Open, the new bank backed by Google and Tiger Global, plans to integrate around 10 million small businesses over 3 years in an effort to solve a series of challenges they face SMEs to manage their business finances, using technology.
Open offers a business account in partnership with banks which helps SMEs automate and effectively manage their finances. The company working with India’s 14 largest banks aims to integrate around 250 banks globally that would 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 primarily to solve the challenges small businesses face in business banking, as there are many inefficiencies in existing processes,” Anish Achuthan, co-founder and CEO of Open, said in an interview. “Today, many large banks across the country 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 more than 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 enable traditional banks to offer better banking experiences to their customers,” 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 $ 100 million led by Temasek, Google and SBI Investments. It now serves more than 2.3 million SMEs and processes $ 30 billion in transactions per year. The platform integrates 100,000 new SMEs and startups every month.
The platform allows businesses to collect payments, make transparent payments and simplify expense management. Other processes include compliance management, automatic reconciliation and the categorization of income and expenses, thereby automating accounting.
“We currently manage deposits worth $ 2 billion on our platform. We aim to increase it to around $ 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 now also takes advantage of the SME lending space. The platform is preparing for the launch of three new products aimed at strengthening 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 offer and Open Capital, a working capital loan offer 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. created a joint venture to launch a neo-bank capable of meeting the banking and credit needs of micro and small enterprises (MPMI). It will offer an alternative experience to traditional banking. This includes providing a simple interface for banking and seamless integration with accounting, finance and payroll.
Achuthan said SME loans are the necessity of the moment as small businesses largely lack access to solid capital resources. A recent IFC report indicated that SMEs occupy a miniscule credit share of 6-7% and face a credit gap of nearly $ 1.1 trillion.
The company recently received the green light from the Reserve Bank of India (RBI) for its new cross-border payment product. This occurs after Open has completed the second cohort testing phase as part of RBI’s regulatory sandbox on “Cross Border Payments”. Open is one of 4 entities that have completed the RBI regulatory sandbox testing phase.
Open has also developed “Zwitch”, a code-free integrated financial platform. This allows companies across all industries to create customized financial products and services that fit the customer journey.