Open, the neobank backed by Google and Tiger Global, plans to onboard about 10 million small businesses in 3 years in a bid to solve a series of challenges facing SMEs to manage their business finances, using technology.
Open offers a business account in partnership with banks that helps SME automate and effectively manage their finances. The company which works with the 14 largest Indian 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 that small businesses face in business banking, as there are a lot of inefficiencies in the existing processes,” said Anish Achuthan, co- founder and CEO of Open, in an interview. “Today, many large banks across the country are deploying our solution to launch their own neobanks.”
For example, the company’s BankingStack solution enables banks and financial institutions to launch digital banking services. It is deployed in more than 15 banks in India and 2 banks in South East Asia. This allows banks to complement their own digital banking offerings and deliver a superior experience to their customers.
“We enable traditional banks to deliver better banking experiences to their customers,” Achuthan said.
Open competes with players such as Razorpay and UK fintech companies such as 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 SME and processes $30 billion in transactions annually. The platform onboards 100,000 new SMEs and startups every month.
The platform enables businesses to collect payments, make transparent payments, and streamline expense management. Other processes include compliance management, automatic reconciliation and categorization of income and expenses, thereby automating accounting.
“Currently, we manage deposits worth $2 billion on our platform. We’re aiming to increase that to around $7 billion by next year,” Achuthan said.
Open, was founded in 2017 by serial fintech entrepreneurs Anish Achuthan and Mabel Chacko, alongside Ajeesh Achuthan and Deena Jacob in 2017.
As a natural progression, Open now also leverages the SME lending space. The platform is gearing up for the launch of three new products aimed at bolstering the capital needs of SMEs in addition to its existing SME credit card offerings. 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 disburse $1 billion in loans through the new product suite on the platform over the next 12 months.
For this, Open and IIFL Finance Ltd. created a joint venture to launch a neo-bank that would meet the banking and credit needs of micro and small enterprises (MSMEs). It will offer an alternative experience to traditional banking. This includes providing a simple interface for banking and integrating with accounting, finance and payroll seamlessly.
Achuthan said SME loans are the need of the hour as small businesses largely lack access to solid capital resources. A recent IFC report indicated that SMEs occupy a tiny 6-7% credit share 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 comes after Open completed the testing phase of the second cohort as part of RBI’s regulatory sandbox structure on “Cross-Border Payments”. Open is one of 4 entities that have completed the testing phase of RBI’s regulatory sandbox.
Open has also developed “Zwitch”, an integrated no-code financial platform. This enables businesses in all industries to create personalized financial products and services that fit into the customer journey.