Episode 173 / June 12, 2022

The story of India’s 100th Unicorn, Open ft. Founder, Anish Achuthan

41 min

Episode 173 / June 12, 2022

The story of India’s 100th Unicorn, Open ft. Founder, Anish Achuthan

41 min
Listen on


We’ve heard inspiring stories of founders of Facebook and Microsoft who’ve dropped out of Harvard and even some of the well known Indian Entrepreneurs who’ve dropped out of IITs to build on their dream venture.

But in today’s episode we’ll talk with Anish Achuthan, who ran away from his hometown during his Class 11th with dreams to build something big in the Dotcom space and currently is the Co-founder of Open, which recently became Kerala’s first unicorn start-up.

Listen to Anish talk about his journey through his various ventures over the last two decades and how he’s building for Open to democratize the Neobanking space in India.


Notes –

02:42 – Being born in Govt service-oriented family in Kerala to getting inspired by Dotcom

06:11 – Meeting his cofounder & life partner

07:49 – Cumulative learnings from his previous companies

11:27 – Product Offerings by Open for SMEs, Banks and Fintech Entreprises

13:57 – Key milestones in Open’s journey

15:49 – Current metrics on the platform

16:56 – What are his plans with Open for the long term

19:17 – Their moat against other Neobanks and traditional banks

23:04 – Product & distribution strategy for the first 100 to 1000 users

31:46 – Licenses and certifications needed for Neo Banking

33:47 – Challenges while cracking the first banking partner

35:27 – Monetizing their services on Freemium model

36:55 – Advice to early-stage entrepreneurs


Read the full transcript here:


Anish 0:03

So personally, if you ask me, I’m not a big believer of this Neo banking as a story, because I don’t really believe that today’s customers need another bank account. So that’s where like on the SME side or on the business side, what we have actually tried to do is that banking is just a base layer for that, what we’re actually trying to do is that bringing that down payables and receivables for example, if as a platform, saying that, okay, hey, your outstanding from your customers is like 10,000 rupees, and here is a specter of those customers basically. Or when you’re doing a payout to a vendor automatically recording that entry into your accounting system. And then instantly showing that here is your profit and loss on the balance sheet automatically.


So we are actually building a complete financial layer on top of your banking or ability to bring all your other bank accounts together in one unified platform. So this is what even today, banks are launching their own neo banks. For example, today, some of these banks have launched SME, neo banking positions, they were either focusing on, they’ve not built a completely interconnected module. For example, the traditional bank strength has been in the banking sites, but when it comes to building the accounting or the expense management, the payroll and the compliance part of it, these are still in the process of building. So what we have is like an early mover advantage, obviously, because we started about four years ago, but today we have complete financial lawyers, which globally very few companies today have. I’m not saying that people are not building on it, definitely. And it will be much faster than probably if it took four years for competitors to catch up and things like that. But as of now, this is the USP that we have and we have been keeping on building products on top of that.


Siddhartha 1:45

Hi, this is your host Siddhartha Ahluwalia. Welcome to the 100x Entrepreneur Podcast. 100x Entrepreneur hosts some of the best entrepreneurs and venture capitalists from the Indian startup ecosystem, who have grown 100x of themselves. On the podcast, they share their habits, their mental models, and their processes of scaling. So by listening to them, you can understand their methods of scaling 100x. Today, I have with me, the founder of the 100th, Unicorn of India. Anish Achuthan, founder of Open bank. Welcome Anish to the 100x Entrepreneur Podcast.


Anish 2:24

Thanks for having me on your show.


Siddhartha 2:27

Open is a Neo bank for small and medium businesses, helping them with all their banking needs. Today, they have an enterprise route also for the banks. I’ll let Anish talk more about Open. But first, let’s deep dive into his own journey. Anish, can you share your tryst with entrepreneurship? How did you get started in entrepreneurship, your family background and your parents?


Anish 2:51

So Siddhartha, I was born in Kerala in a small town called Perinthalmanna, which is near Calicut. And my parents were into the government service, my dad was an engineer, and my mom used to work as a school teacher. And I always aspired to become a journalist throughout my school, and because of that, I used to always have this ability to connect with news or keep exploring more things, the curiosity to learn things. And that’s when the internet was started while I was in seventh standard, I got my first email address and by ninth I started building websites. And I also happen to read the story of Sabir Bhatia and the Dotcom. And I was really inspired by the potential that the internet can bring and especially Dotcom because it was actually connected to my dream of doing something in the media space.


