We are exploring an NBFC licence, tie-ups with more banks: Sujith Narayanan
Founded by former Google, Netflix, and PayPal executives and funded by Sequoia India and Ribbit Capital, neobank Fi wants to help people save with ease, and has already tied up with Federal Bank. Speaking to Mint, its co-founder Sujith Narayanan said that a non-banking financial company (NBFC) licence is something the company is also exploring. He added the neobank is ready to launch its app in the next few weeks, with several people already on the waitlist. Edited excerpts…
Why did you want to start a neobank, and where does it fit in the current financial services landscape?
You had startups focussing on payments, you had banks focussed on storing and saving money. You had a lending economy, and you had an investing economy. As we looked at payments, we realised there is a need to be able to create a full-suite product. Companies and fintechs have built isolated products which solved one purpose as far as users were concerned. We wanted to step back and look at money as a whole from the consumer point of view. We asked ourselves, can we help people save more easily? Can we make them more aware of their spends? Can we simplify financial services? The part that we saw at that point of time was called a neobank, where you start a journey from a bank account and build layers of payments, lending, investment on top of that. So, we started the journey nearly a year ago, and we now have users coming in testing it out and will release this over the next few weeks.
What is your target customer segment?
We think that the product we have solves the need of working professionals. One who earns his/her salary, pays taxes and lives paycheck to paycheck or has money but still relies on friends and family for advice. That is a vast number of workers in India. There are about 50 million people with Employees’ Provident Fund Organisation (EPFO) accounts and that is expected to grow to 100 million over the next five to six years. We have built a product more suitable for them.
Are there regulatory challenges to your business model?
We are working in partnerships with banks, using their Application Programming Interface (APIs), and do not touch the money. Technically speaking, everything is in line with regulations. Think of it like the Unified Payments Interface (UPI), where third-party players have built on top of existing banking infrastructure. From a regulatory perspective, things like Know Your Customer (KYC), consumer redressal are taken care of in partnership with the bank. We have tied up with Federal Bank and will have another bank as well. There are certain services that we offer in conjunction with the bank. Anything to do with bank accounts, charges, and fees is governed by the existing structures of the bank. We look at it purely as a technology player offering a service on top of that infrastructure. Commissions will be there only on products that are permitted as per the law, but at the same time we have an investment advisory licence from the Securities and Exchange Board of India (Sebi).
How do you plan to scale up your operations?
So, a non-banking financial company (NBFC) is obviously a route that we are exploring. We are also looking at partnerships with multiple banks. We looked at a waitlist and wanted to evaluate the initial reaction to our product and launched a small campaign to bring to the attention of users that they have a broken relationship with money. We have got tens of thousands of people on our waitlist, and now as we start giving people access to the app, we think that this will scale up. We have just released it to a very small batch of beta users and will look at scaling it up to a couple of lakh users in the next few months. Sometime over the next month or so is when we are looking at a full-scale launch.
What is your view on competition from banking products like SBI Yono and Kotak 811?
These…
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