Open, the neobank backed by Google and Tiger Global, plans to integrate around 10 million small businesses in 3 years as it aims to solve a number of challenges faced by SMEs in managing their business finances using technology.
Open offers a business account in partnership with banks that help SMEs automate and manage their finances effectively. The company that works with the top 14 banks in India aims to bring on board around 250 banks around the world who will use its platform and technology. It plans to expand its operations globally in markets such as Europe, Southeast Asia and the Middle East.
“We started Open five years ago mainly to solve the challenges small businesses face when it comes to business banking because there are a lot of inefficiencies in existing processes,” said Anish Achuthan, co-founder and chief executive of Open, in a interview. “Today, many of the country’s major banks are implementing our solution to launch their own new banks.”
For example, the company’s BankingStack solution enables banks and financial institutions to launch digital banking services. It is distributed in over 15 banks in India and 2 banks in Southeast Asia. This allows banks to integrate their digital banking offerings and offer a superior experience to their customers.
“We are enabling traditional banks to offer their customers better banking experiences,” Achuthan said.
Open competes with players like Razorpay and British fintech companies like Revolut and Tide.
Open recently became India’s 100th unicorn after raising a $ 100 million round led by Temasek, Google and SBI Investments. It currently serves more than 2.3 million SMEs and processes $ 30 billion in transactions annually. The platform integrates 100,000 new SMEs and startups every month.
The platform allows businesses to collect payments, make payments without interruption and simplify expense management. Other processes include compliance management, automatic reconciliation and categorization of income and expenses, thereby automating accounting.
“We currently manage deposits worth $ 2 billion on our platform. Our goal is to bring it to about $ 7 billion within the next year, “Achuthan said.
Open, was founded in 2017 by fintech serial entrepreneurs Anish Achuthan and Mabel Chacko, together with Ajeesh Achuthan and Deena Jacob in 2017.
As a natural evolution, Open is now also taking advantage of the SME lending space. The platform is preparing for the launch of three new products aimed at improving the capital needs of SMEs in addition to existing credit card offerings for SMEs. The new products include Open Flo – a revenue-based financing product for e-commerce businesses, Open Settl – an early settlement credit offering and Open Capital – a working capital loan offering for SMEs.
Open aims to provide $ 1 billion in loans through the new suite of products on the platform over the next 12 months.
For this Open and IIFL Finance Ltd. have devised a joint venture to launch a neo-bank that meets the banking and credit requirements of micro and small enterprises (MSME). It will offer an alternative experience to traditional banking. This includes providing a simple interface for banking and integrating with accounting, finance and payroll in a seamless way.
Achuthan said SME loans are the need of the moment as small businesses largely lack access to solid capital resources. A recent IFC report indicated that SMEs absorb a miniscule credit share of 6-7% and face a credit gap close to $ 1.1 trillion.
The company recently received the green light from the Reserve Bank of India (RBI) for its new cross-border payments product. This is after Open has completed the second cohort testing phase under RBI’s regulatory sandbox structure titled “Cross Border Payments”. Open is one of 4 entities that have completed the RBI regulatory sandbox testing phase.
Open also developed “Zwitch”, a code-free embedded financial platform. This allows companies in any industry to create customized financial products and services that fit the customer journey.