And in 2001 I ran away from my home to a place called Trivandrum, capital city of Kerala, which is 300 kilometers away from my place where I grew up, to do my first Dotcom startup called and in the initial three, four years, I used to stay in a tumble and a railway station and I had three of my friends who were co-founders at that point of time, they were going to college, which was also supporting me. So I ran this from 2001 to 2005. And this got acquired by Asian at the south India based media group. And after the acquisition, I was motivated to work for them for two years. And then again, got out and started a mobile payment platform called Cashnxt, which was solving for the needs of financial inclusion by using mobile phones. And this later got acquired by a company called Prepaid Masters who is a Latin American company.


And post that it launched an NFC enabled payment platform called Neartivity, which didn’t do well. And while I didn’t do well, I got a chance to connect with Ashish Kashyap who was CEO of ibibo at that point of time, who was planning to launch a payment gateway called PayU, so I joined PayU as a part of the three member team. Then moved from PayU to a company called OnMobile global reasserting their global and commerce product unit. And again started out as a payment gateway called Zwitch which was focused on developers that got acquired by Citrus payments and worked as part of Citrus and Citrus got acquired by PayU so went back to PayU. And then I started Open. So that’s my journey in two minutes.


Siddhartha 5:08

And you said you ran away from your home.


Anish 5:12

It’s ran away in the sense, typically growing up in a middle class family, your parents and your family has a lot of expectations, especially when all of your family members are either an engineer or a doctor, and probably, someone who doesn’t want it to, and for me my passion, I found that okay, now is the right time to do my startup. So I find it very difficult to actually continue that. So that’s where I ran away. And I basically ran away to a different city.


Siddhartha 5:39

And were your parents okay with you not completing your 11th and 12th class?


Anish 5:44

I think, even today, they are not okay with those things. But you know how all of our parents are very well within a very good intention, basically. So they definitely, like always, were not happy with the equation, but obviously over a period of time right now, they’re also happy with what’s happening in the current days with me.


Siddhartha 6:10

And tell us about how you met Mabel. And how you both became co-founders in most of your ventures.


Anish 6:17

Yeah, so I was running Cashnxt, which was like a mobile payment platform to solve for Financial Inclusion. We came up with a technology called near sound data transfer, which enables and turns a local feature phone into a mobile payment device, and turns the local Kirana shop into a bank branch. That was a project which I was working on. And we were doing a lot of pilots in partnership with the World Bank and the New York Times did a half page story about one of the pilots which we were doing. And at the same time, Mabel was trying to work on a biometric payment platform called Touch to Pay, and she happened to read the story. And then she contacted me at that point of time during our code. And then we realized that there is a lot of disconnect in terms of mobile payments and what we really wanted to do.


And then she later joined as co-founder in Cashnxt, and after we sold Cashnxt, we then did the launch near to and that’s how the journey started, basically. And I think ever since that, all of our Ventures we did together.


Siddhartha 7:14

And when did you guys get married?


Anish 7:16

We did it after three, four years. 2011 is when we got married?


Siddhartha 7:21

And what is the complementary set that each of you bring as co-founders to the table?


Anish 7:27

So, Mabel has always been focused more on marketing and operations. So she actually takes care of those areas where I’m mostly focused on the products and the strategic alliances and the sales and the innovation side. So that’s always been how in all the startups we used to actually look after the respective areas.


Siddhartha 7:49

Your previous companies that got acquired, what were your learnings, cumulative learning from them, that you applied in Open?


Anish 7:57

It’s not only the companies where we acquired, even the companies where we actually failed as well. So for example, a lot of things that we have implemented today or I would say, like in the process of like, continuously trying to experiment today are also based on some of the learning for example, the way in which you build a culture basically, in the organization. I would say, probably when me and Mabel we both started our first organization, we were probably really bad managers, and this also taught us how to behave like family members, because we should not be able to actually, somebody should not feel that okay, these are husband and wife or a decision is being taken in a bedroom kind of a thing. So some things on the culture.


Second thing is sometimes, we had actually built ideas, which were very much ahead of their time, rather than relying on the customers focusing more on the research reports. For example, when we built Neartivity wireless, it was all because of that the number of NFC phones will go up and NFC enabled payments will happen. But even today, one personal phone is enough, the so-called NFC technology. So solving for a while, you should innovate, but it should also rely on research reports. But at the end of the day, you should also test it with the market, whether customers really need this, those kinds of things.


