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Tag: fintech ecosystem

  • Slice-North East Small Finance Bank Merger: What Fintech Cos Should Take Note Of

    Diwali festivities seem to have started a wee bit early within the fintech ecosystem. Spirits are high after the tough taskmaster and India’s banking regulator Reserve Bank of India gave a no-objection certificate to what is being touted as a rare merger. 

    Digital payments app company–Slice Pay–merging with the lesser-known Guwahati-based North East Small Finance Bank has certainly piqued the interest of stakeholders. This move effectively gives Slice the power to raise deposits, and lend and offer their own unique products to customers of NESFB.

    Slice began operations in 2016 and was essentially a prepaid card with a credit line. According to data tracking platform Tracxn, the Bengaluru-based unicorn fintech company was valued at $1.8 billion as of March 2023. Meanwhile, NESFB’s valuation has been pegged at around $72.4 million.

    For financial technology companies, this move comes as a lifeline as it opens up another avenue for scaling up operations.

    In this article, we explore how fintech companies can lay the foundation and prepare for a probable merger-like scenario with a bank in the future.

    License VS Merger
    Points to Be Noted

    License VS Merger

    Getting a banking license in India is a big deal. RBI scrutinizes applications under a microscope. Earlier this year in July, the RBI rejected three applications for small finance bank licenses, maintaining its reputation for being a taskmaster. In 2022, the regulator had rejected 6 licenses as it found it unsuitable.

    One exception was the central bank’s green signal in 2021 to Resilient Innovations Pvt. Ltd (owned by fintech unicorn BharatPe) to buy a 49% stake in Unity Small Finance Bank. But, then this was a distress sale, where RBI was doing its job of safeguarding the deposit holders’ interest.

    PwC’s 2021 report on neobanks in India delved into the ambiguity surrounding regulations for smaller digital financial institutions. Neobanks is a term used for financial institutions or fintech companies that operate digitally, without a physical presence. “Currently, unlike neobanks, the regulatory regime does not envisage a completely digital method of offering financial products. It is extremely critical that the current indirect regulations are relooked at in light of the digital offerings of neobanks and their relationship with financial entities.”

    Transaction Value in the Neobanking Market
    Transaction Value in the Neobanking Market

    For a fintech company, opting to go through the due diligence of getting a bank license and following regulatory norms can prove to be a headache. At present, RBI rules state that a payments bank or an NBFC with a successful track record of 10 years is eligible to apply for a bank license. This may seem like a long wait for a fintech company as it may take years for some companies to even break even.

    A fintech company usually has three options when it comes to the renewal of its license. One, it either applies for a non-banking finance company license with the RBI. Two, it can choose to join hands with another fintech company. And three, taking the heartbreaking decision of shutting shop in case they don’t rake in enough value. The option of merging with a small finance bank as a business objective was never really given much thought, until now.

    Meanwhile, for a small finance bank, merging with a fintech company is a shortcut to upgrading its technology, staying relevant to the youth, and paring its losses to some extent. North East Small Finance Bank reported losses for the third straight year with losses widening to ₹288 crores in 2022-23. Its net worth dropped to ₹60 crore, much lower than RBI norms of maintaining a net worth of ₹200 crore. A section of the media has raised eyebrows over the shelf-life of this collaboration, given the losses on both sides and the contrasting cultures in both organizations.

    However, the Slice-NESFB merger seems to be a well-planned strategy and not a spur-of-the-moment decision. In March, Slice acquired a 5% stake in NESFB, to get “comfort”. Media reports have also quoted an unnamed source from the company claiming that Slice had been following through with due diligence over the past 15 months to get the deal through.

    True to their nature, startups, and fintech companies prefer to see this merger as a window of opportunity rather than view the deal with scepticism.

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    Points to Be Noted

    Before celebrations begin within the fintech space, it is time for companies to ponder over making the most of this development. How can they be the next in line as far as envisioning their banking ambitions are concerned? Taking cues from this new-age merger, we enlist a few parameters on which fintech companies can buckle up and chart a similar route to growth:

    Self-regulate Prudently

    Fintech companies have long borne the ‘bad boy’ image in the eyes of the regulator.

    In 2022, RBI barred non-banking entities from embedding credit lines in their loading PPIs (prepaid payment instruments) such as prepaid cards or mobile wallets. This decision had hit Slice itself which then applied for a PPI license and received it by the end of 2022.

    Recently RBI Governor Shaktikanta Das asked fintech companies to form a self-regulatory organization. In RBI’s view, such an organization would help to evolve best practices, protect privacy and data norms, avoid mis-selling, and promote ethical business practices.

    “You need to think you are already a small finance bank and create those kinds of capabilities within the organization before the regulator would even consider something like this,” said Yogi Sadana, Founder and CEO of Zype Loan App. He added, “Unlike an NBFC, the amount of opportunities and liabilities that rests on a bank which a banking license allows taking customer deposits, to open bank accounts, that’s a completely different ball game altogether as compared with an NBFC which was not taking customer deposits, in terms of governance standards, in terms of operating stats, cheques, and balances, more importantly, the management. “

    It’s only a matter of time before RBI comes cracking the whip on those who fail to comply, which could in turn tarnish the company’s image.

    “Eventually they (fintechs) should be ready to come under regulation…the framework for regulation may come. RBI does not leave any stone unturned to leave anybody out of their purview,” said Jaslene Bawa, from Flame University who has worked as a financial market researcher in the corporate sector.

