Tag: fintech

India attracts $2 billion in fintech investment in H1 of 2021: Report

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India almost matched its total fintech investment in 2020, with $2 billion in investment in the first half of 2021, according to KPMG’s Pulse of Fintech, a bi-annual report on fintech investment trends.

India had attracted $2.7 billion in fintech investment in 2020.

Globally, the overall global fintech funding across mergers & acquisition (M&A), private equity (PE) and venture capital (VC) deals soared to a new high with funding increasing from $87 billion in H2’20 to $98 billion in H1’21, across 2,456 deals. This was in comparison to 2030’s annual total of $121.5 billion across 3,520 deals.

“Dry powder cash reserves, increasing diversification in hubs and subsectors, and strong activity across the world contributed to the record start to 2021,” the report said.

“Fintech valuations remained very high in H1’21 as investors continued to see the space as attractive and well-performing. This likely drove the explosion of unicorn births in the first half of 2021,” it added.

The total fintech investment in the Americas amounted to over $51 billion across 1,188 deals while the EMEA (Europe, West Asia and Africa) region recorded $39.1 billion in fintech investment in H1’21.

Fintech investment in the Asia-Pacific region continued at a more moderate pace, reaching $7.5 billion across 467 deals, compared to $13.4 billion across 714 deals during all of 2020.

Corporates were very active in terms of venture deals in a bid to accelerate digital transformation and increasing digital capabilities. They participated in close to $21 billion in investment over nearly 600 deals globally, with many realising its quicker to do so by partnering with, investing in, or acquiring fintechs..

The India scenario

“Digital banking was a big play in India, but with a unique model compared to other jurisdictions in the regions with digital banks acting primarily as SaaS (software as a service) providers and regulatory responsibility remaining with bank partners,” the report said.

Insurtech has also been gaining popularity among investors. Insurtech are technology-led startups in the insurance industry.

Early fintech leaders in India have continued to expand their business models into adjacencies to bring more value to customers, for instance, payments players acquiring insurtechs.

Several insurtechs raised mid-sized VC or PE funding rounds in H1’21.

Sanjay Doshi, Partner and Head – Financial Services Advisory, KPMG in India said, “ Exits in India are going to increase, both in terms of IPOs and in terms of acquisitions.”

“On the M&A front, fintechs could be targeted by banks, larger fintechs or even a fintech services conglomerate. Over the next 12 months, we expect leading fintech unicorns trying to tap into the strong capital market by looking at an IPO. Banks are also keen to partner with Fintechs especially Neo Banks and Wealthtech platforms,” added Doshi.

Global trends

Globally, M&A deals continued at a very healthy pace, accounting for $40.7 billion across 353 deals in H1’21, compared to $74 billion across 502 deals during all of 2020.

Late-stage venture valuations more than doubled year-over-year, with global median pre-money valuations for late stage deals rising from $135 million in 2020 to $325 million towards the end of the first half of 2021.

PE firms embraced the fintech space further in H1’21, contributing $5 billion in investment to fintech— surpassing the previous annual high of $4.7 billion seen in 2018.

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TN budget historic, growth oriented: CII

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Confederation of Indian Industry (CII) on Friday termed the budget presented by the Tamil Nadu government as ‘historic’, ‘transformational’ and ‘growth oriented’ with thrust on ‘inclusive development’.

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Visa could gain 5% incremental share as curbs on MasterCard continue, BFSI News, ET BFSI

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Economics made us partners – and necessity allies. JFK’s template on neighbourhood commercial blocs is being dusted off by Visa in its latest bid to grab MasterCard’s business. Alliances with the likes of IndusInd Bank, Yes Bank and RBL Bank – and another half a dozen fintech players – are at the core of an aggressive strategy that could help Visa gain 5-7 per cent incremental share as curbs on its rival continue.

“It is a great opportunity for Visa, which has been engaging heavily with start-ups in the last 18-24 months to move these sourcing pipes in their favor,” said Amit Das, Co-founder of Think360 – a payments analytics firm. “We have also heard of fintechs like YAP taking this opportunity to show how differentiated their agility is. They have managed to switch over completely to Visa pipes in less than 48 hours.”

Industry sources say that Visa and MasterCard together process a significant chunk – over 70 per cent – of India’s credit cards. For debit card issuances, NPCI’s RuPay is said to be the largest card issuer. The central bank doesn’t disclose the breakup.

These sources indicate that while Visa has a 44 per cent market share, MasterCard owns 37 per cent of the market.