Third is like never building solutions just for investors thinking that okay, maybe I’ll get started with some idea. And after three to six months, some investor will come and actually fund this thing. So now when I start something, I’ll at least plan for the first 12 months in some way like either in a bootstrap way or something. So my business model will not be always fully dependent on, some investor would come kind of thing as well. So these are like a few of the learnings which I had had from our previous startups.


Siddhartha 9:46

Dear listeners before we dive further into the podcast, I would like to thank our sponsors Prime Venture Partners. Prime is the first institutional investor in category creating tech startups like Mfine, Dozee, Planet Spark, Niyo. Prime is now investing out of its fourth fund of $120 million. Today I have with me Shripati Acharya, managing partner Prime Venture Partners. Shripati, we would like to know from you, how does Prime work with the founders. And what is so different about prime from other VC firms.


Shripati 10:21

So Prime is a high conviction high support VC. And so our process is different both during the evaluation and after the investment is made. During the evaluation, it’s less of a typical q&a, but more of a joint brainstorm where we are jointly looking and brainstorming on what the product could be, and what the ultimate vision of the company could be in terms of its impact. And in the process, entrepreneurs engage with all the prime partners. And this is very important, because after the investment is made, the entrepreneurs can engage with individual partners directly who can assist in different areas. For example, we had a company which was looking for a US go to market. And there we helped the company directly connect with prominent Valley angels, and get an investment from prominent VCs there so that they could not only get an investor base, but also develop an ecosystem partnership in the US, which was very helpful to the company. So in that fashion. The engagement is both deeper and more intimate with the founders once we have entered the company.


Siddhartha 11:29

Now moving a little forward. Can you describe the Open bank’s offering today? What are the various offerings?


Anish 11:37

So we have three different business lines today at Open. The first is an SME business banking platform which we offer to small businesses. Second is like an enterprise business where we help banks to launch their own neo bank. So we have like the 15 out of top 17 banks in India currently deploying our solution. And then we have a third division called Zwitch where we offer our infrastructure to other fintechs or non fintechs to build FinTech services. Now, if you could allow me, I’ll just come to the first part of this where we actually started, which is Open money, primarily when in 2017, I was working in PayU and before that in Citrus, when we interact with a lot of these entrepreneurs. One thing Which you realize is that everybody’s talking about that business banking is broken for them. And I always used to wonder, why is Business Banking broken, because I thought, whatever complaints or whatever we crib about the Indian banking system, I know that the Indian banks do much better than what we have from the outside world.


But then I realized that the problem is not just about banking, it says that today as an entrepreneur, I have to use multiple tools. I’m using Zoho, I will be using a tally, I’ll be using an expense managed system, and I’ll be using a payment gateway. All of these systems don’t talk to each other today. So for example, if I get a settlement from a payment gateway, I need to still check to my bank account, whether the settled amount I had got all the settlement for all the successful transactions basically, or when I create an invoice in our software like a Zoho, I need to again go and check to my bank account, see whether this payment has been made and do a manual reconciliation.


So that’s when we thought if your bank account has the ability to integrate some of these tools like invoicing, bookkeeping, Payroll Expense Management, and if it can also automatically identify from where the money’s coming from, for what purpose where it is going out. I can automate income, expenses and bookkeeping. So can we build a digital banking system which integrates tools to help a business automate their finances so that an entrepreneur can get more time to focus on his core business. So that was the thought process behind Open money, which is a nep banking platform. And when we started this, we also realized that getting a banking license is nearly impossible. So we can’t offer direct banking and when we also see a lot of these fintechs, outside India, partnering with banks to launch banking services. So that’s where we took that approach of building that.


Siddhartha 13:56

And in your journey of Open, can you share the milestones each year, let’s say two milestones each year in 2017-18, 2019-20 and 2021.


Anish 14:06

In 2017 I think the first milestone was like I had this idea of building a Neo bank and nobody was ready to bet on this thing. So that’s when Jiten who came on board as the initial investors and initial set of a six member team who had previously worked with me in the past five organizations, they came on board and that was our biggest strength I would say even today, building the base fundamentals of the organizations. The second year, and for the first one year, we are more focused on convincing banks because unless I have a banking partner, I can’t take the service life. So the second year is when we were able to crack a partnership with ICICI bank which is a real breakthrough for for us to be able to launch the services and that’s also the same year where we got institutional investors like recruit group and unicorn India to back us which also gave us a little bit more confidence. And this also led to some of the other investors coming in at the later stage as well.