    Bawa also said that having rigid mechanisms, assessing credit profiles, regular audits, keeping an easy cash flow, and creating a robust board can help a fintech or an NBFC get bank-ready.

    Play to Your Strengths

    Setting up an intricate financial technology infrastructure for a mid-sized or a small bank is an exhaustive process. In such a scenario, merging with a fintech company is akin to adding a bit of zing to their portfolio. In addition, fintech apps are a popular choice among the youth, giving ready access to a younger customer base, albeit small to begin with.

    “Strategic plan for a fintech should be how nimbly can they set this (technology) up. Can they set it up internally or do they need to acquire an existing company with skill sets and reputation which can marry their reputation, culture, and ethos so that integration of both is seamless and easier,” said Badrinarayan Vedanthan, a banker with 26 years experience across MNCs, SME and MSME/Rural Finance business sectors. Vedanthan, now an independent financial consultant, also previously served as the head of strategy at Suryoday Small Finance Bank.

    Slice’s main target has been the Gen Z and millennial crowd. In a media interview in 2021, Rajan Bajaj, founder of Slice emphasized how they would continue to target the young segment, despite their high-risk profile. “The average age of slice’s customers is 23-24, which differentiates us from the rest. We understand the risk and demand profile of this young customer and know how to help them navigate through their finances. At present, there is no other solution at a slice’s scale in the market that can cater to the needs of this generation in a transparent and scalable manner.”

    Fintech companies should play to their strengths as far as their technological reach is concerned. Digital payments have revolutionized the way Indian banks and organizations have managed to get millions of unbanked individuals into the purview. RBI’s Das acknowledged this feat in his speech at the G20 summit held in September.

    Just a month before the Slice-North East Small Finance Bank merger was announced, RBI Deputy Governor Rabi Sankar took note of the upper hand that fintech companies possess. Sankar said, “An arrangement of financial institutions buying services of fintech companies was “functional” adding, …fintech entities can perform functions where they have a competitive advantage and banks focusing on areas of their expertise. While customers benefit from an improved experience with curated products and services at competitive prices…”.

    Customer is King

    A customer-service-oriented approach will help a financial technology company deepen its stronghold and make it an attractive proposition for merging.

    “Banking is not just a business, it’s a responsible service, so if they wish to merge with any such entity, they have to make sure that the customer is well taken care of,” said former banker and head of department – finance at Lexicon MILE, Dr Manju Chopra. “Secondly, they (fintech companies) can go slow on the entire due diligence, the valuation study. Don’t hurry into valuing or finding these banks, ensure that synergies are very very high,” she added.

    The segment and geographies where a fintech company operates could also end up being their USP (unique selling point). Deepening that stronghold could turn fintech into an attractive proposition.

    RBI’s Das has himself stressed the three key aspects that will make fintech “future-ready”.

    “…key issues which are critical for the Fintech ecosystem to be stable and future ready. In this context, three critical issues, viz., customer centricity, governance, and self-regulation merit attention.”

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    Conclusion

    On the surface, this merger seems like a foot in the door for financial technology companies’ growth, but it has raised many eyebrows for its “unusual marriage” of two contrasts.

    It’s indeed an uphill task for both entities to find a middle ground as far as expanding their customer base, scaling up technology, and customer data sharing are concerned. Only time will tell if these opposites, who have attracted themselves to each other, will result in a honeymoon period for customers.

    Unarguably, the merger has set the ball rolling for a number of possibilities for fintech companies and small finance banks to stay afloat. In the meantime, it only makes sense for these smaller players to clean up their image and books so that they are not caught by surprise when the RBI comes knocking at the door.

  • How BNPL Companies Make Money? | Scope of Buy Now Pay Later in India

    Customers tend to purchase their products with various options when they buy through an e-commerce website. This could be through the various debit cards the customer has in their possession, through net-banking accounts, or through cash-on-delivery where they would pay for their products in form of cash once they receive the product you can pay for it next month when you have the money to do so.

    There is a new trend that is emerging by the name of Buy Now Pay Later(BNPL). Say you find a good mobile phone worth say 10,000 rupees, but you don’t want to pay for it as it goes out of your budget for the time being (due to a cash crunch or whatever reasons it may exist). But say by opting for the BNPL alternative, the third-party BNPL company would pay the e-commerce site the 10,000 rupees and then you can pay the BNPL company the same 10,000 later.

    There are various BNPL companies in India like Lazypay, ZestMoney, Simpl, MobiKwik, etc. Some companies, like Amazon in Amazon Pay Later and Ola in Ola Money Postpaid, have an intrinsic BNPL system built within them.

    But then doesn’t it make you think, how do these BNPL companies make money in the first place, given the various instabilities associated with it potentially? How is it different from the conventional credit card? What is the market scenario of companies which offer the BNPL service in India? We will discuss all of these in this article.

    How do BNPL Companies earn revenue?
    Difference Between Credit Cards and BNPL
    Scope of BNPL in India

    About Buy Now Pay Later payment options

    How do BNPL Companies earn revenue?

    BNPL companies make money mainly from two avenues:

    Revenue from Sellers

    For vendors, BNPL is an alternative payment method (others including credit & debit cards/wallets/Cash-On-Delivery) and thus, they have to incur a transaction fee like any other medium at a particular rate. However, a rate of 2-8% is higher than a normal credit-card discount rate, which is usually around 2.9% for e-commerce transactions and about 1 percent less for transactions made by credit cards in-store.

