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A short story on the evolving landscape of Fintech in India

Issue #10 - I Run A Fintech (09/09)

10-minute Fintech updates as it happened!

Pratik Mehta

Sep 9, 2020

Good Morning,

This week, I am attempting to transcribe some interviews for you under the Events section so that you get a sense of “founders of fintech’s” (FoFin) outlook of the industry.

Also today’s email is slightly long, if the mail is clipped, click on the bottom of your email to see the entire newsletter

If you do like the issue or the newsletter, do share it with your friends & colleagues by either forwarding the email or sharing the link from below

Moving on to last week’s updates!

🤓 Events, Webinars & Interviews

goDutch co-founder's pitch on how it aims to make a mark in group payments

An idea that came out of a college dorm and bloomed during work, Sagar Sheth narrates his story on how goDutch came to be. He talks about goDutch's unique capability to solve group payments when you are spending (time & money!) with your friends & colleagues all the times and find it inconvenient to split payments because you have to either follow up with your friends or use an app which does nothing but helps in record keeping.

Zerodha's Nitin Kamath's quick walkthrough on the new margin rule that got implemented by SEBI on Sept 1.

Margin Rule

The new rules mandate the buyer or seller of securities to have 20 percent upfront margin in their account before entering into the transaction.

Also, the trader cannot use the realized profit from an intraday trade to enter into another trade.

For instance, if a trader buys RIL shares worth Rs 10 lakh and decides to sell it the same day for the small profit, he cannot adjust the proceeds due from that sale transaction for a fresh buy trade in some other stock. Only when the amount is credited to the trader's account two days later can he use it as margin for other transactions. This rule means that for every new intra-day trade, the trader will have to put up fresh margins. This will limit his ability to do multiple trades through the day. This is bad news for the broker as well since the broker earns his commission on every trade that his customer does.

"At a broker like Zerodha that's never been the issue because to buy 1 lac rupees of stock you always have to put 1 lac rupees upfront and that changes a little today for those are not asking upfront. A lot of traditional folks would have asked for the money after 2 days because the settlement happens after 2 days. But going forward today they have to collect the Value at Risk (VaR) Margin & Extreme Loss Margin (ELM) upfront"

"However, one thing today is the deterrent is, until today you made intraday profits and all brokers use to allow those profits to be used for fresh trades. But with the new regulation in place you cant allow that to happen. You have to wait for the profits to be settled before you can allow the fresh trades to happen"

Nitin Kamath said on an interview with BQ.

You can also visit the BSE website to see each stocks Margin + ELM

Share Pledging

Another aspect of the new rules is pledging shares for margin requirements. Instead of cash, a broker's clients can pledge shares worth an equivalent amount. Say a client wanted to do a trade worth Rs 1 crore. The Rs 20 lakh margin he has to put up with the broker can be in the form of shares as well.

Before the new regulations came into force, the client would give his broker Power of Attorney (PoA) over his or her demat account. Using the PoA, the broker would transfer the shares from the client demat account to his own, and then further pledge the shares with the clearing corporation to meet the margin requirements.

📣Open Role Spotlight

Couple of Product Management roles have been opening up across fintech

Novopay is hiring for product managers for their business
Tala is looking for senior product managers for the lending business in India
Slice is looking for product manager
JIO is looking for a product head for new business line
Simpl is looking for a product manager

Credit Cards & Banking

🚀Product Launches

Axis Bank launches ‘Full Power Digital Savings Account’ with Video KYC & Instant E-Debit Card

Axis Bank launches a full power Digital Savings Account that can be opened instantly with Video KYC in 4 simple steps. Keeping in mind the need of the hour, the product proposition is built in a way that not only does the account give one access to 250+ banking services online, but also a virtual debit card named as ‘E-Debit Card’ with which customers can start transacting immediately after opening the account.

Fintech

🚀Product Launches

INDMoney, a wealth management app has started offering loans on their platform

This is INDMoney's second product launch in the last 3 months. The last announcement was partnering with DriveWealth to enable investment into US Stock market.

Ashish Kashyap's (Ex-CEO of Goibibo, Ex-CEO of RedBus) 2-year old startup, markets itself as a "superapp".

The app is focusing on the following strategy, aggregate all your investments, expenses and liabilities under one place. Once you see your actual networth, they have a platform for you to discover various other options i.e. stocks, mutual funds, fds, loans etc. And over a period of time, once it learns it uses algorithms and machine learning to advise better offers or lets you get an expert advisory on board on a subscription based plan. The eventual thought process is to manage your wealth either using algorithmic capabilities or via partnerships which they do have today for HNIs (High-Networth Individuals) who have a networth over 50 lacs. This is where they can maximize their ARPU (Avg Revenue Per User) on every customer. Nothing stops them on becoming a neo-bank now...