So these are the things in 2018. And in 2019, maybe hitting the milestone of the first 100,000 SMEs on the platform. Because till that point of time, there were a lot of these questions on, can Neo bank survive in the market, and especially in the b2b space, the cost of customer acquisition is very high, will you be able to acquire these customers. So when you’re able to get that 100,000 businesses onto the platform, and I think we were processing at that point of time, 2 billion US dollars in annualized transactions, that was the major milestone, and I think the next year is what we have got Tiger global coming in and putting our series B round as well. And this also gave us a lot of, especially we were able to attract talent, and banks started looking at it more seriously. So these are a few of the key milestones in our journey.


Siddhartha 15:49

And if you can describe the current metrics at Open, how many total number of businesses that use Open, what would be the monthly active of them? How much is the dollars that you process in a year? And what is the revenue?


Anish 16:06

So we have 2.3 million small businesses currently using the platform. And we process 30 billion US dollars in transactions for all of these users. And the current account deposits, basically, which happens through the platform on which you manage on the platform is around 2 billion US dollars. And in terms of the revenues from itself, it’s only the last one year we have started monetizing the platform, because till that time, it was actually a free service. And even from the areas where we actually charged from the users or through subscriptions, or the things we had actually some more right now in the range of like 15 million ARR. I’m not talking about revenues, what we get from the enterprise business, as well as the revenue shares which you have from this bank itself, just to give a sense of where our revenue stands today.


Siddhartha 16:54

And during this journey of building \Open, you never wanted to sell it this time, like your past two companies got acquired.


Anish 17:03

So Siddhartha this is like every entrepreneur, I also consider you as an entrepreneur as well, right now, the selling is not something I do believe it’s not always a happy decision basically, because there could be multiple reasons where we are not able to scale up the business or you don’t have a choice basically. Or it could be that you probably hit the road, basically. And then you want to do that. So probably I didn’t have that option in the previous organization to take that business further. Because I’m someone who would like to stick with a brand to build it global, for example, for Open, I always asked to build a global FinTech enterprise out of this thing, and during startup, so the aspiration is always to build it for the long term. And Touchwood, so far, I’d always got that opportunity to continue this far. And that’s what God willing, the aspiration is also to.


Siddhartha 17:56

And currently, what’s your goal for Open, where do you want to take it?


Siddhartha 18:00

So one we wanted a global digital banking enterprise out of India’s on one side, definitely we are growing really well on the SME segment. And we have a larger opportunity over here on the SME segment. The same time, we also believe that every financial institution is now trying to upgrade their existing internet banking platform from a very plain banking solution to something like financial lawyers because this can add a lot of value in terms of lending wealth management, other things, which they really wanted to do. And that is another area where we have as I mentioned, like 15 of the top 17 banks in India plus other deployments happening.


So we are slowly transforming from a neobank to a digital bank enterprise where we directly reach out to SMEs through through banking stack, we power the solution for banks. And then we have Zwitch where we enable anyone to actually embark on financial services as well. So build a global FinTech brand out of India, because I always used to follow or I always used to like companies like Stripe and Square and more than square I would say stripe for a very long time. And I always dreamed about creating a brand out of India. And I do believe that India can actually create at least two, three global FinTech brands out of India. So those aspirations are there for Open.


Siddhartha 19:16

And currently there are so many new banks for businesses, Go neo is there, banks are building their own new banks. What’s Open’s MOT right now.


Anish 19:27

So personally, if you ask me, I’m not a big believer of this Neo banking as a story, because I don’t really believe that today’s customers need another bank account. So that’s where like on the SME side or on the business side, what we have actually tried to do is that banking is just a base layer for that, what we’re actually trying to do is that bringing that down payables and receivables for example, if as a platform, saying that, okay, hey, your outstanding from your customers is like 10,000 rupees, and here is a specter of those customers basically. Or when you’re doing a payout to a vendor automatically recording that entry into your accounting system. And then instantly showing that here is your profit and loss on the balance sheet automatically.