    Thus, BNPL companies have to position their service offering in such a way that it convinces future customers of how enticing their service is, and this would further convince more vendors to buy into the BNPL service they are offering thus increasing the customer traffic.

    Revenue from Customers

    Most third-party BNPL providers do have their soft-credit checks to avoid giving money to people who have a poor record for repaying obligations, but this is not universal. Here is how BNPL provides monetizing from consumers:

    1)Interest- This varies depending on the company. Some providers like Lazypay charge an interest of 10-30% on the “loan” amount, depending on the customer’s credit and duration of repayment. There are other organizations like Split in America which do not charge any interest rate as long as the installments are paid in due time.

    2) Late fees- This forms a major chunk of the revenues of the BNPL organization (as high as 30%). Late fees occur when a charge is imposed on a customer for not paying the due amount on time and he thus has to pay later. Think of it like borrowing a book from a library, and then the various fines accumulated for not returning the book.

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    Difference Between Credit Cards and BNPL

    Difference between BNPL companies and Banks offering Credit cards

    In India, there are mainly three differences between BNPL companies and banks that offer credit cards.

    1)Eligibility Criterion- Banks have more stringent criteria to give out credit cards (such as their CIBIL credit score, whether they are earning above a certain criterion or not). BNPL companies are relatively less stringent in their criteria. This helps many consumer segments, such as self-employed people and lower-income category sections.

    2) Accessibility- Unlike credit cards, where you have to fill various online forms going through multiple levels of authentication, we can get access to the BNPL option through a one-stop authentication using our UPI ID. Another fact to be noticed is there is no waiting time to avail of the BNPL option unlike say credit cards, where we have to wait 2-3 weeks after applying for one.

    3)Interest Rates- BNPL companies tend to offer an interest rate of around 28-30% and as mentioned earlier, interest rates are only applied when the customer opts for a longer duration of repayment. Whereas for credit cards, this tends to be way higher than 36-42% annually. Cases of high-risk borrowers do exist in which BNPL companies offer their services at interest rates similar to credit cards.

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    Scope of BNPL in India

    Currently, as it stands, unlike other developed nations, BNPL in India is still in its infancy. But it has been widely speculated that it could take off in the future.

    A market research firm by the name of Redseer estimates that India’s BNPL market will stand at 45-50 billion dollars by 2026 from the measly 3-3.5 billion dollars as it stands right now. The research firm also predicts that the number of BNPL users in the country could rise to 80-100 million customers by that time, from the 10-15 million users it currently has.

    As per Upasana Taku, co-founder of MobiKwik, “Only 60-70 million Indians have access to credit today, which means 93% of India has no access to credit”. Thus, there are a lot of opportunities to be exploited by BNPL companies in the Indian market, where millions of people have little access to formal credit. The poor access to formal credit has further been exacerbated by the COVID-19 pandemic.

    These things can be noticed in the fact that about one-fifth of the revenue of MobiKwik is due to the BNPL transactions and there has been a 45x growth in BNPL transactions for MobiKwik. Similar trends can also be noticed in other BNPL companies.

    Currently, the major obstacle is, unlike those behemoth banks that offer credit cards, BNPL companies can only offer a maximum credit of 100,000 rupees (which roughly equates to 1310.17 dollars). But this can be overcome as long as the reach of BNPL companies spreads all-over India, especially in the tier-2 cities and villages of India.

    Conclusion

    Thus, this article documents how BNPL companies get to make their revenue in India, how they are different from banks that offer credit cards, and what is their scope in our country. In a country where a lot of people are transitioning from the lower-income group to the middle-class group, this appeals a lot to the Gen-Z and millennials of our country. The more people get access to credit, the more they spend on various goods which leads to the growth of the economy.

    FAQs

    Which are the BNPL apps in India?

    Some of the best BNPL companies in India are:

    • Lazypay
    • ZestMoney
    • Simpl
    • MobiKwik
    • ePayLater
    • Flexmoney
    • Paytm Postpaid
    • Sezzle

    What is the BNPL market in India?

    According to the Q4 2021 BNPL Survey, BNPL payment in India is expected to grow by 89.5% on annually. It will reach US$ 6927 million in 2022.

    Which are the E-Commerce website that allows Buy Now Pay Later option?

    Top e-commerce websites that provide the payment option of Buy Now Pay Later for complete range of products are:

    • Amazon
    • Flipkart
    • Myntra
    • MakeMyTrip
    • Yatra

  • Yap – Transforming Every Business Into a Fintech

    Company Profile is an initiative by StartupTalky to publish verified information on different startups and organizations. The content in this post has been approved by Yap.

    Technology has transformed the way financial transactions and operations happen. Today making and accepting payments, receiving loans, everything has become simpler than ever before. All thanks to tech startups, that are coming up with amazing products that have made financial operations much easier for financial institutions, business owners, and consumers. Chennai-based ‘Yap’ is one such startup that this revolutionizing the way banks and other financial institutions offer services to their customers. Yap provides tools that let banks and financial institutions design customized and convenient solutions for their customers. Here is more about Yap.

    Yap – Company Highlights

    Startup Name Yap
    Also Known As M2P Solutions
    Headquarters Chennai, Tamil Nadu, India
    Industry Fintech
    Founders Madhusudanan R, Prabhu R
    Founded Nov 14, 2014
    CEO Madhusudanan R.
    Website www.m2pfintech.com

    Yap – About
    Yap – Latest News
    Yap – Founders and Team
    Yap – Startup Story
    Yap – Mission and Vision
    Yap – Logo
    Yap – Business Model and Revenue Model
    Yap – Employees
    Yap – Funding and Investors
    Yap – Growth
    Yap – Competitors
    Yap – Future Plans
    Yap – FAQs

    Yap – About

    Yap offers a payments-as-a-service infrastructure that can handle all types of retail payment assets. Yap’s Application Programming Interface (API) platform allows digital platforms, fintech companies, and offline businesses to offer personalized solutions to their end customers, by linking them with other fintech platforms and banking and non-banking financial firms.

