERV rapid growth, end-user transactions linked to every wallet which increases often suffered due to a lack of payments the payments flexibility for its users flexibility and a broken experience. “This and allows them to seamlessly transact was partly due to a heavy dependence on across online and offline channels. promotional offers, discounts and deals “This integration of consumer-centric as tools to aggregate customers. These approach and technology differentiates often left payments service providers with Udio from the other digital wallets and little resources to invest into improving is setting new benchmarks in terms of Our focus for the moment is on the robustness and the experience of their consumer engagement, quality and ease of consolidating our services and platforms,” explains he. transactions,” says a proud Williams. maintaining profitability through Identifying this as a gap in the Indian With a team of 180 employees, TranServ sustainable operations digital payments industry, he and his has been built as a capital-light company, co-founders established TranServ as a not driven by discounting. Currently, payments enabler and the Udio brand as a it has eight million customers on its fintech platform that leveraged technology platform, over 6,000 merchants and to deliver highly efficient, flexible and corporates and has close to 80,000 cash seamless payments solutions to both loading points plugged in to its platform. consumers and businesses. “Today, with The company’s revenue has grown by demonetization gaining steady focus from 10 per cent month-on-month which can be attributed to its conservative spending

88 • The Smart CEO | January 2017 pattern apart from a growing market. to meet this massive influx of demand and opines that one of the main reasons why anticipates that over the next few months, the company has been able to gain and Not just a digital wallet as it on-boards more users and merchants retain investor confidence is its business TranServ offers a host of B2C, B2B and on its platform, digital payments will model, which integrates sustainability corporate payments-related services become a habit for many and not just a with scalability. The company raised that add value and convenience to user compulsion. its first round of funding in 2014 from transactions, under the brand name Nirvana Venture Advisors Private Udio. Its product suite for businesses, Adoption – a key challenge Limited and also secured Series C which provides API-based native wallet One of the major roadblocks that the investment of US $15 million in funding solutions to partner merchants, allows digital payments industry in India led by Micromax and IDFC SPICE them to use the wallet as a promotional currently faces is the lack of a widespread Fund. Its existing investors Nirvana tool to engage and interact with their adoption of the digital medium as well Venture Advisors and Faering Capital customers. as the continued affinity towards cash. India also participated in the Series Despite witnessing impressive smartphone C funding. “Hence, our focus for the The company has also ventured into the adoption, less than 30 percent of the moment is on consolidating our services corporate expense management segment country’s population currently has access and maintaining profitability through through its Udio Corporate Solutions that to digital devices. Moreover, despite sustainable operations,” says Williams on include features such as meal/medical/fuel the entry of 4G-LTE services within the a concluding note. reimbursements, rewards and recognition country, there is still a significant portion programs and more. Additionally, it has of the country’s population which does created a digital payments ecosystem not have access to high-speed Internet through developments such as native facilities. The dependence on cashbacks phone integrations with Micromax and and discounts to drive adoption by most cash-to-digital remittance programmes of the digital wallet service providers is SNAPSHOT and linking of Visa prepaid cards (both another obstacle that is holding back the Transerv physical & digital) with Udio Wallet. Indian digital payments ecosystem in Udio is also the first non-banking entity to achieving its full potential. offer mVisa to its consumers. Where to from here Founders: Consolidation – the key The company aims to build an end-to- Anish Williams, Aditya Gupta, Sandeep Ghule & The company is looking at consolidating end payments infrastructure which caters its services by enhancing its product to several aspects of the overall online Anand Kapadia offerings and technological infrastructure. and offline transactional experience “The priority, at the moment, is to add such as online payments, merchant greater value to the user’s transactional payments, mobile-based push payments experience,” says Williams. It is already for consumers and merchants, device- Year: working on leveraging its partnerships based frictionless checkouts for online 2010 with Visa and Micromax in order to purchases, and P2P payments. And jointly implement payments products such working towards this vision, it has as mVisa across merchants, toll booths already partnered with Micromax and and petrol stations. This will allow the Visa. Moreover, it is looking to invest Concept: mVisa enabled app consumers across into new product lines such as micro- banks to digitally checkout at these outlets lending, in order to enable small-ticket, TranServ is a fintech company focused across the country. easily accessible loans for the country’s on creating the payment experiences for growing digital consumer base. The aim individuals and business partners. “Demonetization has been the answer to is to popularise digital payments in India the prayers of companies like us in the by creating a well-integrated nexus of digital payments ecosystem. We have seen virtual and physical prepaid solutions massive growth in the usage of our Udio and provide users with the best payment Investors: wallet and also the demand for the Udio experiences. Nirvana, Faering Capital India Evolving Fund, physical and digital card,” adds Williams. IDFC SPICEFund and Micromax Informatics The company is also ramping up capacity Talking about fund raising, William

January 2017 | The Smart CEO • 89 COVER STORY - FINTECH 35 33 A discounted investing platform

RKSV, the discount brokerage, has now rebranded itself to Upstox, and the founders have launched a low-cost, mobile-first stock trading platform. Shortly, the company wants to foray into mutual funds and also service the NRI market.

