Don't compare us with legacy banks: Aeldra Financial's Sukeert Shanker

We want to be the first truly global consumer bank. Some banks have an international presence, but continue to be country-bound on the consumer side, says Shanker

California-based Aeldra Financial offers bridge-banking services between India and the United States. The neo-bank — an entirely digital entity — enables the Indian diaspora to transact and invest without a social security number and address in the US. Backed by Greg Kidd — a Silicon Valley-based serial entrepreneur and co-founder and CEO of the GlobaliD platform — it hopes to disrupt the playbook of legacy banks with an innovative pricing strategy. SUKEERT SHANKER, founder and chief executive officer of Aeldra, spelt out his game-plan in an e-mail interview with Raghu Mohan. Edited excerpts:

How has the response been to your platform after its launch in December last year?

We received over 10,000 customer sign-ups in the very first week, and are slated to open 2,000 accounts per day from March. We have tripled our targets this year to almost one million accounts from India alone. A lot of this demand is latent, because people just cannot open a US bank account. The enormous demand for cross-border banking points to the global lives the affluent and mass affluent lead across countries — whether it is having friends or family out there, sending kids to college, business relationships, frequent travel, desire to move there, investing, or thinking of making the US their second home.

Can you flesh out your positioning vis-a-vis legacy banks?

We want to be the first truly global consumer bank. Some banks have an international presence, but continue to be country-bound on the consumer side. But we offer end-to-end cross-border banking, including account opening, credit services without a FICO score (a rating created by the Fair Isaac Corporation), and an investment platform that enables simple, quick, and low-cost investing in the US. We offer industry-leading interest rates with no fees involved, including international wire transfers. Besides, we have a proprietary peer-to-peer real-time transfer called AeldraPay. Banks (legacy) take 1-3 business days for such transfers. Our uniqueness is driven by the expertise of the team. We are conversant with, and focused on compliance and regulatory matters. And we have also built credibility with regulators and banks in both India and the US.

Your offering is linked to the Reserve Bank of India’s liberalised remittance scheme (LBS) which allows one to remit $250,000 a year. Pricing is a tad above $20 per transaction by banks, but you are offering it for free. So, how do you make money?

The LBS is not priced, as such. The government of India has put a withholding tax deducted at source of five per cent that can be offset against the tax paid. International wires are priced by banks that they originate from. We don’t charge in-bound wire fees, while other US banks charge $15-35 per transaction. Our model is similar to banks, except for the reliance on fees. 

We earn a few basis points on every dollar of deposit, and through sharing of interchange on debit-card transactions with Blue Ridge Bank in the US, plus incentives from MasterCard. We don’t need to rely on fees, being completely digital without legacy costs.

How are Aeldra’s know-your-customer (KYC) norms different from those of banks which offer a similar service?

There are no legacy banks that offer a similar service. You can’t digitally open an account with a US bank without having a social security number and a local address. Our customers in India only require a passport, and can open an account on their mobile within five minutes. We have worked extensively with regulators, US banks, and compliance teams to develop our proprietary KYC process and procedures. We use the latest technologies, like risk-scoring algorithms, artificial intelligence-based facial matching and machine learning, along with risk-based customer profiling and continuous transaction monitoring.

What is the importance of neo-banks offering such services, and how will it reshape the remittance business?

This will revolutionise the market. There are now application programming interface-based data sources that weren’t available even two to three years ago for KYC underwriting. Aeldra’s founders, in their previous experience, have innovated to launch de-novo digital banks in the US for the non-US diaspora. Legacy banks typically find it challenging to implement due to their inherent rigid structures, lack of agility in their processes, and innovative product mindset. As a fintech disruptor, we believe we are in the right place and time with the right capabilities to address this problem.

Do you intend to foray into other countries, and who are the investors backing the firm?

We want to be present globally. Our initial focus is on the BRICS-plus countries that offer a pool of 100 million customers. We currently offer US banking, but will expand our footprint to Canada, the United Kingdom and Australia shortly. We are backed by Greg Kidd — the legendary Silicon Valley investor with investments in Square, Ripple, Coinbase, Robinhood, and other top fintechs. Our other investors include the managing partner of McKinsey (North America), the US head of PwC’s Financial Service Consulting, venture capitalists, and C-suite executives.