    Yap’s functional APIs, let its clients receive and transfer funds through  Wallet & Cards, Cross Border Payments, Gift Cards, Fleet Spends, Just-In-Time Funding, UPI as well as other payment methods. Consumer, corporate, small business, and credit card loans are among the products it offers.

    Yap’s modular platform ‘bank in a box’ enables its clients to offer products such as opening bank account, credit, online payment, toll payment, foreign exchange solutions, etc.

    Many companies in Nepal, India, New Zealand, the UAE, Australia, and the Philippines are served by YAP. Around 20 Indian banks, including ICICI Bank, Yes Bank, and RBL Bank, as well as numerous consumer internet companies like Ola, Cred, Swiggy, and also large NBFCs like Muthoot, TVS Credit, Bharat pe, Razorpay, Finin, etc use YAP’s services on the lending space.

    Yap – Latest News

    In March 2021, Yap raised $10 Million in funding from investors like Flourish Ventures and Omidyar Network India. The fundraising round included participation from YAP’s current investors, including Beenext, 8i Ventures, and Better Capital.

    “We are uniquely poised to cater to new cohorts of distributors as more firms embed financial services into their digital platforms. This investment allows us to strengthen our technology teams, build new capabilities as well as reach new markets across Asia,” Madhusudanan R, co-founder at Yap, said.

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    Yap – Founders and Team

    Yap was founded by Madhusudanan R and Prabhu R.

    Madhusudanan R

    Madhusudanan R is the Chief Executive Officer & Founder at YAP. He is a fintech entrepreneur with deep-rooted experience in building and scaling Payments businesses across Asia.

    Prabhu R

    Prabhu R is the Co-Founder & Chief Operating Officer at YAP.

    Yap – Startup Story

    Madhusudanan R. and Muthukumar A and came up with the Yap idea during the office tea breaks. The founders who worked at Visa Inc in Mumbai from 2010 to 2012, often realized how big banks were lagging behind in digitizing their services. The focus of these conversations was always on how the financial industry might fix this problem. Finally, Madhusudanan and Muthukumar, came up with a solution themselves and founded Yap in 2014.

    The Yap founders observed how banks work in India, through their combined expertise of over a decade working for Visa, Citibank, and Paypal. They understood that due to their aversion to developing new digital products, banks were unable to reach a whole new set of clients. Yap is a solution to these problems, Yap’s is empowering many banks, financial institutions, and businesses to offer various customized solutions to its customers.

    YAP’s unique API (application programming interface) gives banks and fintech businesses the tools they need to create new payment systems. This shortens the time it takes for these businesses to acquire consumers who want simple and quick electronic payment options.

    “When we started, banks in India didn’t use any APIs. In other markets, like the US, this phenomenon started ten years ago. In India, it started around 2014–15, when a few digital payment companies started to grow,” Madhusudanan, co-founder of YAP, told.

    The firm claims to deal with 15 banks in India at the moment. Apart from providing an API for payment integration, including UPI payments, YAP also assists them in acquiring corporate clients, which are often digital financial institutions such as neobanks or the fintech divisions of big corporations.

    “They don’t have to spend any money on this, and they can reach a lot larger audience without having to spend money on client acquisition,” Madhusudanan explained.

    Yap – Mission and Vision

    Yap’s mission statement says, “We are focused on user experience and customer retention. We are constantly thinking of new use cases and ways to serve our customers across all their financial needs as seamlessly woven into their daily routine life as possible.”

    YAP is on a mission to transform every business into a fintech.

    Company Logo of Yap
    Company Logo of Yap

    Yap – Business Model and Revenue Model

    Yap provides B2B tech solutions to financial institutions and businesses. The YAP platform connects companies to licensed banks, financial institutions, and financial infrastructure such as UPI/card networks through its extensive Application Programming Interface (API) libraries. Within a few weeks, a company may connect to YAP’s platform, choose goods and banking partners, and roll out financial products to its consumers or vendors. In addition, YAP oversees essential continuing activities like reconciliations and compliance monitoring. YAP now serves over 200 fintech with an API platform.

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    Yap – Employees

    • Rajesh Wadhwa – Chief Business Officer
    • Prabhu R – Co-Founder & Chief Operating Officer
    • Muthukumar A – Chief Technology Officer
    • Madhusudanan R – Chief Executive Officer & Founder

    Yap – Funding and Investors

    Date Round Amount Lead Investors
    Mar 16, 2021 Series B ₹732M Flourish Ventures, Omidyar Network India
    Apr 21, 2020 Series A $4.5M BEENEXT
    Feb 13, 2020 Seed Round ₹100M Amrish Rau

    Yap – Growth

    Around 20 Indian businesses, including ICICI Bank, Yes Bank, and RBL Bank, as well as numerous prominent consumer internet companies like Ola and PaisaBazaar, use the service.

    “We are uniquely poised to cater to new cohorts of distributors as more firms embed financial services into their digital platforms. This investment allows us to strengthen our technology teams, build new capabilities as well as reach new markets across Asia,” Madhusudanan said.