So we are actually building a complete financial layer on top of your banking or ability to bring all your other bank accounts together in one unified platform. So this is what even today, banks are launching their own neo banks. For example, today, some of these banks have launched SME, neo banking positions, they were either focusing on, they’ve not built a completely interconnected module. For example, the traditional bank strength has been in the banking sites, but when it comes to building the accounting or the expense management, the payroll and the compliance part of it, these are still in the process of building. So what we have is like an early mover advantage, obviously, because we started about four years ago, but today we have complete financial lawyers, which globally very few companies today have. I’m not saying that people are not building on it, definitely. And it will be much faster than probably if it took four years for competitors to catch up and things like that. But as of now, this is the USP that we have and we have been keeping on building products on top of that.


Siddhartha 21:06

And once you go out in the market and tell SMEs that Open is the platform you choose, how do customers decide whether they want to choose Open or the rest of the neo banks?


Anish 21:19

So one is definitely from a feature functionality. For example, I’ll give you a simple example if I’m going to SME business owner or his finance team who currently uses Tally, today they take around four hours in a week to reconcile your bank statements with Tally but when we say that okay, now, if you connect your Tally account to Opens platform, every time a payment comes in or payment goes out, it will get automatically real time reconciled on Tally. This is like a unique feature probably like we have or saying that Okay, now, if you completely use the Opens platform, you can also link all your other current accounts because in India, typically because business owners has multiple bank accounts, and many times like the business owner or the CFO, it’s hard to remember all the passwords or every time entering it, but you connect one once all your bank ports, you only have a single unified view of all your bank accounts. So for that you sign up honestly.


So we have always taken an approach of financial automation as an entry point, as a hook to actually get a customer rather than telling him okay, this is another neo bank. So we don’t even talk about neo banks and in this area where we have a strong advantage right now in terms of the competitors. And it’s also because probably there are only one or two major competitors in the SME space and a lot of his players have actually started new so for example, they are right now started building digital banking offering and some of them have payroll basically, but nobody has actually built a whole other thing. So that’s where right now, our competition is still with banks. So we always say that rather than using the plain internet banking provided by the banks, this is much better. And I believe that if we can have like 2000 Plus scheduled and non-scheduled banks in India competing for the SMEs, we can easily have like a lot more players, even fintechs in the SME in the neo banking space.


Siddhartha 23:04

Can you describe the product with what you built for the first 100 customers and how did you change from 100 to 1000? And also the distribution strategy that he used to capture the first 100 and then 100 to 1000.


Anish 23:18

For the first 100 users, we had a current account where you have a digital current account which you can actually sign up on the platform. And then we have like, simple invoicing system where you can actually invoice. It has an invoice with an integrated payment method. And what we did was like and then you have the payouts basically. So it was like a very basic product, if you would. Now the value probably it had was like, let’s say Siddhartha was a freelancer basically, and you have to send invoices to 10 people. Today, you send invoices to these 10 People from a system like either an MS Word or a Zoho invoice, and your customers would pay into your bank account. But your bank account will only have reference numbers basically like 123. And you may need to sometimes call up your customer and send me the screenshot to reconcile that.


But what we did was that, when here in Open when you create an invoice, all your 10 customers will generate a unique bank account number for all your 10 customers when we are sending this invoice for example, if your account number was 100 and if you’re sending it to say Anish, it will be 101 and if you’re sending it to somebody else, it will be 102 and another so, we innovated this concept of adding a unique for each of your contacts on the primary account number and the advantage was that the moment when money comes in it will automatically say that to Siddhartha that okay this money from Anish has actually come. And then every time you make a fund transfer to a vendor, you can tag it into an expense category or a category saying that okay, this first salary payment or this is for these things. Now, this will lead us to a simple cash flow. So for an entrepreneur income rather than recording ask you okay, what was that 5000 rupees made on 10th it automatically does that.


So this was First product which you built for the first 100 customers. And then what happened was that we also build a simple Bulk Upload functionality, because we realized that at that point of time, most of the banks were not offering this bulk upload to the smaller businesses, if you’re a large enterprise, obviously, they used to give that thing but that to a complex process, you have to have download a software have an Excel converted into a different file format. And it was very complex to do that. So we made a simple Excel sheet where you just upload the bank card numbers of the room and send money and you can do that. So this was the first product till 100 and from 100 to 1000, was when ICICI bank started trialing this product to their existing set of branches, customers and selling t\hrough the existing branches to the customer, they found a lot of value. And suddenly we realized that the payment as a feature and automatic reconciliation we build or something, but it was actually helping businesses save a lot of their time adding value. So that was how that’s the first product till the 1000.


