 "Bengaluru turns test bed for global fintech innovations")
Global and Indian financial institutions are increasingly experimenting new products and services in Bengaluru, India's technology hub, which is emerging the test bed for financial technology products and solutions globally.
In September, around 20,000 merchants across Bengaluru began testing a mobile app-based payment service, mVisa of global card issuer Visa, which would allow customers to pay for small-ticket services such as buying flowers or dry cleaning services. Visa is testing the app first in India's tech hub before it plans to take it globally. Similarly, in 2005 Citibank tested its near-field communication payment service in the city that allowed users to experiment contactless payment or tap and pay money on Nokia phones to vendors.
Novopay Solutions, a mobile payment company that uses the Aadhaar biometric scanner to allow people to conduct banking transactions from neighbourhood shops. Novopay's solutions were also not only built but also launched for the first time in India out of Bengaluru.
"Bengaluru has a very strong early adopter community and has high smartphone penetration; so it's like a perfect storm. There's software expertise, there's hardware expertise, design skills and manufacturing. A lot of these things have come together in Bengaluru along with the very strong start-up ecosystem. It's not just with financial technology (FinTech); it is the rest of the technology ecosystem as well," says Sanjay Swamy, partner, Prime Ventures.
In 2009, Swamy-led mChek India Payment Systems, a first generation mobile payments solutions start-up, did its year-long pilot to enable individuals to pay back loans in the micro-credit sector. The country's start-up hub also has several financial start-ups such as Happay, Scripbox, Ezetap, Capital Float and Coverfox.
Srikanth Nadhamuni, chief executive of Khosla Labs, which has incubated the Novopay start-up, says it is no surprise that Bengaluru fits in to be the test hub for financial technology solutions in India because the city is the destination for technology.
"Even in the US, we have seen similar trends. While New York is the banking and financial capital, all the new technology solutions in the financial technology space comes from the Silicon Valley," said Nadhamuni, who is also the co-founder and chairman at Novopay.
Bengaluru has traditionally been a hub for outsourcing software development and providing back-end services for global financial institutions. Two core banking solutions used by global banks - Finacle of Infosys and Flexcube of i-Flex, which was acquired by Oracle, were built out of the city. As the market in India expands, global firms are looking at the country as a business opportunity, building products that they could take it other emerging markets.
In January, Karnataka government-owned Bangalore Metropolitan Transport Corporation would implement a solution that would allow people to buy tickets with prepaid cards. VeriFone, which is a partner, plans to take it to other cities and potentially other countries as well.
"India's progressive regulations that are driven by the Reserve Bank of India are also key factors. It has opened up opportunities for smaller and nimble companies to build products and solutions that are disruptive," added Nadhamuni. "Bengaluru is by far leading the charge. You'll find that where technology is leading the charge it's almost invariably Bengaluru."
Swamy says Bengaluru is on the radar for financial technology innovations as global banks and financial institutions are being disrupted with new-age firms that are building new business models using technology.
"I don't think you can compare India with the Fintech space in Silicon Valley from 10-15 years ago, because even there, it's less than five years old," says Swamy. "The innovations happening in India are largely in sync with what is happening across the rest of the world, especially in the US."