    The 6-year-old firm offers comprehensive Application Programming Interfaces (APIs) to banks, startups, and consumer online businesses. The new funds (raised in March 2021) will be utilized to expand into foreign markets and bolster the team with new hires.

    Yap – Competitors

    The top competitors of Yap are

    • Open Bank Project
    • Decentro
    • TrueLayer
    • Teller, Inc.
    • Plaid
    • Konsentus
    • Figo
    • Quovo
    • Instantor.

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    Yap – Future Plans

    Yap’s major plans include expansion to new geographies and expanding the team.  According to Madhusudanan R, co-founder of YAP, the company intends to grow to Bangladesh, Saudi Arabia, Oman, Egypt, Vietnam, and Indonesia.

    India’s rapidly digitizing financial environment, according to Amol Warange, head of Omidyar Network India, would provide chances for YAP to expand.

    “We think that digital enablers like YAP can catalyze financial inclusion and promote adoption of financial products among the next 500 million Indians who are projected to access the internet for the first time via their mobile phones” Warange added.

    Yap – FAQs

    What does Yap do?

    Yap offers a payments-as-a-service infrastructure that can handle all types of retail payment assets. The company’s platform links banks, financial institutions, enterprises, payment networks, and merchants to build an interoperable payment platform that allows businesses to quickly design and carry out their own customized payment solutions.

    Which country is Yap based in?

    Yap is a Chennai-based, Indian fintech company.

    Who founded Yap?

    Yap was founded by Madhusudanan R and Prabhu R.

    Which companies do Yap compete with?

    Open Bank Project, Decentro, TrueLayer, Teller, Inc., Plaid, Konsentus, Figo, Quovo, and Instantor are the top ten competitors of YAP.

  • Top 8 Leading Fintech Startups in China

    Fintech is one of the leading industries in the world because of many emerging unicorns in the sector. The fintech industry has become a game-changer for banking services industries as it has been tremendously impacted by Technology enterprises. Most Fintech startups offer financial services such as mobile payment, digital banking, insurance, crowdfunding, wealth management, or recently even digital currencies like cryptocurrency.

    Fintech companies nowadays have to rely on advanced technology like datasets, Internet of Things (IoT) artificial intelligence (AI), cloud computing, or even blockchain in order to provide their services. Fintech currently has over 79 Unicorns globally making it the largest sector with the most number of Unicorns, while there are more upcoming fintech startups that will be added to the list.

    The global Fintech market was said to be valued at $111 billion, while it is now expected to grow to more than $158 billion by 2023. China is often considered one of the leading countries in the sector of financial technology. The country so far has over 2,160 Fintech startups out of which over 18 are already unicorns. According to some studies over half of the world’s digital payments were made in the country using apps like Alipay and WeChat in 2017.

    In 2018, China received over $25.5 billion investments into its fintech industry making it the leader in this sector. Even to this date china continues to be the leader in the industry because it completed over 600 plus deals in 2018 alone, the country also has the highest fintech adoption rate of 69% in the world.

    China went through a Fintech boom because many startups wanted to fill the gap of traditional banking which lacked in the country by introducing fintech services that fulfilled the needs of ordinary people and SMEs. Because of the growth of the fraudulent practices in the Chinese sector in China, the Government has come up with rules and regulations including 65 national financial standards and 252 financial industry standards to control them.

    The fintech startups in China are targeting the middle class in the sectors of wealth management, different types of insurance and private banking as the services like mobile payment is already popular in the country.

    Tencent
    Ant Financial
    Lufax
    Bitmain
    Dianrong
    Ping An
    JD Digits (Formerly JD Finance)
    Renrenxing Technology
    Frequently Asked Questions

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    Here’s a list of top fintech startups in China.

    Tencent

    Company Tencent
    Founded year 1998
    Headquarters Shenzhen (China)
    Funding $12.6 Billion
    Investors Lippo Group, Prosus & Naspers, PCCW, IDG Capital

    Tencent Logo
    Tencent Logo

    Tencent is considered to be one of the largest gaming companies in the world, but also has a foothold in the Fintech industry. Over the years the company has come up with top-notch payment services through WeChat, which was considered to be the first online-only bank offering wealth management and other financial services in China. Through WeChat Pay the company has made many strategic investments and third-party marketplaces, increasing its valuation to $21 billion in 2018.

    The company was initially founded by Ma Huateng, Tony Zhang, Xu Chenye, Chen Yidan and Zeng Liqing in 1998, with its headquarters based in Shenzhen, China. The main competitor to Tencent in the fintech sector is Alipay which is under Alibaba. By the end of 2019, WeChat had is estimated 800 million users and 50 million merchants on the platform every month. This is why Tencent is one of the most financially valuable companies in the world.

    Ant Financial

    Company Ant Financial
    Founded year 2014
    Headquarters Hangzhou (China)
    Funding $22 Billion
    Investors General Atlantic, Meros Equity Global Management, Warburg Pincus, The Carayle Group, Credit Suisse, Temasek Holdings, Sequoia Capital, Khazanah Nasional, Silver Lake

    Ant Financial Logo
    Ant Financial Logo

    Ant Financial is one of the top fintech startups in China that was founded in 2014 with its headquarters in Hangzhou, China. Ant Financial provides various digital payment services for both customers and businesses.

    Ant Financial is known for its Alipay mobile wallets which offer financial services like transferring money to bank accounts, bill payments, online or offline mobile bill payments, among others. The brands under Ant Financial are Alipay, Ant Fortune, Yu’e Bao, Zhima Credit, MYbank and Ant Financial Cloud.

