Fintech: more than just hype

We in India are experiencing a shift in the way we are paying our bills, buying insurance, investing our savings and borrowing. Tech led companies are offering us better alternatives at lower cost and more convenience.

What are the macro trends that are driving these changes?

Millennials are thinking differently about financial services

A recent survey by CBInsights found that 79% of millennials in the US view their relationship with their banks as transactional and 59% think the financial products are not even targeted at them. Around 2/5 of India’s population is in the working age group of 20-35 years and like their counterparts in the US, do not relate to the traditional financial institutions and their products. These mobile first customers want convenience and personalization.

Incumbents underserving the consumers

Like in most other sectors, the Indian consumers are underserved by the existing financial service providers. Only 14% of individuals save at a financial institution, not a surprise considering that gold is still the preferred asset of investment. Even worse, only 6% of borrowed from a financial institution. We continue to be a cash economy with only 1 in 5 having a debit card.

Government pushing for financial inclusion and digital economy

The government is pushing for financial inclusion with programs like Jan Dhan Yojana, UID / Aadhar and Unified Payments Interface (UPI). A recent paper claims that with Aadhar decision making on loans would be done in 15 seconds and virtual credit cards will be issued instantaneously. Over 200M bank accounts were opened under the Jan Dhan Yojana bringing a large section of the population under the banking and digital umbrella.

Tech players are innovating

The tech players are re-imagining the role of tech from being an enabler to a disrupter in delivering financial products. With credit scores being new in India, tech enables the use of social and transactional data to evaluate credit risk for millions of new to credit customers. It has lowered the friction of making online payments through wallets and seamless payment gateways.

Where are the opportunities?

Creating new markets

As the economy becomes less reliant on cash and moves towards a digital economy, there is a lot of transactional data which can be used for assessing credit worthiness of a consumer or a business.  Companies like CapitalFloat and LendingKart use digitized credit risk processes to disburse business loans in record time. New to credit customers like people in their first job, who would have never got a traditional bank to loan them for a durable purchase, have access to personal finance from companies’ tech lenders like Finomena and Krazybee.

Virtual EMI cards, which are now a payment option on popular ecommerce sites, are pre-approved personal loans for buying from ecommerce sites. NBFCs like Bajaj finance and new age tech players like FastBanking are among the growing number of virtual EMI card providers enabling a large population to get financing for their online purchases.

Disintermediating the traditional bank

Banks have traditionally been the one stop shop for all our financial needs, but they have been very inefficient and discriminatory. Small savers never got the personal finance advice that the HNIs got. But this is changing with personal finance platforms like MoneyView and Slonkit that provide tools to everyone to set savings target and effectively manage the use of credit cards. Personal asset management companies like Scripbox and FundsIndia have democratized the portfolio management services that were earlier exclusive to HNIs. They have simple intuitive mobile apps that makes it easy for a new to investing consumer to save and track investments.

There is a huge disparity between what the savers get for their deposits and what the borrowers pay for their loans in India. This is bound to change as P2P platforms like Faircent take off. It has already taken off in western markets like the UK where over 50K people have cumulatively lent GBP 1.4B to businesses on FundingCircle.

Online brokering

Not long ago, getting a quote for insurance, loans and credit cards involved a visit to a few neighborhood bank branches. Consumers were still not guaranteed the best deal. Platforms like policybazaar, bankbazaar and deal4loans have made it possible to get a comparison and buy insurance and loans almost instantaneously.

Lowering the friction in a transaction

Payment gateways have made the process of completing an online transaction seamless. The governments push for ‘Digital India’ is proving to be a huge boon for the gateways. Wallets, with preloaded money that can be spent at participating online and offline merchants have become ubiquitous. It is not only the backbone for most ecommerce transactions today, but also provides solutions like remittances and transfers.


Tech companies seem to be best placed to offer financial services to the large young underserved population that is mobile first and on the internet. It is happening already with apple, google and amazon making big bets on fintech. The next set of large financial companies will be tech startups that serve this large innate demand of the new consumers.