“While both Visa and Rupay will benefit in the segments they are trying to address, Visa will benefit more because of its ability to roll out products faster than Rupay,” brokerage house Macquarie said in a recent report. “Visa has a concept of providing exceptional approval and is able to go live within 24 hours at times. Since the process of transition is shorter and faster with Visa, it could benefit more from this disruption.”

Visa is also gaining an upper hand in getting new debit card issuance contracts as well. The central government’s zero Merchant Discount Rate rule on RuPay debit cards means that private sector banks, which were tying up with Mastercard to issue these cards, are almost exclusively moving to Visa.

Last month, the Reserve Bank of India (RBI) imposed regulatory restrictions on MasterCard from onboarding new domestic debit, credit, or prepaid customers on its card network in India from July 22 onward. The central bank’s supervisory action cited “non-compliance with directions on Payment System Data.”

To be sure, these restrictions are only on Mastercard’s new cards and not the existing instruments held by customers.



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GIFT City, India Insurtech Association ink pact to promote fintech in insurance space

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India Insurtech Association (IIA), a not-for-profit body promoting tech-driven insurance ecosystems in India inked a memorandum of understanding (MoU) with International Financial Services Centre at GIFT City, (GIFT-IFSC) to collaborate on building thought leadership in the field of insurance and promoting GIFT City for Indian and foreign insurance companies.

To raise awareness about GIFT IFSC, the collaboration will organise events, information series, seminars, and conferences. The two institutions will also research regulatory sandbox projects for GIFT IFSC, which will benefit insurtech start-ups, re-insurance businesses, politicians, service providers, and individuals.

Tapan Ray, MD and Group CEO, GIFT City, said, “We have presence of some of the major insurance players in GIFT City and now, with this collaboration, we can aspire to be a vibrant hub for world-class insurance products and services and encourage innovation in the segment.”

Through the integrated platform of GIFT City, the endeavour is to highlight India’s international financial services potential by offering international firms a world-class infrastructure and facilities to conduct their business in India.

Elaborating on the collaboration, Prerak Sethi, Director and Co-founder of IIA, said, “Through this collaboration, our goal is to assist worldwide financial organisations in developing top-notch financial services. IIA will provide support towards bringing various Indian and global insurance, re-insurance and insurtech participants to benefit from the regulatory sandbox initiatives at GIFT City.”

Under the terms of the MoU, the IIA has promised to work closely with the GIFT SEZ in various areas, including bringing global insurance businesses, Indian insurtech companies, and insurance players to the GIFT City.

The association will promote new digital business models, build collaboration between start-ups and all the other participants of the insurance industry.

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Banking tech firm Zeta eyes $300 m in revenue by 2025

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With 25 fintechs and 10 banks onboarded, banking SaaS unicorn Zeta is targeting a revenue of $250-$300 million by 2025 followed by an IPO in 2026, co-founder and CEO Bhavin Turakhia told BusinessLine.

Currently present in Vietnam, the Philippines, Brazil, India, Italy, Spain, UK and the US, Zeta plans to hire and appoint presidents for Europe, UK, Latin America and APAC regions this year. The start-up is expanding its sales and marketing team in North America adding 30-35 people and another 40-50 people across regions this year.

Also read: Zeta joins Unicorn club with latest fund raise of $250 m

“Our revenue run rate was around $10 million in 2019. We are looking to grow by 2X in revenue year-on-year. Based on contracts we signed today, will account to $250-300 million revenue in 2025. We are estimating to hit operational profitability in early 2023. And go for an IPO in 2026,” Turakhia said over a Zoom meeting.

‘Full-stack solution’

Zeta differentiates itself to traditional legacy IT companies selling banking software by creating a full-stack solution, Turakhia added.

Zeta’s offerings in the banking space include services like credit card processing, debit card processing, prepaid accounts, loans, core banking solutions, front-end mobile apps, value added services. It has HDFC Bank, Kotak Mahindra Bank, Yes Bank, Axis Bank, and IndusInd Bank as clients in India and has network deals with Visa and Mastercard.

Sudden growth

Founded in 2015, it wasn’t until the pandemic hit in 2020 that the company saw a sudden jump in its client onboarding and a 78 per cent increase in its team size from 450 to 750 at present.

Out of the 25 fintechs and 10 banks it is servicing currently, six banks and 21 fintechs were added in 2020 alone. They added four new regions too.

“The pandemic had accelerated the process of sales as we didn’t have to meet every client in person and meetings would happen over Zoom Calls.It accelerated process of catching up and closing deals faster,” Turakhia said.

Also read: Zeta aims to partner with more banks through the API platform

It is not often that the rather self-sufficient serial entrepreneur Turakhia and his brother Divyank reach out to the market to raise funding. They managed to turn heads after raising $250 million from SoftBank Vision Fund 2 at a valuation of $1.45 billion, a massive surge from a $300 million valuation Zeta earned in 2019 post its first external funding round from Sodexo BRS.