    Alipay also allows SMEs to accept online payments from customers through cards, corporate credit solutions and Bank transfers. Ant Financial Group is a subsidiary of the Alibaba Group which is a Chinese eCommerce giant and is also said to be the world’s most valuable Unicorn Company.

    As of 2018, the company has over 87 million users across the world along with JV partners, currently, it has over 1.2 billion users worldwide. Besides its mobile wallet services, Ant Financial is also a leading fundraising company in the country.

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    Lufax

    Company Lufax
    Founded year 2011
    Headquarters Shanghai (China)
    Funding –
    Investors HarbourVest Partners

    Lufax Logo
    Lufax Logo

    Lufax is a popular online wealth management and P2P lending platform for personal loans. The company provides insurance services to both individuals and institutions with advanced technology like AI and Cloud. Lufax was founded by 2011 in Shanghai, China and was originally set up by Ping An as an incubation project.

    It currently is the second-largest P2P lender in the country and is planning to branch out its business gradually to work with funds and insurance companies. In 2018, the company also expanded its services to Singapore, the same year it also came out with a new blockchain solution that identifies users and tracks transactions, especially between borrowers and lenders. Lufax is said to be the best Internet financing industry in China as it has accelerated the marketing process.

    Bitmain

    Company Bitmain
    Founded year 2013
    Headquarters Beijing (China)
    Funding $764.7 million
    Investors Temasek Holdings, Crimson Ventures, Noris Capital, Newegg, Coatue, Sequoia Capital China, CAS Investment Management, Jumbo Sheen Group, HuangPu River Capital

    Bitmain Logo
    Bitmain Logo

    Bitcoin is a well-known Edtech startup that provides hardware-based mining solutions for Cryptocurrencies. The company was started by Micree Zhan, Jihan Wu in 2013 with its headquarters based in Beijing, China. Bitmain is known for providing hardware-based mining (ASIC) solutions for bitcoin mining. By 2018, the company became the largest designer of ASIC chips for bitcoin mining.

    Besides ASIC chips the company also makes servers, simple routers, AI applications, mining tools and other services & products for blockchain. Bitmain also operates BTC.com and Antpool which became the biggest pool for bitcoin. Bitcoin introduced Bitmain Technology in 2013 that successfully engaged with the field of AI and increased power consumption speed.

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    Dianrong

    Company Dianrong
    Founded year 2013
    Headquarters Shanghai (China)
    Funding $549 million
    Investors Simon Investment Managers, EG Capital Advisors, Affirma Capital, ORIX Asia Capital, CITIC Securities, China Minsheng Investment Group, GIC

    Dianrong Logo
    Dianrong Logo

    Dianrong is a leading peer to peer platform for personal loans. The company was founded in 2012 with its headquarters in Shanghai, China. Dianrong provides products and service offerings like credit ratings, investment products, marketplace lending solutions risk management and operation tools.

    In 2018, the company created a supply chain finance solution designed especially for finance and business. The company provides a well planned and secure infrastructure for industry data and insights.

    Ping An

    Company Ping An
    Founded year 1988
    Headquarters Shenzhen (China)
    Funding $4.8 billion
    Investors –

    Ping An Logo
    Ping An Logo

    Ping An Technology is the main subsidiary of Ping An Group a multinational conglomerate. The company is in charge of the financial sector that provides services like insurance, banking, investment, and numerous other internet businesses. The company went on to create Lufax and Oneconnect which are both well-known fintech companies in China.

    The company was founded in 2008 and initially provided IT services to firms within the Ping An Insurance Group. Ping An also allows its customers to use its P2P lending services over AI technology. Ping An was the first insurance company to be selected on the index and is currently the World’s top global insurance brand in 2020.

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    JD Digits (Formerly JD Finance)

    Company JD Digits
    Founded year 1998
    Headquarters Beijing (China)
    Funding CN¥ 34 billion
    Investors CICC, COFCO, APOFCO, Sequoia Capital China, China Creation Ventures, China Taiping Insurance, Intonation Ventures, Harvest Global Investments

    JD Finance is one of the leading Chinese fintech companies that was started by the JD Group in 2013. JD Group is one of the biggest B2C online retailers in China. The company has its headquarters in Beijing, China and aims to become the most trustworthy internet investment and funding platform. The company provides its customers with services for investment and financial management, which are easy, high yielding and safe.

    The company uses advanced technology big data, AI, cloud computing, blockchain and IoT for providing its financial services. JD Finance is estimated to be $20 billion as it raised over $1.9 billion in 2018. The company comprises 10 business divisions that cover different types of covering corporate and consumer finance needs.

    Renrenxing Technology

    Company Renrenxing Technology
    Founded year 2014
    Headquarters Beijing (China)
    Funding CN¥ 4.5 billion

    Renrenxing Technology is another popular Chinese Edtech startup that is known for developing applications for borrowing and lending money. The company started Jiedaibao in 2015 which has its headquarters in Beijing, China. Jiedaibao is a leader in providing peer to peer services for lending and borrowing money, besides that it also offers services like matching, registration, collection and other services for small loans for customers and SMEs.

    The company is now known to be the country’s top tech unicorn company as its valuation is estimated to be over $10 billion. Through Jiedaibao, Renrenxing Technology has come up with an app that helps in deciding interest rates independently and based on that it generates an electronic contract that is legal. This enables their customers to get personal loans at a fixed price and get reminded of the repayment or expiry of the contract.