S Meera

Mumbai-based Upstox, co-founded by experienced traders Raghu Kumar, his brother Ravi Kumar, and Shrini Viswanath, is a next generation light weight trading platform, which offers a low cost brokerage fee of Rs. 20 per trade We also put a lot of effort for day trades and no fee for delivery in ensuring that we got a trades (when you buy stock and take delivery of that stock). balanced perspective on product development from traders as well The timelines as newbies who had never traded When the brothers moved to India in 2009, there were only two providers from before M whom to outsource the trading platform and these required a desktop to download a clunky .exe file. “They had gotten away with it for years because there was no fresh, new entrant,” says Raghu, who had run an algorithmic trading firm in Chicago from 2006 to 2008, and had been trading along with his brother since his mid-teens.

90 • The Smart CEO | January 2017 RAGHU KUMAR, RAVI KUMAR & SHRINI VISWANATH - CO-FOUNDERS, UPSTOX

In May 2011, the company was launched exciting. Less than two per cent of the Over the next year, Upstox wants to foray as a discount brokerage under the brand population invests in the capital markets, into mutual funds and also target the NRI name RKSV. In early 2012, they garnered so this is both a fantastic opportunity as community to trade on its platform, says users with a foray into retail broking, well as a curse. There are a lot of factors Raghu as he wraps up. offering unlimited trading for a fixed low at play that prevent “logic” from making price. By September 2014, RKSV hit a someone’s decision. “For example, trading turnover of Rs. 4,000 crore, thanks fixed deposits, gold, and real estate have to its low-cost, fixed fee model. This was been and continue to be looked upon 1 per cent of the turnover at NSE at the as fantastic assets to invest in. But the time. In February 2016, the company fact remains that investing in stocks raised a Series-A round of US $4 million outperforms all these asset classes. So SNAPSHOT led by Kalaari Capital, Ratan Tata and educating the user from the ground up GVK Davix. In May 2016, post the fund- becomes vital,” he adds. To address this, Upstox raising, it launched its rebranded trading Upstox has created an education site, platform Upstox and Upstox Pro, with a www.tradeacademy.in, which conducts mobile-centric strategy. free webinars, workshops, and has almost 100+ free videos that explain the very Focus: The toughest decision the founders had to basics of investing. Trading platform take was about the bells and whistles that commonly existed on virtually all other In Five Years trading applications but were not needed. Post fund-raising, the founders are “Those were difficult decisions to make. focused on building tremendous scale and We also put a lot of effort into ensuring they want to become the go-to trading and Launched in that we got a balanced perspective on brokerage platform. May 2011 product development from traders as well as newbies who had never traded before. The trading platform includes all It was a great learning lesson for us on exchanges; NSE, BSE, F&O, Currency how to build a product from scratch,” and Commodity. Owing to its visual Fund: adds Raghu. design, users can easily check their $4 million in series A from Kalaari Capital, GVK liquidity levels, and the platform offers Davix and Ratan Tata The Opportunity real time margin monitoring and one-click According to Raghu, the current trades. opportunity in front of them is certainly

January 2017 | The Smart CEO • 91 COVER STORY - FINTECH 35 34 Financing the ‘Missing Middle’ Vistaar Financial Services is striving to create financial inclusion for the ‘missing middle’, typically family businesses run by entrepreneurs who deal with cash. So far, it has disbursed Rs. 1,100 crore in loans to over a lakh customers through 200 centres across India.

