Meet the Mavericks: The entrepreneur who is creating the best business banking experience for SMEs in India.
A maverick is a person of incredible vision, someone who challenges the norm and forces people to think beyond the ordinary. YourStory is going behind the scenes to uncover the inspirations and secrets of the ultimate maverick in the business world: the entrepreneur.
Banking and financial services in India have undergone a facelift in the past decade or so, with entities adopting more sophisticated technologies to reduce time-consuming processes and offer new products to their customers.
But the size and scope of India’s demographics makes it challenging for traditional and incumbent institutions to cater to various needs of customers, leaving some sections unbanked and without access to financial services. This is where Open Financial Technologies (Open), a fintech startup offering neo-banking services, saw an opportunity to build a successful business model and democratise banking for Indian businesses.
Since its launch in 2017, Open has changed the way business banking takes place for small and medium businesses with its disruptive solutions and business practices.
It has established a user base of five lakh SMEs in just about three years since its incorporation.
While traditionally, business banking involved using separate tools for specific functions, businesses need to have all of them on a single platform.
“So, we built a dashboard to have all ecosystems such as banking, accounting, invoicing and expense management tools etc. on one platform,” says Ajeesh Achuthan, Co-founder and CTO of Open Financial Technologies.
With the tagline ‘Banking and accounting on an autopilot mode’, Ajeesh explains how Open’s product has helped businesses cut down on time-consuming and tedious processes.
For instance, accounting is traditionally done with the help of software such as Tally, while internet banking is used for salary payouts. All this data, which may be in different forms or formats, then needs to be synced in one place.,.
“With Open, a customer can raise an invoice. We have access to the invoice data and the customer statement data as well. So, when the user receives the invoice, it’ll automatically get reconciled in the system.”
Moreover, businesses have multiple current accounts with banks, which can be integrated/synced on Open’s application, making an accountant’s job simpler.
“As a business owner too, the dashboard helps in understanding the cash flow or cash burn patterns without having to rely on a third-party and help in smooth payouts and income,” says Ajeesh.
Adopting this model, along with having the right customer mix, has helped Open become one of the pioneers in the neo-banking space.
Ajeesh points out that a large chunk of their business comes from users of traditional banks. As a traditional bank, they are good at holding funds, but when it comes to offering a good user experience, they lack that,” he adds.
Out of its user base of four lakh SMEs, about 40 percent actively use most of Open’s services. The rest choose the payment gateway or other services such as expense management and virtual account collections, etc. that help them build on an effective business model.
Apart from banks, Open’s growth story has been driven by other fintechs as well. “Fintechs also want to ride on our APIs to build on products on top of payouts or build a neo-bank on top of our APIs. In a way, that is a growth for us too,” Ajeesh explains.
While the company does not have a lending product right now, its large base of customers helps it offer products such as credit lines.
“It becomes easy for us to offer a credit line to our customers as we track their payments and incomes on our platform and makes the job of underwriting easy,” Achuthan says, adding that this helps in offering credit services to small business owners and homepreneurs that traditional lenders are unable to finance.
Open has come a long way from having to convince banks and their customers about the need for neo-banks to offering top-notch and tailored services. One of the major reasons it attributes this transition to has been its persistent reliance on customer feedback.
“There are a lot of use cases we get from customers such as SMEs and small retailers and these categories of customers have different kinds of use cases, which they would want on their platform. So, feedback has been one major driver,” he says, adding that having a customer-centric experience has been the thought behind its product’s design.
Innovation using technologies has also helped Open, Ajeesh says, highlighting the use of artificial intelligence (AI) and machine learning (ML). He cites the example of performing cash flow predictions using AI on the platform.
The company also uses technology for spearheading innovation in its products.
“We want to give the user the fastest experience, compared with traditional banks… Our teams keep experimenting with new technologies to see if they can be implemented in the application.”
Even amid the current health and economic crisis, Open has managed to continue functioning business as usual, thanks to the standardisation systems it deployed recently. The neo-bank received ISO certification three months ago, which helped it set up a BCP policy for crisis and disasters. As part of this ‘process-setting,’ it also set up VPNs and other precautionary security measures.
But it’s not new for Open to overcome challenges. Ajeesh says the one maverick move or decision that got it in this position today is when it tied up with “India’s largest bank” for its application.
“The bank wanted to integrate our platform and gave us just 15 days to do that. We were just a team of 8-9 members and integrating a bank’s API would have taken half a week or about a week. Testing and rolling out (of the product) were big challenges. We did do it in 15 days with sleepless nights and without bifurcated teams or collaboration tools,” Ajeesh says.