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    Frequently Asked Questions

    What are the top Fintech startups in China?

    The top Fintech startups in China are Renrenxing Technology, JD Finance, Ping An, Dianrong, Bitmain, Lufax, Ant Financial and Tencent.

    How many fintech startups does China have?

    The country so far has over 2,160 Fintech startups out of which over 18 are already unicorns.

    What is the valuation of the global fintech market?

    The global Fintech market was said to be valued at $111 billion, while it is now expected to grow to more than $158 billion by 2023.

  • Top-Notch Entrepreneur, Milan Ganatra’s View on Fintech Industry [Exclusive Interview]

    StartupTalky interviewed Mr. Milan Ganatra, a prominent face in the wealth management community to get his professional opinions and views on the Fintech Industry in India. He brings with him more than two decades of experience in financial services. This serial entrepreneur and investor founded Miles Software, a path-breaking company in the fintech space.

    As an individual, Milan Ganatra believes that life is a beautiful journey where it is essential that one constantly grows, gains experiences, and learns new subjects. Milan continues to believe, despite increasing competition, that fintech has enormous potential. With a solution-oriented mind, he is interested in finding like-minded partners with whom he can invest in ventures within the sphere of fintech. A prime example of this is his investment in Financepeer and Finalyca after his exit from Miles Software.

    His eagerness to explore urged him to invest and form a disruptive fintech platform – 1Silver Bullet, which provides gateway infrastructure for a range of tech-based avenues such as Edtech, Agritech, Insurance, Traveltech among others. Milan is a member of the Advocacy & Knowledge Management Committee for the Indian Institute of Alternative Investments funds, as well. He also consults several banks  and financial institutions. Known for his dedication to his profession, he is always excited to hear new ideas, invest in new projects, and offer innovative solutions.

    Let’s see what Mr, Milan Ganatra has got to say on the Indian Fintech Ecosystem in the post ahead!

    1. Motto of 1Silver Bullet and How it works
    2. Top trends in the Indian FinTech Ecosystem
    3. Change in the Fintech Industry of India in the Pre & Post-covid Era
    4. Growing usage & Advancement of Technology in the Fintech space
    5. Role of AI / ML -driven performance analytics in the fintech space
    6. Future of the Fintech Space
    7. Role and Future of Robo Advisory in Investment management
    8. How to be successful in the growing technological advancement in fintech space?
    9. Data Security in Fintech Space: Distinguish a legitimate fintech platform from a fraud
    10. Milan Ganatra’s Expectations from Startups prior to Investing
    11. Milan Ganatra’s Recent Investments and Future Plans
    12. Contact Mr. Milana Ganatra for Investment, Mentorship & Solutions
    13. Milan Ganatra’s Advise to the Budding Fintech Platforms

    1. What is the main motto of 1Silver Bullet? How does it work?

    With 1Silver Bullet we are trying to democratize the digitization of the financial space. Despite the recent emphasis on digitization, there are still glaring gaps that neither incumbents nor fintech have managed to cross over. With 1Silver Bullet our effort is to lay down the infrastructure and provide a well-thought digitization framework that can help these organisations to transform their legacy systems in a smooth, efficient, and time-bound manner. We lay down the framework and provide them with the tools so that they can focus on their core business.

    The most striking trends in the fintech ecosystem are centered around how these new-age companies have disrupted the status quo. They quickly seized the ground from incumbent players by introducing technology to improve and simplify processes. The three topmost fields where we saw fintech companies make their mark are:

    • Payments: Apps like GPay and Paytm are some of the most popular payment apps. They completely revolutionized how people in India make payments today
    • Banking: The success of fintech shows how banks have no choice but to keep up with the pace set by these neo banks. While most of the neo banks have an anchor point, like investment or SME, what they offer is a holistic experience.
    • Investment or brokerage: Groww, Zerodha or Upstox offer a completely different experience to investors, making it more democratic, accessible, and easy-to-use than any other traditional means. They have opened access to users who are tech-savvy willing to explore investment options that otherwise would sound complex. Consequently, they have grown very quickly in a very short period.

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    3. What change did you witness in the Fintech Industry of India in the pre & post-covid era?

    The COVID crisis is a watershed moment in our history and it has left an undeniable impact on every aspect of our life. The fintech industry is no exception. In general, we have seen that digital platforms found a wider acceptance with the spread of digitization and there is good reason to stay bullish about the future.

    A recent report by Matrix Partners and McKinsey & Company shows that fintech across different segments have experienced mild to major disruptions with the lending sector being the most affected. In wealth management and insurance, we have seen some positive moves. The pandemic has also forced some segments to put a hold on their new products with 50% of the neobank delaying product launches. But these disruptions notwithstanding, the outlook is quite optimistic on future growth. This comes from an increasing acceptance of fintech and the wide adoption of technology across sectors. For instance, incumbent institutions like banks are now tying up with fintech to improve their digital presence, boost reach, and create a more efficient delivery of products.

    Fintech Industry

    4. How can one keep up with the growing usage & advancement of technology in the Fintech space?

    What is considered cutting-edge tech today will get obsolete very soon. The only way to keep up is through investing in continuous Research & Development (R&D) and keep upgrading the tech stack. The other equally important aspect is the service. User expectations change with time and with increasing competition. We have to keep improving and innovating. The agility to disrupt yourself is the key mantra for any fintech to survive. It must have the agility to adapt, the will to improve, and the tenacity to keep looking for a way forward.