Siddhartha 26:03

And what are the persona of the first 100 users and then the first 1000, the next, let’s say 900 users.


Anish 26:09

I think the first 100 users we had our I would say wrong persona. But we were thinking that the traditional SMEs will not use your platform because they may have hesitation towards using something which is a non bank thing. So we started focusing on mostly the online savvy millennial users, for example, focusing on people who are very active on selling on Instagram and Facebook, whoever established a set of followers, then the Freelancers basically. So these are the initial set of customers we had on the 100.


But the moment when the distribution changed from 100 to 1000, when the bank branches started selling and then we got like a Rice Trader in Ahmedabad who’s actually doing it for payouts, then we started getting people like in manufacturing units, the small time b2b traders. And that’s when we also got the feedback that okay, your invoicing is good. But I’m using Tally or I’m using my own accounting software. If I can connect that with a bank that can add value, then we start building the Tally plug-in basically and then it exponentially took it from 1000 to 20,000 in no time basically just because of this small feature which you brought.


Siddhartha 27:18

And When you call SMEs, who were they? They were Kirana stores, they were freelancers or what are they?


Anish 27:24

So I would not say by the way, like even SME is like a very, I would not say not abused, but it’s not an actual, because an SME is typically like somebody with 1000 employees is also an SME. So I would say these are micro and small businesses, but not the real Kirana shop. It is probably businesses in our platform today that are more than average if you take around 75 lakhs of annual turnover. And these are like, a b2b trader, a distributor, a manufacturing, we also have freelancers, for example, we have freelancers, and tax practitioners, but majorly these are like 55 percent of our business are like, manufacturing. And then we have like the retail and the distribution kind of like percent of users.


Siddhartha 28:12

Integrated Open into their current account banking. So their account holders didn’t need to open another bank account, you sat on the top of their current ICICI account, right?


Anish 23:23

That’s how we initially started basically, yeah.


Siddhartha 28:26

And that has continued till now?


Anish 28:27

So that is continued. But we were always focused on bringing new current accounts to the banking partner. So what has happened is, once the branches were selling our products, they found that it is easier to, I’ll tell you a simple example like today, if a bank was selling a current account, there is no mechanism where somebody can log the application basically. So what happens is we would call and the agent would come with a form, but here, what happens is that you could actually apply for the application even though it was numbered four years back in Open basically apply for an application, you get an application number. So what happens is that the lead is a hot lead for the brand, so that it can actually follow up and things like that. So simple things like that actually really worked for the bank. So while there is an existing set of users, bank users who can connect their account. Parallelly what is happening is this is helping the bank channels to acquire new sets of customers. And this was actually an advantage over their competing current account from other banks.


Siddhartha 29:21

So out of the recent 2.3 million current accounts that you have, what will be the distribution across the top 14 partners that you have?


Anish 29:30

I would say this would distribute right now, almost equally distributed on top four or five banking partners, which we have. Because today, depending upon the persona of the customer. So what we do is like for example, if it’s a startup then I do give it to a different banking partner. If it is like a traditional distributor, I give it to different banking partners. If it’s a freelancer, some of these banks don’t need it. I will do that. Sometimes I’ll give to our small finance Bank, which is a regional bank for certain kinds of categories. So that’s how we distribute.


Siddhartha 29:57

And I believe the top four would be somewhere like ICICI, HDFC, Kotak, the top four private banks of India.


Anish 30:07

Yeah, the private banks in the country.


Siddhartha 30:08

Why have public banks been slow to innovate on this?


Anish 30:11

I think I mean, probably this month, we are the public sector banks, which everybody would relate to basically, and they are actually going live on our platform. So, and in fact, we are also helping them launch their SME neobank, as well. So two of the public sector banks have been really working with us. I would not say they are, by the way, this is also a perception that from outside, which we have right now, when we speak, we always talk about how public sector banks are, not reluctant, but very slow in terms of innovation and launching new products. But we’ll look at the consumer side. Today, I would say that an SBI can be considered as a neo bank, and it’s something which is like really able to get the users and the deposits.