What will it take for high tech startups to bloom in India

A few weeks ago, I heard the pitch from Team Indus which is the only Indian team competing for the Google X prize to launch a rocket to the Moon. In the process of competing for the prize, it is building the next generation aerospace company in India. I left the room with a lot of optimism in the future of high tech in India and with the thought – What would it take to see many more bold startups from India aiming for tech breakthroughs like advanced materials, super computing, blockchain technologies and space?

Nasa photos

Pic from:

India has seen hundreds of consumer internet startups by founders who had just graduated. These 23-25 year olds understand the millennials and technology better than anyone else. They built startups that took advantage of the current technologies to define new business models. However, few ventured into advanced sciences, as high tech startups require people with doctoral and post doctoral degrees, research background and experience in the relevant field. Though Indian’s bloom and flourish in research labs outside India, few have built hi-tech businesses here.

The spawning of high tech startups in India could be driven by a trifecta of diverse forces. First, we need to create a higher education system that focusses on real innovation. India has very few institutes that are renowned for advanced research, so people who want to pursue research end up studying in the US / UK. Most end up working in high tech startups in the Silicon Valley and Cambridge, UK. To provide these talented people the opportunity, the Indian government must focus on building advanced education institutions on par with the best in the world and open up 100% FDI in higher education. There are examples of how this has been done. Saudi Arabia founded KAUST (King Abdullah University of Science and Technology), a private post graduate research university that brings together the best faculty from around the world in areas of super computing, visualization, nano fabrication etc. The university has become the nucleus of research and development in the region.

Next, We need to bring together research and business ideas. The scientists and researchers at the various advanced institutes, like ISRO, IISc and HAL are our best bet to start up in the near term. These institutes must encourage their scientists to commercialize their ideas. Most accelerators are focused only on popular business models and consumer internet, which require little intervention. We need specialized accelerators for high tech businesses like the global aerospace business accelerator by Airbus in Bangalore. Government and industry must promote / incentivize many such accelerators that incubate technologies that take longer to gestate.

Finally, the Indian investors – both venture and corporate must build capabilities to evaluate high tech. Opportunities in this space have potential for very large impact and outcomes. Investors could form alliances with universities and foreign funds that have experience in advanced tech investing to understand the technologies. They can take cues from Israel’s venture capital and incubator industry that plays an important role in the booming high-tech sectors like material technology, medical devices and internet security.

With these forces coming together and the large domestic market, India will be among the best places for true innovation and commercialization. I hope to see the next breakthrough medical devices, AI robots and spacecraft designed and built in India.

Let a 1000 high tech startups bloom in India.

Investment decision: Product Evaluation

Most investors focus on the product to make an Investment decision, apart from the people, potential and traction in the startup. Here are a few questions that entrepreneurs must be ready to answer while making the pitch.


What are you developing?

This is the question of “purpose”. Understand the context for the need of the product, how are things being done now and why in a particular way. What will the proposed product achieve, considering the current social behavior of users and available technology

Who is it for?

One can’t design a product that is for everyone in the world, there is no one size fits all. Be sure, which segment of customers are your target – Enterprise/individuals, those who seek luxury/value for money, double income couples/teenagers everyone has different needs. Spreading too thin to cater to every segment will bother stakeholders. Continue reading


5 Exciting b2b startups in India


Here’s a list of 5 exciting b2b startups that I’m following. I used the evaluation criteria used by Jason Ball in his blog. – People, Product, Potential and Traction.

1. UnicommerceUnicommerce

Cloud based Multi-Channel Order Fulfillment Platform which enables E-commerce merchants

People: Started in 2012 by a group of IIT / IIM graduates, they have proved that passion, talent and ability are more important than experience. Without any previous experience in warehouse/inventory management , they have build world class inventory management software and have over 4000 paid users! Ankit, Manish and Vibhu have relied upon their IIT connects for the first few deals and there after relied on the products strength and customer service.

Product: Their product, Unicommerce, is comprehensive enough for big e-commerce players to rely on and easy enough for smaller online merchants to use.  It provides end to end order fulfillment including procurement, vendors, inventory, warehouses, drop shipments and returns. Being hosted on Internet, it enables small and medium sized online sellers to tap power of technology without any technology knowledge.

Potential: One of the ways that small offline businesses can survive the onslaught of e-commerce is by joining the e-commerce marketplace. The millions of small offline retailers and suppliers willing to join the online marketplace in India are the potential market for inventory management software.

