Open, Google and Tiger Global-backed Neobank, plans to connect around 10 million small businesses over 3 years, as it aims to address a range of challenges faced by SMEs to manage their business finances using technology have to solve.
Open offers a business account in partnership with banks that help SMEs automate and run their finances effectively. Working with the top 14 banks in India, the firm aims to include around 250 banks globally that will use its platform and technology. It plans to expand its operations globally in markets such as Europe, Southeast Asia and the Middle East.
Anish Achuthan, co-founder and chief executive officer of Open, said, “We started five years ago primarily to solve the challenges faced by small businesses, because there are too many inefficiencies in existing processes.” Interview. “Today many top banks in the country are deploying our solution to launch their own Neobanks.”
For example, the firm’s BankingStack solution empowers banks and financial institutions to launch digital banking services. It is deployed in over 15 banks in India and 2 in South-East Asia. It is empowering banks to complement their own digital banking offerings and provide better experience to their customers.
“We are enabling traditional banks to bring a better banking experience to our customers,” Achuthan said.
Open competition with players like Razorpay and British fintech firms like Revolut and Tide.
Open recently became India’s 100th unicorn after raising a $100 million round led by Temasek, Google and SBI Investments. It is now serving over 2.3 million SMEs and processing $30 billion in transactions annually. The platform connects 100,000 new SMEs and startups every month.
The platform enables businesses to collect payments, make seamless payments, and streamline expense management. Other processes include managing compliance, auto-adjusting and classifying income and expenses, thereby automating book-keeping.
“We currently manage $2 billion in deposits on our platform. Our target is to take it to around $7 billion by next year.
Open was founded in 2017 by fintech serial entrepreneurs Anish Achuthan and Mabel Chacko along with Ajesh Achuthan and Dina Jacob in 2017.
As a natural progression, Open is now tapping into the SME lending space as well. The platform is set to launch three new products in addition to its existing SME credit card offerings aimed at augmenting the capital needs of SMEs. New products include Open Flow – a revenue-based financing product for e-commerce businesses, Open Settle – an early settlement credit offering and Open Capital – a working capital lending offering for SMEs.
Open is targeting $1 billion in lending over the next 12 months through a new suite of products on the platform.
To this end, Open and IIFL Finance Limited have come up with a joint venture to launch a neo-bank that will cater to the banking and credit needs of Micro and Small Enterprises (MSMEs). It will provide an alternative experience to traditional banking. This includes providing a simple interface for banking and integration with accounting, finance and payroll in a seamless manner.
Achuthan said SME lending is the need of the hour as small businesses largely lack access to strong capital resources. A recent IFC report indicated that SMEs hold 6-7 per cent of credit shares and face a credit gap of around $1.1 trillion.
The firm has recently received approval from the Reserve Bank of India (RBI) for its new cross-border payments product. This comes as Open has completed the testing phase of the second group under the RBI’s regulatory sandbox structure called ‘Cross Border Payments’. Open is one of the 4 entities that have completed the testing phase of RBI’s regulatory sandbox.
Open has also come up with ‘Zwitch’, a no-code embedded finance platform. It enables businesses in any industry to build personal financial products and services that fit the customer journey.