Madhumita Prabhakar

institutions) Vistaar envisioned a majority of the total MSMEs segment, the self- While refinement of product and credit help groups or the missing middle, as its methodology is an ongoing process at addressable market; 76 per cent of the the company, it currently offers four market share, to be precise. “We were products on the platform; Small Business looking at family businesses, run by Hypothecation Loan (SBHL) of up to Rs. entrepreneurs who deal with cash. And, 95,000 with a tenor of two years, Small a key challenge we were faced with is, Business Mortgage Loan (SBML) of up there is no documentary evidence of their to Rs. 25 lakh with a tenor of five years, revenue or cash flows and they have high bill discounting with loan up to Rs. 25 loan requirements,” explains Nishtala. lakh and a 90-day tenor and, Equipment Finance with a loan up to Rs. 25 lakh Assessing Credit Worthiness over a tenor of four years. “While bill WhenW Brahmanand Hedge and So, how did they arrive at a methodology discounting is targeted at manufacturers Ramakrishna Nishtala founded Vistaar to evaluate the borrower’s credit with an annual turnover of Rs. 1 crore, Financial Services in 2010, their goal worthiness? As a first step, the team equipment finance is designed to enable was not to find a spot in India’s already held an in-depth study of eight different individuals, partnership or proprietorship cluttered fintech space, but to strive sectors, such as hotels & bakery, dairy and businesses purchase machinery,” shares towards financial inclusion, particularly allied businesses, home-based enterprises, Hegde. among businesses that operated in the Kirana stores and more, to arrive at a MSME (Micro, Small and Medium credit methodology. Customised to each Financing Its Growth Enterprises segment. Think Kirana store, a sector, it arrived at a mechanism wherein With loan disbursements also came a power loom or a brick kiln. it first assesses the borrower’s income need for Vistaar to begin seeking external by evaluating non-traditional documents funding to fuel its venture. It raised its In numbers, Vistaar was looking at 36 for income, ability, intention, business first round of US $3 million (before 2011) million enterprises with a total unmet need sustainability and credit behaviour. Then, from Sama Capital and Elevar Equity, of Rs. 2.9 trillion. Of course, while banks it determines the business’ credibility and followed it up with a US $1.5 million and NBFCs tried to address some of the through reference checks in the supply round in 2011. In 2012 again, it raised US sector’s credit demand, primarily of the chain, neighbourhood and other sources, $8 million from Lok Capital and Omidyar medium and large businesses and of the and finally, it initiates a loan against Network. “From here on, we wanted to productive poor (served by microfinance collateral. explore commercial funds from large

92 • The Smart CEO | January 2017 SNAPSHOT Vistaar Financial Services BRAHMANAND HEDGE AND RAMAKRISHNA NISHTALA, FOUNDERS, VISTAAR FINANCIAL SERVICES

Founders: investors. That’s when Westbridge Capital Brahmanand Hedge and Ramakrishna Nishtala came into light,” adds Nishtala. This was in May 2014, when Vistaar raised a Series C of US $27.37 million from Westbridge Capital, soon following it up with an One of the biggest challenges internal round of US $37.58 million, led Year: we faced was in identifying the by existing investor Westbridge Capital right team, especially because we 2010 and earlier investors, Omidyar and Elevar Equity. served a segment that hadn’t been addressed before. To tackle this, we During the last funding round, its co- Investors: founder, Hegde had pointed out that the first brought together a core senior Sama Capital, Elevar Equity, Lok Capital, money would be channelized towards management team, whose ideas we Omidyar Network, Westbridge Capital increasing its portfolio to Rs. 2,500 crore aligned with the company’s vision. in the next three years, along with an expansion (of its centres) from 150 at Later, we on-boarded and trained next that time to 275 in two years. “While this level of talent to work on ground continues to remain our focus, we also Lenders: plan to double the number of customers IndusInd Bank, SIDBI, Federal Bank, RBL Bank, we serve from the current 1,30,000 across Hinduja Leyland Finance, IFMR Capital and MSME segments,” adds Hegde. With psychometric tests (to evaluate a Sundaram Finance, to name a few borrower) and deeper adoption of data While being an NBFC institution serving and analytics being the key focus for the ‘missing middle’ stands as a key Vistaar going forward, its co-founders are positioning for Vistaar, it counts its confident that anyone wanting to replicate technology and digital backend to be Vistaar’s model in the market will take at Impact: least three to four years to stand neck- Served 1,30,000 customers and crossed loan its key strength and game-changer. “All our processes are paperless, digitised to-neck. “We want to be a leader in this portfolio of Rs. 1,100 crore and automated. Take for example, our segment and specialise specifically in the in-house IT platform; it can process MSME financial space,” concludes Hegde 7,000+ transactions in a month and on an ending note. enable electronic disbursement of loans Presence: via banks, not only bringing agility into 200 centres the process but also minimising risk for customers,” explains Hegde.