The founders still hold a 70 per cent stake in the start-up.

“We started looking for funding in November last year. By April, we had settled with SoftBank. We were building Zeta as a global scale banking technology company. Getting SoftBank onboard made a lot of sense from a strategy, capital and accelerated growth stand point. We can use their network to make meaningful connections. Also, we signed some really large contracts. Banking landscape is seeing disruption right now and we are at the forefront with a full stack modern banking platform that exist in the market. This caused significant jump in valuation in a short time,” Turakhia added.

Next up, in another two quarters, Zeta will be launching a new credit card offering and a buy-now, pay-later product starting from North America.

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CS Ghosh, BFSI News, ET BFSI

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We are provisioning for net NPA in this quarter also. It has come down and so a very small amount has come. This is a conscious call because we have not written off NPAs in this quarter, says CS Ghosh, MD & CEO, Bandhan Bank.

It has been a kind of mixed performance for Bandhan Bank. While the bank has reported the highest ever quarterly operating profits, NPA stress has also risen. Can you tell us about the quarter?
This quarter was more severe than any other quarter in the pandemic situation. The second wave affected lots of lives and people were more scared about it. That prevented a good number of business owners from properly running their business. It started in the first month of the quarter from central India, Delhi and Madhya Pradesh and Chhattisgarh and it has gradually gone to the north east. Till now, it is happening in the north east.

Secondly, micro credit is nearly 60% of Bandhan Bank’s advanced book. The staff go to customers’ doorsteps to collect instalments. It was not easy to do because of the lockdowns and also because of risk to staff health. The number of cases affected came down in July and lockdowns were also lifted and a couple of rating organisations and the government also declared their GDP growth rate will come to 9-10%. I hope the future turns very good.

The total collection efficiency stood at 86% in Q1. Talk to us about collection efficiency for the overall book and collection efficiency in states like West Bengal and Assam. Are you seeing any improvement versus the last quarter?
There has been improvement in collection efficiency. In March, micro credit collection efficiency was 95%. In April, May, June it was hit in a big way by the Second Covid Wave. For that region, it has come down a little bit.

In case of the micro credit portfolio, in the first quarter our demand was Rs 13,000 crore and we collected nearly Rs 13,000 crore including arrears. That means our customers are paying the instalment. The total collection efficiency including arrear is 98% in micro credit and in case of total bank, it is 101% which shows that after the bad situation in the first quarter, it recovered a lot in this month. I hope next quarter onwards it will improve further.

Has micro finance loan book slowed versus last quarter? Is that a conscious call to slow down the growth as collections and demand may be impacted?
No. There are three factors here; one factor is that in the first quarter of any financial year, demand for credit always comes down. Secondly, there was the impact of Covid 2.0 in first quarter and that also impacted demand. Thirdly, we are disbursing credit conservatively and on a very selected basis.

Credit cost has come down versus the last quarter but it is still pretty high at 4.9. Will operating profits be enough to take care of the provisioning or the credit cost needs?
The provisioning is in two parts. One, it has helped me to increase PCR. The other side, it has helped us to strengthen our balance sheet. We can continue this provision continuously and accordingly the business growth will absorb it.

Gross NPAs stood at 8.2% and the net at 3.3%. At a net-net level, will gross and net NPA for FY22 be higher?
No. We have not written off this quarter. We have a Rs 700 crore account for NPA. If we write off this NPA, it will not be in place. Again, when one calculates the gross NPA percentage, because my advance book size has come down, percentage wise also, it has come down. Otherwise, percentage wise gross NPA has increased by 0.5% from last quarter to this quarter. We are tracking that. We are provisioning for net NPA in this quarter also. It has come down and so a very small amount has come. This is a conscious call because we have not written off NPAs in this quarter.

Overall the loan book has declined by about 8% quarter-on-quarter. What kind of loan growth do you expect this year?
In this type of a situation, the bank will be cautious and very selective. The credit growth will come from the last month of the second quarter before the Puja and Dussehra to the fourth quarter. That has been the case in normal times and even last year. So it depends on whether the Third Covid Wave comes in the Puja season or not.

Over the next one-two years, which segments do you think will lead to growth — microfinance, mortgage or commercial banking?
Microfinance is a very standard model and India is a big country. There is no growth driver needed for that. But we are likely to drive the growth of the housing loan vertical. It accounts for 24% now and in future we would like this segment to account for 30% of the total book.
The second vertical we are focussing on is MSME which caters to less than Rs 5 crore type of MSME. There is a huge market which is secure and we would like to grow it in future. Gold loan is another we would like to grow because like housing loans, it is also secured. These are the three sectors we would like to focus on in future and which we expect to account for 30:30:30 by 2025.

