How Bengaluru-based fintech startup Zeta provides online banking solutions to businesses

Due to increasing internet penetration and availability of cheap smartphones, India has been witnessing a digital revolution, especially in digital payment space. Several businesses have launched their innovative services to make online payments seamless and easily accessible. One such startup is Bengaluru-headquartered Zeta India which provides digitised solutions to banks and fintech businesses.

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Founded in 2015 by Bhavin Turakhia and Ramki Gaddipati, Zeta is a full-stack cloud-based neo-banking platform for issuing credit, debit, and prepaid products, enabling banks and financial institutions to launch modern retail and corporate fintech products. 

Speaking with YourStory, Murali Nair, President-Banking, Zeta, said, “The banking software technologies are stuck in the 80s because of the legacy mainframe systems which are hardly able to cope with today’s digital system. The idea is to help banks and fintech businesses use the Zeta platform to cater to the needs of digital-native customers.” 

Products and services

Zeta initially began offering a range of employee benefit services including a cloud-based smart benefits suite called Zeta Tax Benefits to allow employees to digitise all kinds of tax-saving reimbursements and its digital cafeteria solution, Zeta Express. However in July 2019, it merged the employee benefits business with Sodexo Benefits and Rewards India (BRS India). The merger came in after Zeta raised and undisclosed amount of funding from Sodexo which boosted Zeta's valuation to $300 million.

Currently, the startup offers digital banking solution through its mobile application. Explaining about Zeta’s mobile banking app, Murali said that it offers a 'super pin' feature – a four-digit dynamic pin generated by the app – and is linked to the user’s card. “Normally, we need to remember the pin or the online password of a card to complete transactions. This becomes troublesome for people with more than one card. With Zeta’s banking app, one can just select the card they want to use for payment and instantly get the super pin to make ecommerce or PoS payments. This pin automatically changes after 120 seconds, thus, cannot be used by anybody else,” he adds.

The app also provides a feature called family centre through which users can instantaneously generate a digital card for their family members. With this feature, users will be able to restrict the usage of the cards at certain places or place a cap on the transaction. For example, one may issue such digital cards to their children and then they can cap the transaction amount at Rs 2,000, or also limit its usage to just family restaurants. 

Introducing Cipher

In January 2020, Zeta introduced its ACS (access control server) solution, Cipher, to provide second-factor authentication service. It aims to help banks and financial institutions protect their users from security threats by safeguarding the OTP pages used during online transactions.

According to the official statement, the new ACS solution does not need any payment sensitive data such as PAN, card expiry date, or CVV to perform the authentication.

Murali also explains that the ACS solution has been designed to support a huge volume of transactions. He added that in the same month, Zeta showcased Cipher’s capability to process one million transactions in one second. The innovation comes at a time when India records a maximum of 4,163 transactions per second, he claimed.

Business model and more

Murali explained that Zeta works on B2B2C model. It acts as a technology service provider where it offers its tech-based products to banks and fintech businesses. While he declined to disclose the pricing, he explained that Zeta charges the banks based on the number of transactions or the number of customers. Meanwhile, it has a revenue-sharing model for fintech startups. 

Currently, Zeta’s solutions are used by BFSI issuers in India, Asia, and LATAM. Zeta counts banks such as RBL Bank, IDFC First Bank, and Kotak Mahindra Bank as its clients, along with 14,000 corporates. he added that around four million users are using Zeta via their bank and other financial institutions.

According to him, the business has increased during the coronavirus crisis as the pandemic forced people to switch to digital mode of services amid the lockdown. 

The startup currently has 450-480 employees working from over 11 Indian cities such as Mumbai, New Delhi, Hyderabad, Bengaluru, Chennai, Pune, Kolkata, Nashik, Vadodara, Kochi, and Ahmedabad.

Speaking about future plans, Murali said that Zeta is expanding its presence in the US and the UK. In the long term, the startup is aimed at disrupting the banking space and becoming the leading player in the space. It is working towards becoming the default one-stop solution for all digital banking needs.

According to the startup, it competes with Financial Software and Systems (FSS) and First Data in India. It also faces international competition from Marqeta and Galileo Financial Technologies.