Current products and features on their platform:

A robo-advisory that helps you switch into mutual funds that give better returns and also help your switch to loans with better interest rates.
A mutual Fund investment platform
An investment platform for Indian and US stock markets via direct or SIP investments
A lending platform
Give you detailed credit scores
Aggregates your FDs, PPFs, Bonds, Real-Estate

If you would like me to break this down further into a descriptive framework, you can either reply me over the email or leave me a comment in the blog below.

Google Pay is bringing NFC-based card payments in India

Couple of weeks ago, we saw how NFCs are distributed across various payment options.

Google Pay is now bringing it's NFC technology in India by integrating your debit cards and credit cards into their platform. This was announced at Google for India last year to enable secure online payments via Google Pay using credit and debit cards. The arrival of the option to add cards to Google Pay is setting the pitch for tokenized cards that the search giant announced last year. The feature was projected to bring a secure online payment experience by using digital tokens instead of showing the actual credit or debit card number to payment gateways. Google had said that tokenized cards would be available for Visa cards issued by Axis, HDFC, Kotak, and Standard Chartered banks. A support page has been dedicated to the page giving a walkthrough on how cards can be added, general FAQs and the current limitation of the product.

If you are new to tokenization technology, you can visit the Visa's page where they have illustrated it in a simple infographic

Google Pay will fall under category three which is Mobile to Machine Contactless Payments which requires Internet to work. You can see an example of this here.

As per Gadgets360 and a reddit thread, the feature is rolled-out to a limited population set.

If you are wondering, aren't expensive devices only NFC-enabled? This means that Google Pay would like to make the app more popular amongst the customers who are heavy card users even today and become the go-to app for all payments possible.

source: pricebaba

Gaurav Sharma launches Singapore-registered Fintech Atlantis in India

Gaurav Sharma who also runs neobank called "NEO" has launched his new neo-bank startup under the brand name Atlantis which is registered in Singapore under Atlantis SG PTE Ltd. Both "NEO" & "Atlantis" are under waitlist 🤔 which makes me wonder are they the same-same or same-different?

Razorpay has soft-launched ThirdWatch (a fraud management service) on their platform

RTO (Return to Origin) or returns leads to large losses in the eCommerce industry today especially when the payments are on CoD and is also one of the major reasons why eCommerce sellers fear COD even today. Couple of months ago, on a webinar hosted by Razorpay, they discussed various topics on how losses in eCommerce keep hurting businesses because of various reasons ranging from:

Forward & reverse logistics
Blocked Inventory (Items stuck in transit)
Physical Quality check and re-packaging of returned items
Increased probability of damage to fragile items, and hence more money spent in shipping them
Operations cost in processing this order

60% of the orders even today operate on COD, especially in Tier-1 cities onwards.

An article published on indianonlineseller.com on 2017, mentions that small eCommerce players lose almost Rs. 75 on every order that is returned which includes cost of logistics & cost of packaging and it also leads to higher working capital cycle since their inventory gets blocked until the order is either delivered or returned back to the merchant. This typically takes anywhere between 14 days to 30 days to recover the payments or losses against the stocks.

And as per RazorPay, 30% of the orders are RTO'd.

So where does RazorPay's recently acquired ThirdWatch helps out?

Identify non-deliverable addresses before shipping, improve success rates and increase revenue.
Detect risky and fraud orders which pose a high risk of RTO and substantially cut down on RTO losses.

How will it work?

First, RazorPay has to start collecting addresses and get delivery feedback to increase their level of intelligence.
Second, It will have to either clean and standardize those addresses or provide a mechanism to let the merchant use RazorPay's address field

Once it reaches a large volume, it will be able to deliver intelligence with respect to ecommerce fraud, delivery fraud and logistics fraud as well.

OkCredit launches its version of ‘Dukaan’ via OkShop

Digital bookkeeping startup OkCredit has silently launched OkShop, a new app that allows small shop owners to set up online stores, create product catalogues and let them share inventories and offerings on WhatsApp.

The company has built and introduced OkShop within a month of its rival Khatabook launching a similar app called “Dukaan by Khatabook.”