Traction: Within a short span of 2 years, they could help their 4000+ customers do Rs. 1000+ Cr business. Unicommerce comes pre-integrated with all the leading marketplaces like Jabong, Snapdeal and Lazada, carts, couriers/shipping companies, accounting software and have built high barriers with these alliances for new entrants and in 2013, they raised their first round from Nexus.

2. Power2sme


Group buying site for SMEs

People: The founder, R Narayanan is a seasoned entrepreneur with experience in diverse industries, he is also a cost accountant working on profitability from early stages. He has built a team of around 60 and is advised by a very capable board.

Product: The company is a group buying site for SMEs in India. It has also diversified into SaaS applets and employee retention and motivation for SME. The primary business of group buying can include several products (over a million products listed in and serviced through the common infrastructure.

Potential: The Indian economy is poised to return to high growth and the new government will provide an impetus to manufacturing, the market for industrial supplies will only increase. It is a blue ocean out there and the market is in billions, even amazon has started catering to SMEs in the US through

Traction: With $8m of funding from Inventus, Accel and Kalaari, there is enough capital to see the company through the venture phase. The company has its head quarters in Mumbai, which is the hub of commodity business in India. Continue reading


Financial Services: Industry ripe for Disruption

Why are banks pruning their branches after years of growing them? What is the purpose of a bank? To grow savings, get a loan, make and receive payments.

With crowd funding sites like zopa, lending club, ilend and umpteen other crowd funding sites, individuals can cut the middleman and take direct control of their investments or get a loan. Venture capital, PE and debt funds are better capable of evaluating the risks of investing and lending to businesses. NBFCs (Non Banking Financial Institutions) in India – an umbrella that includes micro financial institutions (MFIs), Asset backed financiers (housing, auto and consumer) have better infrastructure like geographical coverage, understanding the market, credit score of borrower, than banks to cater to customers. Focused lenders that lend to infrastructure, agriculture and export sectors are better placed in their sectors than banks. Crypto currencies can’t be written off and will comeback as they offer an almost no transaction charge transfer of money. New payment solutions like mpesa by Vodafone and Square (and the look alikes) serve merchants better than solutions provided by banks. So why do we need a conventional bank in its current form?

Advertisements to India

aliexpressLast week, my brother received his slick iphone case ordered online for Rs. 300, which was real value for money deal. There is nothing unusual about ordering online these days, but here the case was ordered on and shipped from China with no shipping charges by China post, the only things he had to bear with was the delivery took 4 weeks, he had to pay in advance only by credit card and any additional duty levied by Indian authorities would have to be paid to the courier. In his case, there was no duty charged.

If the home grown e-commerce companies – snapdeal and flipkart are having sleepless nights after amazon started in India, they now have to also compete with a company whose global revenue (including its parent – Alibaba) is more than that of amazon and ebay combined. Agree, aliexpress Continue reading


Automotive startups: Next wave in Bangalore?

With 80 million new customers in 2013, the global auto market is a larger than that of wearable and personal fitness devices. Automobiles also collect a large amount of data that can be harnessed to provide feedback/analysis to driver, easier processing of accidental insurance claims, targeting advertising and endless application limited only by imagination.

One of most important ingredient of a startup is finding the right people and Bangalore has few thousand engineers working with Bosch, Continental and Delphi who come with the right skills. The existing ecosystem of entrepreneurs, VCs and success of many tech startups in Bangalore can make it the global hub of automotive startups. Moonraft, a startup in design and technology based in Bangalore, has developed Smartphone based telematic application to control car functions in Mahindra’s electric car. Continue reading



I believe every individual and business must focus a percentage of their resources on moonshots. Moonshots are experiments that strive to achieve what almost seems foolish to pursue, but if they succeed, it will not only make the experimenter a rockstar, but also further mankind’s quest for knowledge. Google uses a part of its resources for such projects, the driverless car and the Google glass can change the way we live in this world.

These investments are risky and enough knowledge and research needs to be done before jumping into your next product development, business expansion or alternative investments in real estate, art, angel investing and derivatives, but it is worth the effort for you and the society.