Same way, if you really work with banks, like SBI as a FinTech, you’d found that they have all the API’s built in, they have actually a team and this is something which people actually don’t know from the other side, I mean, a lot of this also for the fellow entrepreneurs and other fintechs that they have to go to they’ve actually built much better API’s and some of the private banks, they also have focused this thing. Obviously, they may not be the ones where you go and within a month get into a partnership kind of thing, because obviously being like public sector banks, they have their own restriction reservations on in terms of comfort level of like, getting into partnership, obviously, because they also, their users have their own like, this thing kind of thing. But slowly, if you look, they are also closely watching the market, and with the recent digital banking unit, the guidelines of the Ministry of Finance, as well. A lot of those public sector banks are now either partnering or deploying some kind of digital banking solutions.


Siddhartha 31:46

And what are the various regulations licenses that you have to take. So, this is for other FinTech entrepreneurs listening to this podcast.


Anish 31:52

So, I’ll talk about neo banking first and maybe again, for the benefit of the other second, touch a little bit on the FinTech license as well. So today, Neo banking is not fully directly regulated by RBI, it is the regulation is on the banks, the partner banks, for example, if it’s a bank like an ICICI or an SBI or a AS Bank, which is partnering with a neo bank, then they have to ensure certain guidelines which RBI has set, for example, in terms of the ICMS audit, in terms of certifications in terms of PCDs and things like that. Now, there are also certain other regulations like for example, the PAPG license which RBI has initiated, which is mandatory for anybody who is actually collecting, storing and managing payouts on behalf of or for aggregating funds they have to go through this thing.


So PAPG is like, I think the first step towards some kind of regulations on this space apart from that, pretty much the regulation is on the bank. But having said that, the because it is indirectly regulated through the banks, you have to go through a lot of this audit process because the banks has to actually submit the audit back to the RBI in terms of every partner, so you have to go through a very strict audit process and many times like this is one area where I’ve seen like a lot of Intex get stuck because they don’t take it seriously. But then it may take up and can delay your launch up to six to nine months. So whoever is on fintechs or when you’re working at a bank, because many times you won’t get this, the bank may not, the business will not talk to you about the compliances and Roth’s is required.


So, building a team for managing his compliances and the Secretary right from the beginning and planning it is very important. Now on the other side, what the RBI has come up with, the Ministry of Finance has come up with their guidelines on digital bank or on digital banks as well as the regulator has always been talking about so we are expecting some kind of regulations and especially with RBI setting up a separate division department for fintechs they’re expecting some regulations that is coming up on this side as well.


Siddhartha 33:47

And in your journey How tough was it to crack the first bank at Open?


Anish 33:53

I think it was really tough, I don’t know how to explain this thing but it’s practically just think of the situation like you have a little bit of, you’re not even that very well funded obviously you have some angel funds and you’re like a small team but you don’t have a name in the market and you go into a bank and say that I want to build a neo bank. And the first question which was posed to us is like, firstly are you regulated and do you think that building a bank is like a child play then, what is the guarantee? How do I expose my infrastructure to you because of what would happen and if something goes wrong with you, so it was very difficult to initially crack or get into because even when the business heads were okay with partnering but it was not going for the compliance and other sites.


And it took us almost like eight to nine months of we were very persistent in terms of like, we even told banks can we do a pilot will actually showcase to you we make we will help you to target a different segments like the homepreneurs and the Instagram sellers who normally don’t have a current account, so I’ll get to all of those things. But then one thing that also helped for us was like We also got into this accelerated programme of ICICI. So this helps you a lot more connect basically an equal opportunity to actually do the integration. So, again, many times I know, we are bombarded with a lot of these accelerator programmes, ads and things like that, especially most of the entrepreneurs. But sometimes strategically, something comes in like, especially in the fintechs and these things, take that up, maybe not for the accelerator’s sake, but even to get to connect part of it. So this worked for us being part of the first accelerator, which was set up by ICICI.


Siddhartha 35:27

And when you talk about monetization, you talk about roughly $15 million of revenue, who are you monetizing at? What value chain? Are you monetizing them? Are you charging them for a Saas service or for a banking account?


Anish 35:40

So we are a freemium service. And we do believe that today, we should not be charging the user for banking, so 80% of our services are free on the platform, which means like practically, banking, even for services like our payroll, it’s free up to 10 users, you can use our invoicing payables, receivables, expense management, virtual cards for two, virtual cards for managers for free, but then if you upgrade, if you wanted to actually give access to your accountant to view this things for managing your GST filing, or if you want to do more than five Visa cards for subscription or expense management, those comes under a SaaS model where we charge anywhere between, we have like planned from 10,000 rupees roughly to around 15,000 rupees.