Apollo Finvest opens up LMS called "SONIC" to all fintech players

Apollo Finvest has opened up their LMS (Loan Management System) for all the fintech players to integrate with for their businesses. LMS is usually one of the most complicated applications for a lending business because it has to handle variety of products and loan programs for

Managing various payment methods
Managing delinquencies, NPAs
Managing reconciliations
Handling variety of payment
Handling the veracity of credit product behaviours

With Apollo Finvest’s new platform, it want to simplify the product by unbundling and providing easy-to-use interface to create products for the Fintechs.

Mutual funds platform Kuvera now offers Indian investors to invest in US stocks

Online investment platform Kuvera.in, has partnered with Vested Finance to enable Indian investors to invest in the US stock market. Amid increasing interest from Indian retail investors in the foreign stock markets specially US markets, a lot of platforms have emerged to allow to invest directly in US stock market. Recently, ICICI Securities, Axis Securities, Matertrust, Winvesta, Vested Finance have also launched their global investing services.

LazyPay combines the best of Buy-Now-Pay-Later with UPI

LazyPay, launched a first of its kind digital credit card that combines the power of UPI and the Buy-Now-Pay-Later concept. Called LazyUPI, the offering enables users to access real-time credit using UPI across omnichannel networks, including offline merchants and e-commerce platforms.

💪Partnerships

BEST Buses partners with PhonePe to launch Digital Ticketing

The Brihanmumbai Electricity Supply and Transport (BEST) undertaking has expanded its digital ticketing services in all its 27 depots.

Passengers can book the tickets directly through their PhonePe app by scanning the QR code badges issued to the conductors. The ticket would be issued to the riders in their phone and they can pay using the PhonePE digital gate-away.

Federal Bank, Innoviti team-up to extend affordability through Debit Card EMI

Federal Bank and Innoviti Payment Solutions have joined hands to offer convenient and affordable options of Federal Bank Debit Cards through Innoviti POS terminals. This partnership will be providing convenient EMI options to more than 7.5+ million Federal Bank Debit Card holders at around 70,000+ Innoviti POS terminals across 1000+ cities. This facility will be an add on to EMI options that the Bank already offers on Amazon, Flipkart and POS terminals of Pine Labs.

Bajaj Finserv inks Kwik.ID as their Exclusive Video KYC Partner

Kwik.ID, Video KYC solution has inked a strategic partnership with Bajaj Finserv to provide them services pertaining to Video KYC

HDFC Bank partners Adobe to enhance customer experience

HDFC Bank has announced a strategic partnership with Adobe to help improve digital experience journey of its customers. Adobe Experience Manager (AEM) Forms will allow HDFC Bank to provide online experiences to its existing and new customers.

🔑Mergers & Acquisitions

Niyogin Fintech acquires 51% strategic stake in iServeU

BSE listed, fintech company Niyogin, has acquired a 51% strategic and controlling stake in iServeU for Rs 592 million ($8 million) in a cash plus stock deal.Niyogin's vision is to create a full-stack digital platform for the underserved and bring best in class products and services on the platform. Niyogin has been scaling its unique platform through a network of financial professionals along with products such as wealth, credit and other SaaS-based products that help digitise small businesses.Financial inclusion solution provider, iServeU enables small village merchants to serve local communities and drive financial inclusion through iServeU’s digital platform

💲Funding

Avail Finance raises $11.5 million in Series B round led by Falcon Edge

Fintech lending startup Avail Finance has raised about Rs 87 crore (around $11.8 million) in a Series B funding round, led by US-based Falcon Edge Capital, with participation from existing investor Matrix Partners.

They have raised 38 million till date

New Fintech startup UniOrbit raises $20 million

Nitin Gupta’s new fintech startup UniOrbit raises $20 million in funding. The startup has not been launched yet.

One of the startups of Nitin Gupta is PayU. It is also a fintech company that provides payment technology to online merchants. It was founded in 2002. The startup allows online businesses to accept and process payments through payment methods that can be integrated with web and mobile applications.

📖Good Reads

Top 20 Indian Fintech startups that have made it to CBInsights

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Disclaimer: The newsletter contains information about Fintech and Organizations that operate in or around the fintech industry. The information is not advice, and should not be treated as such. Without prejudice to the generality of the foregoing paragraph, we do not represent, warrant, undertake, or guarantee ... that the information in the newsletter is correct, accurate, complete, or non-misleading. We will not be liable to you in respect of any special, indirect, or consequential loss or damage. If a section of this disclaimer is determined by any court or other competent authority to be unlawful and/or unenforceable, the other sections of this disclaimer continue in effect.