[YS Exclusive] After Rs 4,000 Cr in credit disbursement, MoneyTap transitions to FREO, a credit-led neobank

In 2016, when Anuj Kacker, Kunal Varma, and Bala Parthasarathy started MoneyTap, they were serving a segment that was new and different. Back then, most banks and NBFCs weren’t catering to the middle-class that was increasingly going online. 

They found that middle-class borrowers were looking to avail themselves credit without the hassles that were associated with the process. It started by providing flexible, fast, and convenient credit with the help of technology. 

In five years, MoneyTap, the parent company, which now is a Reserve Bank of India-registered NBFC, has attracted over 11 million users to its ecosystem and disbursed upwards of Rs 4,000 crore in credit, along with issuing 175,000 credit cards (in partnership with RBL Bank). 

Building on its success in India, the company also launched credit products in Vietnam, with an aim to create a strong international presence.

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MoneyTap to FREO

Now, the startup is transitioning to a credit-led neobank FREO. It is looking to build an innovative digital banking experience that focuses on the unique needs of modern consumers in India and SE Asia with a host of financial products such as a digital savings account, uber-flexible credit line, credit and EMI cards, Buy Now Pay Later (BNPL) schemes – all in one place. 

FREO’s parent company started its operations in India with the launch of MoneyTap in late 2016. Its goal was to make credit flexible, convenient, and affordable through an intuitive, category-creating product. 

In an exclusive conversation with YourStory, Anuj says, “We have built a strong legacy of five years of building strong credit lines and systems that have catered purely to the middle-class. The neobank is a step further in giving access to our consumers.”

He adds while there are several neobanks, Freo will be India’s first credit-led neobank. 

“Across the globe, there are many neobanking players. While some are payment-led neobanks, where they start with payment as their core value proposition and then expand into various services; others are experience-led; and some like US-based Upgrade, Brazil-based Nubank, and now FREO – are all credit-led,” says Anuj. 

He explains that the team has built a strong muscle with the now sub-brand MoneyTap, and with credit as the mainline of its business, it will move into offering more options to the consumer – such as bank accounts, loans, credit lines, BNPL, etc – everything that a bank offers. 

The founders believe this is more sustainable because credit for any bank is the main form of revenue, and the team already understands credit, monetisation, liabilities, underwriting, and better lending. 

The exclusive statement also added that as part of its growth and expansion plans, the team at FREO endeavours to provide value to customers as a single point of access to a variety of financial products throughout their lives. 

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Why a neobank?

The advantage of neobanks is that they offer financial solutions in a completely digital setting by using mobile applications and ensuring a smooth and seamless banking experience for users. FREO aims to do this in India by merging the convenience of modern-day solutions with the trust and reliability provided by its partners - other banks and regulated financial institutions. 

Neobanks can offer a wide pool of financial products that are easier, quicker, and more compelling, by leveraging state-of-the-art technologies.

In early 2021, FREO entered the BNPL space by launching an innovative product that enables QR code-based retail store purchases and online transactions. 

The COVID-19 pandemic has led to a shift towards digital spaces, and banking has been no different. With a growing demand for convenient and intuitive digital solutions and offline banking becoming crowded and cumbersome, neobanks have emerged and grown exponentially across the globe.

In a conversation with YourStory, Anuj further explains the thesis behind FREO and the company’s core aims. 

Edited excerpts of the interaction: 

YourStory [YS]: What is the main reason and aim behind starting FREO? What problem does it intend to solve? 

Anuj Kacker [AK]: Millennials now demand simpler, faster, and more efficient financial services. They are currently forced to use archaic banking products. 

FREO fulfils this need with its state-of-the-art tech and by keeping the customer at the centre of the whole experience. Even though a large number of Indians have a bank account, they need help moving up the ladder of financial access, and that is where FREO comes in. 

FREO gives our existing and new customers the chance to get more out of their banking experience by making credit more accessible, launching new products which allow for smarter utilisation of their money, and becoming a one-stop-shop for all financial needs – like an account, cards, etc.

If you look at how banking has evolved, the first wave was of PSUs. Then, in the 90s, the second wave came with private banks that ate into the PSUs’ market share. They offered better products, better service, ATMs, phone banking etc. This third wave is now about neobanks that will offer all financial products via a mobile app – all while sitting at home. 

Neobanks will partner with existing banks but have the tech and data DNA to serve the end consumer better, and across all products via a single login. 

YS: Why the shift and addition to MoneyTap? 

AK: We wanted to play a bigger part in the financial lives of our customers in India and SE Asia. The opportunity in these markets is immense, and now this allows us to address it. FREO has been launched as an umbrella brand that will encompass the MoneyTap credit line as well as a host of other products and services.

YS: What sets it apart from others? 

AK: Neobanks aren't a new concept, and many have been launched in the last two to three years in India. But while most of them have a primary focus on goal-based savings or investment, FREO's vision is to provide simple, intuitive, and smart ways for people to access credit and manage money with ease on their phones. 

Through this credit-led neobank, consumers will have access to financial products such as a credit line, credit cards, EMI cards, deposits and savings, BNPL, and other financial utilities, in order to help build their credit profiles, borrow flexibly, save easily, and spend smartly.

Neobanks attract a large number of customers due to the experience they offer, however, it becomes difficult to monetise the business without an effective credit engine in place. FREO is different thanks to it being credit-led, which means it has a powerful and proven monetisation model.

YS: How do the customers benefit? 

AK: India has approximately close to 550 million people with smartphones and access to mobile internet. Digital transformation is the way to go for banking and financial products, especially during the era of COVID-19. 

Customers get access to various financial services from the convenience of their homes via a mobile app. They can also improve their overall credit profile by becoming a part of the FREO ecosystem. 

FREO’s platform is powered by deep-tech, big data, and AI/ML models for customer-product fit, risk management, customer engagement, retention, and upsell/cross-sell.

This allows us to match customers' needs and give them the relevant FREO product, and over the lifecycle of the customer, recommend other FREO products to them.

YS: What are your future plans?

AK: Many other products are in the pipeline. As part of its growth and expansion plans, the team at FREO endeavours to provide value to customers as a single point of access to a variety of financial products throughout their lives.

The journey of every customer might start early and continue for decades with the different products across savings, credit, wealth, investments, and more. 

The research has shown that emerging markets like India and South-East Asia are brimming with potential, thanks to billions of underbanked young smartphone users who are looking for a banking partner that understands their needs and provides them with relevant financial products. We may expand into other geographies soon. 

We’re now looking at: 

• Getting new products out. You’ll hear launch announcements on credit, payment-linked products, card products, and savings and deposits products in the next three to six months.

• Geographic expansion. We already have a strong presence in one South-East Asian country. This footprint may expand in the medium to long term.

FREO’s vision is to offer users exactly what they are looking for and bring about financial inclusion and accessibility.