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We have processed over $20 billion in transactions: Open CEO Anish Achuthan

We have an advantage over fintechs that offer lending based on credit bureau scores or conventional bank statements, said Achuthan

Anish Achunathan
Anish Achunathan, Co-founder & Chief Executive Officer, Open
Raghu Mohan
5 min read Last Updated : Nov 08 2021 | 6:10 AM IST
Open has just raised $100 million from Temasek, Google, Visa International and SBI Investment, with existing investors Tiger Global and 3one4 Capital also participating.

Targeted at small businesses, it is one of the fastest-growing neo-banking platforms in Asia. Anish Achuthan, co-founder and chief executive officer, spoke to Raghu Mohan on his plans. Edited excerpts:

What, essentially, is the difference between a neo-bank and a digital lender?

A neo-bank is a financial technology firm or a non-bank which offers banking service to customers, and can technically offer an entire spectrum of services that a licensed bank offers. In most cases, neo-banks operate without such a licence, but partner with a bank for offering these services. Digital lenders offer only lending services.

For example, globally, you have Monzo and Revolut. Initially, they didn’t have a banking licence, so they partnered with a bank to offer savings accounts to customers. Lending may or may not be done by these neo-banks, whereas fintechs focused on lending, provide only lending as a service.

How is Open positioned as a neo-bank?

We are a small and medium enterprise-focused neo-banking platform. What we offer is a current account to SMEs in partnership with a bank. What differentiates us from a traditional bank is our internet-banking dashboard where we offer a lot of tools for small businesses to automate their finances, like built-in invoicing, built-in payroll, built-in accounting, and regulatory filings. It helps businesses to automate their finances using our platform.

So, that’s the way it’s different from a traditional bank, but when it comes to the market, we typically compete with current accounts from businesses. As for lending, we have partnered with banks and non-banks, and their capital is being lent to customers. In the four years since inception, we have processed over $20 billion in transactions and on-board 90,000 new SMEs and startups on our platform every month.

Digital lenders also claim to offer payroll services and enable a composite view of transactions. How different are you from them?

We have an advantage over fintechs that offer lending based on credit bureau scores or conventional bank statements. They don’t have access to other bank transactions. Some of them do offer payroll services, but it’s at a very small scale at this point of time. We are turning the bank account into a financial operating system. Because all the funds move to Open’s current account and that’s how we are able to offer them better banking and lending services.

You are part of the Reserve Bank of India’s sandbox framework to build a cross-border payment system based on blockchain? How is that shaping up?

While offering current accounts to small businesses trying to solve banking challenges, one thing we came across was collecting, sending and receiving payments internationally. For example, if I have to remit some payments or access certain services through a bank transfer, it is a tedious process. And it’s the same whenever you want to receive funds as well. So, we built a blockchain-based cross-border payments system. If any Indian business wants to collect payment from the US, they can instantly get the money once it is paid (out there), and we take care of all the compliance issues.

So, the way this is designed is that we have a partner bank in the US and when money comes in from the US, it gets updated in blockchain nodes in India, as well as our partner bank in India. And we have real-time access to the information about the money movement that is happening from the US to India, plus the KYC documents of the customers who are doing the transaction. The same holds true when there is an outward payment to the US.  The pilot-project is for the US-India cross-border remittance. In the coming months, we will expand it to other markets as well.

Where do you propose to deploy the $100 million raised recently?

When we started four years back, we were one of the first in the neo-banking space. Now, there are many more entities coming into the market, including global players. So, one of the uses of the funds is to keep growing on market leadership. The second is to launch new products, especially on lending, wealth management and cross-border, which will also directly relate to more hiring of engineers, product managers, and marketing people.

Third, we have also launched a new set of products — what we have built as a neo-bank, we have started offering as a solution to banks as well. Today, we have helped a lot of banks to launch their own neo-banking propositions, which is a new unit where funds are going to be deployed. And fourth, we are also expanding to Vietnam, Philippines and Indonesia.

When you say you are going to enable traditional banks to open neo-banks of their own, what does that mean?

Today, some like ICICI Bank have launched digital-banking solutions for their customers, which are built fully on top of our platform. So, we offer our platform for banks to launch their own branded digital banks. In fact, the top 15 banks in the country are either deployed, or in the process of deploying our solution. So, this is what we call the tech-enterprise banking division. 

And, we are increasingly seeing more and more banks outside India doing the same to compete with fintechs. That’s where our strength comes in, since we already have experience in building it. And apart from the 15 banks in India, we have two more bank deployments happening — one each in Indonesia and Vietnam.

Topics :GoogleFintech sectorTemasekVisasbibanking licence