Then there is a lot of other revenue streams, which you work with the banking partners, this could be interchange revenues, every time your customer swipes a debit card, or your credit card, you want revenues, every time the customer makes a payment, you can see these are not services where you charge your other six, I would say like around 30-40 percentage of your revenues also comes not from your customers, but through your banking partners, basically from various services. And then we have like third party app store, for example, like in a PayPal, use a third party online store or some of the other platform partner services, then you have revenue shares and things like that.


Siddhartha 36:55

And in today’s environment, with talks of a recession, and you have been a five time entrepreneur, what would be your advice to entrepreneurs who are starting up right now?


Anish 37:03

I think I believe, first of all, I’m not an expert when it comes to recession, because the times like in the 2001 dotcom bubble and probably 2008 recession, probably we were really young basically, or I would not have been somebody who’s been like, handling a major fund. But I always feel that sometimes the best time to start is when there is a recession, because what would happen today, what would happen during this downturn, or like if you have like for the next 12 to 24 months, is that a lot of this larger companies or funded companies, they’ll be heavily focused on revenue generating products, otherwise, they would have probably ventured into some of the other territories are just for making news or thought leadership or Okay, rather than trying to eating up onto that.


So this is like a good opportunity for a lot of entrepreneurs, so they don’t have to worry about, like, some well funded startup coming and like, really competing, or shutting you off. And also, recession or downturn means a lot of good opportunities. I’ll leave a simple example, what we have seen during the COVID times and what probably we are expecting during this downturn is like banks who are ramping up their infrastructure during this COVID period of time. And even now let’s look at these next two years basically, when there is a lot of funding crunch gonna happen in the market. Fintechs would stop these cashbacks and they would actually be slowing down on the customer acquisition. This is where banks would be actually trying to ramp up their infrastructure to compete with their fintech.


So people who are actually focusing on this b2b model, it’s about identify your niches basically, is there also opportunities that you can actually create during this and also finding sustainable business models because sometimes we all got carried away by, the frequent funding things, I mean, I’m also probably a party to this era beneficiary but I feel like, when we were in the 2010 2008, 2012-13 period, there is a lot of sanity in terms of like an okay I had to build this product, a solve for the customer needs kind of things. So this is also a good time for entrepreneurs to build sustained models, because if you look at all these downtimes, those companies which survive, they’re actually really becoming larger. So this is for people who start today as well.


Siddhartha 39:20

Thank you so much Anish, it’s been wonderful to host you on the podcast. Thank you so much for sharing your learnings.


Anish 39:25

Thanks a lot. I think what you’re really doing is like a lot of value to a lot of entrepreneurs. Because many times, for entrepreneurs like us, it’s very difficult to actually get the experiences and insight from others. So thanks a lot for doing this show. And having me on the show, it’s a pleasure to be in this show.


Siddhartha 39:44

Anish our last ending question is three entrepreneurs who you would like to see on the 100x Entrepreneur podcasts, who would they be?


Anish 39:54

I think I would like to see Amrish Rau of Pine labs. I would like to have Ashish Kashyap who is CEO of INDmoney today. And I also like to have my co-founder, Deena Jacob, she also has an amazing story basically, as well on this show. So Amrish is like somebody who has actually built Citrus and then led PayU and Pine labs and more than that he is like somebody who has a hack that can add a lot of value to entrepreneurs in terms of the thoughts and very sharp in terms of the thing. And I think anybody who actually spends five minutes with him can actually get a lot more from him. So Amrish is definitely the second Ashish Kashyap because he can be termed as firstly, one of the first internet entrepreneurs in the country, because ibibo at that point of time was trying to compete with Facebook and Goibibo, MakeMy trip. And then he is silently building INDmoney. I mean, not many people know about the neobank. But they are actually the ones with the right balances and things like so that’s the reason why.


Third, I would say Deena, who was my co-founder here. She is from a very humble background from a tier two town and growing up in the ladders, first 10 years in the EY and other companies and then working with companies like TaxiForSure and Tapzo was head of finance and can give a lot of insights in terms of dealing with investors fundraising at what point of time because she had seen the acquisition from from to all then in Tapzo raising rounds basically, and then obviously somebody who has, like when series B was happening when she was actually going into the delivery room and after seven days coming back and working a lot of inspiration towards other Woman entrepreneurs basically.


Siddhartha 41:31

Thank you so much.


Anish 41:33




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