What led to margin improvement during the quarter, at what level do you see margins stabilising going ahead?
I have always predicted that around 8 or 8 plus will be NIM but this quarter, it is a little bit higher compared to the last quarter. That is because of last quarter we have reversed the interest of Rs 500 crore. Otherwise, 8 to 8.4 is what we would like to maintain.

You seem to have sufficient capital, how long will the current capital last considering your growth?
The growth of the bank was a little bit on conservative side last year and this year we expect normal growth. Upto 2025, we do not need the extra capital.

Is the structure of the financial industry changing with competition from fintech players?
The banks are focussing on digital transaction mode for the customers. At Bandhan Bank, in the last quarter, 87% of the transactions happened digitally. 11% of the bank accounts were opened digitally. We are also invested in digital transformation of the bank. We are also focussing on how we can give digital service to the customer.

Won’t you need additional capital to expand in digital space?
We have enough funds and we are already working on that from last year. Whatever is needed, will be invested from our own funds.



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SBI General ties up with SahiPay to expand each in rural areas, BFSI News, ET BFSI

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New Delhi, Aug 2 (PTI) To increase non-life insurance penetration in the rural market, SBI General Insurance will tap customers of fintech player SahiPay, which provides digital and financial services in the semi-urban and rural parts of the country. SBI General Insurance on Monday announced a partnership with Manipal Business Solutions, the promoter of SahiPay.

Through this partnership, SBI General will provide a bouquet of non-life insurance solutions to SahiPay customers, the insurer said in a release.

The tie-up is a right fit to support the company’s endeavour to maximise its reach to rural segments, Pushan Mahapatra, President – Strategic Investments & Head – Open Market, SBI General Insurance said.

SBI General is continuously strengthening its distribution footprints in the country, and this tie-up is a step in that direction, the insurer said.

“SBI General Insurance will help us provide comprehensive and accessible set of insurance offerings to our customers,” Kamaljeet Rastogi, CEO, Manipal Business Solutions said.

India is predominantly rural with over 65 per cent of the population residing in rural areas and to make the rural population aware about the benefits of insurance, affordable and technology based products that provide adequate cover are required, he said. PTI KPM MR MR



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From Indian FinTech to Wall St, companies roll out red carpet for young talent, BFSI News, ET BFSI

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As the pay gap between tech firms narrows, wall Street banks are going the extra mile to retain junior workers.

As young workers quit or face burnout, companies are trying to turn the tide with raises, bonuses, vacations and even free Pelotons.

Investment bank Houlihan Lokey Inc, is offering a five-night stay at a Caribbean retreat where a room night costs $1,000, as a reward after a year of record profits.

It’s also never been more lucrative for aspirants to work outside the gilded world of finance with tech firms creating enormous wealth on the stock market.

A presentation prepared by 13 first-year analysts at Goldman Sachs Group Inc. earlier this year drove a reckoning across Wall Street after it shone a spotlight on the working conditions for junior bankers — some of them were toiling hundred hours a week while their physical and mental health suffered. Goldman responded by easing up on weekend hours and pledging to increase staff in its most-active businesses.

The new six-figure salaries for first-year analysts at Citigroup Inc., JPMorgan Chase & Co. and others are close to double the estimated national average wage. BlackRock Inc., the world’s largest asset manager, joined the war for workers by announcing an 8% blanket raise for employees.

BharatPe offers

In India, BharatPe has offered all new tech team joinees an option to choose between “Bike Package” or “Gadget Package”, according to reports. The Bike package has 5 bikes as options – BMW G310R, Jawa Perak, KTM Duke 390, KTM RC 390 and Royal Enfield Himalayan. The gadget package includes – Apple iPad Pro (with Pencil), Bose Headphone, Harman Kardon Speaker, Samsung Galaxy Watch, WFH desk and chair, and Firefox Typhoon 27.5 D bicycle.

The company will also host its entire Tech Team in Dubai for the ICC Men’s T20 World Cup from October 17- November 14, 2021.

Demanding workers

It’s not just in finance that workers are becoming more demanding — a similar scenario playing out nationwide. Businesses from McDonald’s Corp. to country clubs in Nashville, Tennessee, have raised wages and offered hiring bonuses to lure new workers. From March to May, the rate of U.S. workers voluntarily quitting their jobs rose to its highest level in at least two decades. In Washington, lawmakers are sparring over raising the minimum wage to $15 an hour.