    5. Highlight the role of AI / ML- driven performance analytics in the fintech space

    Artificial Intelligence and Machine Learning have transformed the fintech space and will continue to be the drivers in its growth. The evolution of Robo-advisors and its growing impact on wealth management is a perfect example of how these technologies can create a revolution. But there are many other myriad ways in which we use AI/ML to create more efficient and secure services while improving the accuracy of our processes. Something as simple, but critical, like automated customer support, rely on AI/Ml to reduce human intervention, gather data, create a more efficient, and quicker turnaround for the customer. But it’s not just performance analytics, AI/Ml is a game-changer when it comes to predictive analytics.

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    6. What do you think is the future of the Fintech space?

    Given that India has the highest fintech adoption rate in the world, we can safely predict a bright future for the industry. In Asia, the Indian fintech industry has already pipped China to lead investments with close to $286 mn from 29 deals, against China’s $192.1 mn from 29 deals in Q1 2019.

    Despite the COVID-19 slowdown we can expect an annual growth rate of 20.2% till 2023. We may need some course correction in the short term to counter the impact of the pandemic, but in the long term, I see fintech gaining more and more ground as digitization becomes the norm.

    7. How effective is the role of Robo Advisory in Investment management? What does the future behold? How will it impact the employment of potential prospects?

    Robo-advisors are the most efficient online investment management services that employ mathematical algorithms to offer financial advice with nominal human intervention. The AI helps manage clients’ assets in a structured and strategic manner. It also understands and predicts investor behavior. This helps build a comprehensive investor profile giving in-depth and accurate information on the investor liabilities, spending patterns, and likely behavior. While it does everything in an automated fashion, the human interface is crucial to monitor the performance from time to time. We cannot say that it will eliminate human advice.

    “Humans and machines will work in harmony in the space of investment advisory”

    In terms of its impact on skills in the wealth management industry, we are already seeing a greater demand for technical training to work with Robo advisors. We will need coders, analytic experts, and wealth managers who can work with data, AI, and machine learning.  

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    8. From ideation to evolution & ultimate revolution – how can one be successful in this journey with growing technological advancement in the fintech space?

    Like any other revolution, success always begins with an idea. But it does not necessarily have to be unique. Some of our most successful businesses today are testament to the fact that it is rarely the first-mover advantage that works. What takes an idea from its germination to a decisive success, is the execution. When it comes to fintech, we first see if the concept simplifies a complex process, if it makes the life of a consumer easy.

    Next, we see if it can be scaled up. Then comes the hard work of fine-tuning the initial concept. We have to continuously listen to the customers, understand their pain points. The revolution comes only when we provide the customer with a unique and amazing experience.

    “There is no magic and no short-cuts here, just hard work”

    9. How safe is the customer data in Fintech space? How do you suggest customers distinguish a legitimate fintech platform from a fraud/illegitimate/unregistered?

    The safety of consumer data is the most serious issue facing the fintech industry and it must be addressed urgently if we want to keep our momentum and gain wider acceptance. To avoid falling for a fraudulent fintech, consumers are advised to stay vigilant. Beware of any platform that tries to impose a quick decision, does not carry out standard verification procedures, is unclear on its fee, or does not carry a physical address on the website. At the very least it should have a secure https:// web address.  

    But there is undoubtedly a larger and more fundamental problem of safety that we face today, which can make a serious dent in our trustworthiness in the industry as a whole. We need a singular tech-focused regulator that can enforce compliance, not the current fractured structure that stays divided between RBI, SEBI, and IRDA. We must hold fintech responsible in the way we hold banks liable. Until a regulator steps in (as it eventually will), responsible fintech should follow best practices, such as disclosing vulnerabilities, to reassure customers.

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    10. With your recent investment in 1Silver Bullet & Finalyca, Are you planning to invest in any more upcoming fintech startups or thinking about a whole new yet another innovative venture?

    I am exploring completely new domains. I have recently invested in Halaplay, a part of Nazara Technologies which is a listed Indian gaming and sports media platform. Online gaming is an interesting space to grow and thrive in. A new venture is something I will talk about when I am ready to announce it.

    11. How can one potentially connect with you to either present ideas, get innovative solutions/mentorship or investment and stand out from the crowd?

    Mr. Milan Ganatra’s Email ID: Milan@ganatramail.com

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    12. How do you scrutinize the list of startups before making an investment? What do you expect?

    When we evaluate a startup for an investment, there are a few factors we are looking for. These centre around the founder, the concept, and the founding theme. The founder’s passion and commitment towards their idea is the first thing we check. Then comes the potential of the concept in terms of its scale. Does it address a generic or exemplary issue? Finally, we come to the founding theme and its clarity. Our focus is on the planning involved, whether it is detail-oriented and quality conscious.

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    13. From Miles Software to 1Silver Bullet – Your out-of-the-box ideas & innovations is commendable! What would you advise the budding fintech platforms?

    “If you think you have an idea, come out of your comfort zone and pursue it. There is no better time than today to pursue your dream. You may have to go through some struggle but believe in yourself. Be passionate about your idea”

    Conclusion

    The Indian Fintech ecosystem has seen tremendous growth, even during the pandemic times. Given that India has the highest fintech adoption rate in the world, we can safely predict a bright future for the industry. In Asia, the Indian fintech industry has already pipped China to lead investments with close to $286 Mn from 29 deals, against China’s $192.1 Mn from 29 deals in Q1 2019. Despite the COVID-19 slowdown we can expect an annual growth rate of 20.2% till 2023.