January 2017 | The Smart CEO • 93 COVER STORY - FINTECH 35 35

Improving credit delivery in India

Ribbit Capital and Omidyar Network funded ZestMoney is a technology company that facilitates EMI payment option for products purchased online or offline through its partner merchants without the need for a credit card.

Poornima Kavlekar I Instant digital lending. That’s the Solving the real financial problem those who don’t have employment buzzword that keeps Lizzie Chapman, “We believe that there is a gap in history or are self-employed etc. Banks co-founder of Zest Money, on her toes. the transactional credit side,” opines find it almost impossible to lend to this “There is a huge percentage of the Chapman. Explaining this further, she segment, Zest Money believes that using population in India that doesn’t have says, “Traditional credit bureaus are technology one can create models and access to credit, as it is impossible to reassessing the credit worthiness of the project the credit worthiness of this score credit worthiness using traditional same people. In fact, traditional financial population. Effectively, it aids lending methods,” says Chapman. And this services companies do not have the decisions based on alternative data thought brought together Chapman, Priya expertise, technology, time and alternative sources, enabling lenders to reach a wider Sharma and Ashish Anantharaman to set ways of assessing credit worthiness of the market, as well as make decisions quicker up Zest Money in 2015 in Bengaluru. mid-market consumer.” This effectively and without manual underwriting. The company aims to use technology and means there is an opportunity for fintech data science to improve the way credit is companies to understand the specific Not just this, the CEO of ZestMoney delivered in India. behaviour of this segment, especially believes that credit cards do not really

94 • The Smart CEO | January 2017 exist in India in the way it does in the If you need massive digital adoption, rest of the world. It is used to get loyalty points and not really a financing solution. there has to be a quick repayment And so, targeting those who really need prominent challenges that the company is method in the digital context the financing solution, the company has facing in the industry. “Customers don’t created an equivalent to the EMI concept understand a lot of concepts that we talk available in the offline world. And so, about and hence, user adoption is difficult. the company partners with e-commerce We have to spend time and money in companies to create a check out solution communicating with them so that they for the merchants. Hence, it facilitates understand us,” says Chapman. The EMI payment options for products company also has to work on simplifying purchased online or offline with its partner its message to its customers. merchants without the need for credit card. It works with over 12 merchants What ZestMoney has to permanently including velvetcase.com, juspay, credr. watch out for is the identity of a person com, chillr and Zefo. and how it can map it to the entire digital footprint of that individual. “It is possible Challenges galore for people to have multiple identities in Consumer education is one of the most the online context. This means that our identity connect solution has to track this SNAPSHOT while working with a customer,” says she. Zest Money Path ahead The pace of change over the last five years in the fintech space has been very dramatic and the growth going forward Founders: is expected to be even more magnificent. LIZZIE CHAPMAN, CO-FOUNDER AND Lizzie Chapman, Priya Sharma and Ashish “More specifically, the Indian ecosystem CEO, ZEST MONEY Anantharaman is fully backed by Government initiatives. KYC is being approached and built with to the right consumer and believes that full support from the Ministry of Finance partnership led approach to marketing is and the RBI,” adds Chapman. Given her sustainable in the long run. Year: global experience, Chapman believes 2015 that the Indian market is advanced when To aid its growth and expansion, the compared to the rest of the world. “For company raised funds to the tune US $ 1.7 example, the platform behind IMPS and million from Ribbit Capital (a US-based UPI does not exist anywhere else in the VC firm which invests in global fintech) world. And there is no other country that and Mumbai-based Omidyar Network. Concept: has 24/7 real time, instant and low cost Currently, the company is raising a fresh It is a technology company that gives instant payment infrastructure this sophisticated,” round of funds. EMIs to online customers, thereby enabling adds she, explaining why India has the shoppers with no credit card history to shop most conducive environment to create “Going forward, with a sharp focus on the as much as they want. financial products. This, combined with digital online transactional credit space, user population that is advancing at a fast we aim to create new channels and will pace, is adding to the strong potential for be led by our customers,” says Chapman. fintech sector in India. “We aim to use data and technology to create specific financial products and for Investors: While the company is all set to capitalise the next few years, as the market has a lot Raised US $ 1.7 million from Ribbit Capital on this potential, it doesn’t believe in of demand, we are focussing on the Indian (a US-based VC firm which invests in global aggressive marketing effort and targets market,” adds she, on a concluding note. fintech companies) and Mumbai-based consumer education. It also works with its Omidyar Network. partners to help them target their product

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