These neobanking startups are providing entrepreneurs with a seamless and integrated customer experience

By providing a differentiated experience to the end-user, neobanks or online banks have witnessed higher user adoption. YourStory has curated a list of startups working in neobanking that help SMEs automate and run their finances effectively.
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Neobanks - also known as online banks, digital banks, internet-only banks, virtual banks, or even “challenger banks” - are changing the financial services landscape. By being 100 percent digital, without any physical branches, neobanks have the advantage of launching features faster and being more flexible when it comes to customer service. 

Some of the first neobanks emerged in the UK and Germany, and they include the now-famous names like Monzo, Revolut, N26 and Atom Bank. 

Since then, India has also seen a new crop of neobanks that are disrupting legacy banking systems with their user-centric digital offerings across money transfers, retail and small-to-medium (SME) banking, utility payments, remittances, and personal finance. By providing a differentiated experience to the end-user, these banks have witnessed higher user adoption.

According to Statista, the neobaking segment is projected to reach $47.94 billion in 2022, and is expected to reach $101.40 billion by 2026, at a CAGR of 20.60 percent from 2022 to 2026.

Here are some Indian neobanking startups that provide better adaptable solutions across business segments.

Karbon Card

Founded by Pei-fu Hsieh, Amit Jangir, Kartik Jain, and Sunil Sinha in 2019, Bengaluru-based fintech platform KarbonCard helps entrepreneurs and startups with an interest-free corporate credit card and the VC Connect fundraising accelerator.

It enables startups to access credit of up to Rs 5 crore with a personal guarantee, or no fixed deposits, and offers rewards such as seamless payment transactions through corporate cards, expense management via WhatsApp, and AWS credits, among others.

In February 2022, this Y-Combinator backed startup raised $15 million in a Series A round led by Olive Tree Capital, Avenir Growth Capital, and Harmony to ramp up its product development and foray into the corporate neobanking space and hire people.

"We thought, what if we offered corporate cards to startups and didn’t ask for fixed deposits and personal guarantees, and built a process that would take mere five minutes to apply? Wouldn’t that be nice? We went about doing just that. Our vision is to empower all startups to achieve more, starting with a Karbon Card.

There are many exciting products in the pipeline to help startups succeed, be it saving money, increasing efficiency, or fundraising." Amit says. 

Open

Founded in 2017 by Anish Achuthan, Mabel Chacko, and Ajeesh Achuthan, Bengaluru-based neobanking startup Open helps SMEs automate their business finances by integrating banking with all the tools needed to collect, manage payroll and expenses, send and reconcile payments, automate accounting, and get access to credit to grow their business.

"We started out to solve this by integrating banking with all the tools used by small businesses to manage their finances- tools for invoicing, payouts, reconciliation, accounting, expense management, payroll etc," said Mabel. 

In October 2021, Open raised Rs 735 crore from Temasek, Google, and SBI Investment, among others, to strengthen its new product lines, including its embedded finance platform, BankingStack, and Zwitch, a cloud-native SME banking platform for banks.

Zeta

Zeta founders. (L-R) Ramki Gaddipati, co-founder and CTO with Bhavin Turakhia, co-founder and CEO

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

"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," says Murali Nair, President-Banking, Zeta 

In May 2021, Zeta turned unicorn and raised $250 million in a Series C round from Softbank Vision Funds to scale growth in the United States, Europe, and India.

Zaggle

(L-R) Zaggle CEO Avinash Godkhindi, brand ambassador Jaspreet Bumrah, and Founder Phani Raj

Founded by Raj N Phani and Avinash Godkhindi, Hyderabad-based fintech startup Zaggle offers digitalised solutions for expense management, employee tax benefits, rewards and recognition programs, and corporate gifting.

The startup aims to create, market, and distribute innovative prepaid products that address the desires, growing needs, and aspirations of Indian corporates and consumers.

"People will bid directly for the corporation and we take a small percentage for the loan disbursed. This will be part of the account aggregator model as sanctioned by the RBI, and we will announce the tie up with account aggregator soon," says Raj.

Through ZikZuk, Zaggle entered the neobanking space for the SME segment in May 2021. The first product launched under the initiative is the Founders Card, which is a curated credit card for SME owners to take care of their business expenses.

"This credit facility offered by ZikZuk will enable SMEs to streamline their working capital cash flows and is in sync with the global developments and offerings in this space," Raj N says.

Hylobiz

Founded by Vishal Gupta, Lakshmi Tampi, and Ashish Mahal in 2019, Bengaluru-based startup Hylobiz connects an SME’s business and financial services seamlessly and digitally, without having to undergo any new system adoption.

"The biggest reason for the lack of SME B2B value chain digitisation is the legacy tools, processes, and systems that the SMEs use and they cannot be changed/replaced suddenly. Our product seamlessly connects the SME world with the banking world seamlessly, while giving the absolute power and business visibility to the SME owner on a real-time basis" Vishal says.

Hylobiz is built on the Open API banking growth platform and aims to build itself into an ‘Amazon’ of financial services for the ME value chain segment. 

Edited by Anju Narayanan

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