Last month dozens of the US’s top law firms raised first-year wages to $202,500, give or take a couple of thousand. They’re also offering multiple annual bonuses and extra time off as they fight to retain talent and their workers face burnout.

Wall Street banks

JPMorgan is also encouraging more personal time for employees to be offline and will enforce many policies already in place to protect weekends and provide extra flexibility for junior bankers.

Goldman Sachs Group Inc’s chief last month responded to complaints from junior bankers by saying the management is going to work harder to give them Saturdays off and to shift bankers from other divisions to the busiest teams in the investment bank. read more

JPMorgan also plans to conduct a quarterly review to evaluate how junior bankers are spending their time and will hold senior management accountable in their performance reviews and year-end compensation.

Additionally, every group head is required to call two to three junior bankers daily and ask “what’s working and what’s not?”



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Fino Payments Bank files for Rs 1300 crore IPO, BFSI News, ET BFSI

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Four years after starting operations Fino Payments Bank will soon launch a Rs 1300 crore initial public offering which includes a Rs 300 crore OFS component. The Blackstone, ICICI Group and BPCL backed Fino Payments Bank said it has filed the draft documents with SEBI for an IPO.

Investment bankers Axis Capital, CLSA India, ICICI Securities and Nomura Financial Advisory Services are the book running lead managers to the IPO.

The fintech bank turned profitable in the fourth quarter of FY20 and has consistently enhanced its profitability since. “This makes FPBL the first profitable fintech to file for an IPO,” the payments bank said in a statement.

Fino serves the emerging India market with its digital based financial services. Over the last few years, the payments bank has witnessed a steep surge in transaction volumes on the back of digitization and proliferation of its banking points.

As stated in the DRHP, at the end of fiscal year March 2021 the payment bank’s platform has facilitated more than 434 million transactions having a gross transaction value of Rs 1.32 lakh crores. It has the largest network of micro ATMs as of March 2021 with a market share of 55%, a robust merchant network of 6.4 lakhs and 25.7 lakh bank accounts.

Its revenue for FY21 stood at Rs 791 crores that grew at a CAGR of 29% in last three years. The bank registered a profit of Rs 20.5 crores in FY21 with an annual average ROE of 15%, the DRHP states.



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Pencilton raises $330K in a pre-seed round by Jupiter, others, BFSI News, ET BFSI

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HYDERABAD: Pencilton, a teen-focused fintech company, has announced raising $330K in a pre-seed round led by Jupiter (registered as Amica Financial Technologies Pvt. Ltd). The round also saw participation from Nilesh Patel and Prashant Singh (Founders, LeadSquared), Ashish Sharma (MD, Innoven Capital), Abhishek Goyal (Founder of Tracxn), Himanshu Sharma (Founder, Aspiring Minds), Kunal Sinha (Founder, GlowRoad), Vignesh Ramanujam (Partner, Spoonfeed) and angel investor Tirumalareddy Karri.

Pencilton offers a debit card, PencilCard, to teenagers and students to help them manage their expenses while teaching them the basics of money management. An upgrade is expected to its debit card in a few weeks that works with the Pencilton app to enable financial inclusion and digital financial literacy for teenagers. With the new funding, the company aims at product enhancement by building industry-leading backend systems for card issuance, management, and further launching of upgraded products. The company was founded by Vishwajit Pureti, Ashish Singh, Pallavi Tipparaju, and Viraj Gadde in 2020.

In a statement, Vishwajit Pureti said, “This round is important as it serves as a vehicle for us to have some of the best minds from the fintech and startup ecosystem, join us on our mission. We are going to announce many industry-leading initiatives that will help bring the best of fintech tools and digital financial literacy to students across India.”

The company has recently introduced the PencilCard, a RuPay debit card for teens across India that can be activated and managed via the Pencilton app. Teens can use the debit card to manage, receive and spend their pocket money through the help of the app. In addition, parents can also use the app to give pocket money, setting parental controls such as the spend limits, approval of money requests, etc.

Pencilton chose the RuPay card platform as it is a product built in India and line with the Government’s ‘Make in India’ policy. It also allows Pencilton to work closely with NPCI to innovate on various aspects of the fintech ecosystem that will soon help bring some never-before-seen features of fintech, not just in India but the whole world, to the fingertips of the next generation.

“The teen/pre-teen banking segment is nascent and growing rapidly. We believe that the Pencilton team understands the space and is solving both kids’ and parents’ needs,” said Rahool Gadkari, Director of Product, Jupiter, in a statemet.

Pencilton aspires to educate the younger generation on financial literacy and management and become the most innovative and prominent player in this space.



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