Tiger Global-backed small business-focused neobanking startup Open said it is onboarding 60,000 new small businesses and startups every month, adding to its over 1 million registered customer base in four years since launch, according to the company’s CEO and co-founder Anish Achuthan. Launched in May 2017, Open is backed by Speedinvest, Beenext, Recruit Strategic Partners, AngelList, 3one4 Capital, Unicorn India Ventures, etc., and had raised $35 million in funding so far. It offers current account services, credit cards, debit cards, payments, accounting, and expense management in partnerships with banks.
“We have grown from onboarding 1,000 new businesses every month in 2018 to currently adding up 60,000 new businesses every month on the platform. We are now scaling up our digital and inside sales, channel partners and have recently increased our bank distribution platforms to seven banks which will help us accelerate to 5 million users by end of next year,” Achuthan told Financial Express Online. For this year, the company is targeting to reach a customer base of 2 million.
The concept of neobanks has picked up globally on the back of increased digitization of banking services and lesser time spent on key tasks by customers which otherwise cannot be catered by legacy-based banks as fluidly as neobanks. Unlike a whole host of services, neobanks, which operate online-only, offer customers a dedicated set of services such as payments, accounting, expense management along with actual banking. This also means one cannot expect car loans, home mortgages, or business services, and in-person service in cases of availing a big loan. Essentially, neobanks play on the concept of being faster and simpler in offering financial and banking services onto users’ smartphones. Neobanks don’t have a bank license but build services on existing banking infrastructure. During the pandemic, their adoption had only accelerated.
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“During the pandemic, we saw a lot of small businesses adopting digital tools for managing their finances. The majority of the transactions on Open are through the account payable & receivable feature, followed by integrated accounting. The platform has grown from strength to strength, having recorded transactions on the platform that cross $24 billion in transactions annually,” Achuthan added. Open had made one acquisition as well. It had bought a GST and financial automation startup Optobizz in February this year for $5 million in a stock-plus-cash deal.
NiYo, RazorpayX, Fi, Chqbook, and Finin are among other neobanks in India. According to Zion Market Research, the global neobank market size stood at $18.6 billion in 2018 and is likely to grow — at a compounded annual growth rate (CAGR) of around 46.5 per cent between 2019 and 2026 — to around $394.6 billion by 2026.