How Open Financial Technologies navigated the complex fintech landscape

Open Financial Technologies—which became a unicorn in 2022—has navigated significant challenges while pioneering the concept of neobanking.

The company’s focus in the initial years was not revenue but strategic planning and product building, said the founders of the fintech firm, during a panel discussion at TechSparks 2024 in Bengaluru.

Deena Jacob, CFO of Open Financial Technologies, explained that the company, which was founded in 2017, avoided focusing on revenue for the first three years. Instead, it concentrated on building a robust platform by connecting payables with banks and over 300 ERP systems and integrating with the government’s GST tax system.

“It was a conscious decision to avoid chasing revenue and instead focus on habit creation and product excellence," said Deena. “Today we are sitting on multiple revenue streams. We have customers who are paying us upwards of Rs 20 lakh-24 lakh per annum. Revenue will follow, so long as you're building products customers need,” she added.

The company’s revenue from operations in FY24 dropped to Rs 24.8 crore from Rs 29.9 crore in the previous year. However, its outlook for the future is optimistic, as Open is also preparing for an IPO.

Flexible pricing models

After laying a strong foundation, Open began experimenting with multiple revenue streams, and it quickly realised the need for flexible pricing models. Flexibility in its pricing model allowed the startup to target businesses of different scale and size—both small businesses and large enterprises.

“We started with SMBs at around ₹15,000 per year but soon found enterprise clients willing to pay much more," said Anish Achuthan, CEO.

The company also focused on a combination of innovative product offerings and strategic partnerships with leading banks like HDFC and Axis.

Building a tech stack

Building the right technology infrastructure was crucial for Open's growth, said Ajeesh Achuthan, CTO. He explained how the lack of open banking APIs (application programming interface) in 2017 led to a lot of trial and error.

“We had to adapt our tech stack based on each bank’s API structures. Now, as we’ve grown, it’s become

more organic—we constantly adapt based on customer needs and evolving traffic,” he said.

Challenges being a category leader

The founders also reflected on the challenges of being a category creator in the fintech space. Creating an entirely new category came with a long gestation period, they said.

“When we started in 2017, the concept of neo-banking was new in India. We had to build this category brick by brick—from convincing banks to trust us to integrating multiple financial systems into a single dashboard for our clients,” said Ajeesh.

“It took us 12 to 15 months to get our first partner, ICICI Bank, on board. Banks were hesitant as they wondered what would happen if something went wrong with a fintech company.”

He added that the idea was not to position Open as a replacement for traditional banks but as a value addition.

“We integrated customers’ existing bank accounts into our dashboard, providing tools like ERP and accounting integration. This approach helped us gain customer trust,” he said.

Today, Open Financial Technologies works with 16 banks across India, including SBI and HDFC.

Compliance and regulatory hurdles were other challenges that the company navigated successfully.

“We went for ISO compliance very early, even though it wasn’t mandatory. That gave our banking partners the confidence that we were serious about data security and privacy,” said Mabel Chacko, COO, highlighting the proactive steps the company took to gain the trust of banking partners.

Second rung of leadership

Open’s leadership said it recognised early on that success would require not just great products but also the right talent to scale them.

“One principle we’ve always kept is we need people smarter than us to run the show. We are constantly hiring the next set of leaders who can scale this company into something that's ready for public markets,” said Mabel.

The founders have been grooming a robust management team to take over day-to-day operations, allowing the leadership to focus on long-term strategies.

“We are in the process of building a leadership bench that can take Open to the next level. This will be crucial as we prepare for the IPO,” said Anish.