India’s first online marketplace for forex services, BookMyForex, recently launched its ‘Zero Margin’ campaign which allows customers to buy forex at interbank rates with zero exchange margins. While its current annual transaction volume is Rs. 500 crore, over the next two years, it aims to up that number to Rs.2,500 crore
Five years ago, Sudarshan Motwani sat ruminating on his idea for a new business while heading the Forex division at ING Vysya Bank. Three thousand and more miles away, his son, Nitin Motwani was in the Silicon Valley researching unique business ideas that addressed an untapped market. In due conversation, the father-son duo kick-started the process that led to the creation of BookMyForex, India’s first online marketplace for forex services, including multi-currency cards, cash remittance and travel insurance, in 2012. “With the travel industry taking the e-commerce route, we figured money exchange has to get online,” recalls Motwani. The company’s first move was to partner with Axis Bank to bring foreign exchange online but Motwani shares that the business model was ahead of its time. “It was very staff dependent and we couldn’t keep pace with the number of branches in different cities and couldn’t afford individual reps for each. By January 2014, we brought in the first money changer and soon brought in more,” he says. Today, BookMyForex has 5,000 money changing locations spread across 650 cities with door delivery options in 200 cities through 42 channel partners. The company’s products are delivered by RBI authorised money changers or banks that have a partnership with it.
“We created a proprietary app which allows channel partners to quote rates on our dashboard,and in turn, allows for rate improvement with the first five most competitive quotes being displayed,” explains Nitin while adding that the company’s app now quotes the best rates in each currency in every geography it is available in.What gives the company an edge over its direct and indirect competition is the ability to make apt rate comparisons on its technology platform; an element that is missing in forex transactions conducted elsewhere.
Building everlasting relationships
While banks and exchange merchants typically charge anywhere between 3 per cent and 6 percent on every Rs.100, BookMyForex charges were close to 0.6 per cent.In a game changing move, the company recently launched its ‘Zero Margin’ which allows customers to buy forex at interbank rates with zero exchange margins. Motwani’s extensive background in handling forex divisions at various banks has enabled him to network and maintain relationships with key players; one of the reasons he attributes to the company delivering such competitive rates. “We have arrangements with several banks and exchange companies that offer us wholesale rates and thus, we have been able to offer zero commission on sale of foreign currency notes, travel cards and traveller’s cheques,” he shares. Keeping in mind the Indian purchase policy of ‘cheap and best’ has helped the website garner good volumes and Motwani states that the current annual volume of transactions is close to Rs. 500 crore. Till date, it has seen solid conversion rates in its operations of above 45 per cent, which beat the industry standard.
What gives the company an edge over its direct and indirect competition is the ability to make apt rate comparisons on its technology platform; an element that is missing in forex transactions conducted elsewhere.
The company has also forged strategic partnerships with travel portal, MakeMyTrip, wherein its products will be available through the former’s website or app. In the near future, it aims to create more such synergies with allied companies. As for its partnership with banks, BookMyForex has a stable relationship with Axis Bank and as Motwani suggests, as transaction volumes grow, it will look into entering more relevant partnerships.
Finding timely funds
In March 2016, PE firm Faering Capital, picked up a 26 per cent stake in BookMyForex for an estimated value of US $2 million. Motwani speaks of how the funds came at the right time for the company as it was struggling to manage its transaction volumes. “Last July was a bad time for us as we were not able to manage traffic. We were understaffed and needed money to create infrastructure, backend staff and an upgrade in technology,” he explains. Post the infusion, the team was able to ramp up to 61 members from its previous 26 and, by the end of this fiscal, Motwani expects the company to have a workforce of 85 people.
Motwani shares a fantastic rapport with his investors and this has helped the company right from the early stages. In fact, the company was founded with seed funding of Rs. 1.5 crore from one of his mentors, former executive director at Centurion Bank of Punjab, Tejbir Singh. “At each stage, people have shown a great level of trust in me and my team. I think what resonates with them is that to me, there’s no giving up, you have to survive each situation,” opines Motwani.
Courting speedy growth
With a timely boost from Faering Capital, the Motwanis are looking to up the ante of growth at BookMyForex. Even though the nature of this business does not see the same customer making frequent transactions, the company boasts of a repeat customer rate that is over 40 per cent. “We are now marketing through various channels such as social and digital media and this will help us increase our user base,” says Nitin.
BookMyForex has a current annual transaction volume of Rs. 500 crore and in the next two years, it hopes to take that number up to Rs. 2,500 crore. That’s a five-fold growth projection and the founders project a confidence in being able to turn it into reality. “Between the months of April and May (2016), we registered a growth of 388 per cent. We might even cross the 500 per cent mark in this fiscal,” beams Motwani. That’s not all, he shares that in the future, exciting things will happen for the company as it looks to address global pain points in the industry.
HEAD: SUDARSHAN MOTWANI, NITIN MOTWANI
INDUSTRY: ONLINE MARKETPLACE FOR FOREX SERVICES
USP: PLATFORM TO COMPARE AND SHOWCASE MOST COMPETITIVE FOREX RATES
INVESTMENT: PE FIRM FAERING CAPITAL BOUGHT A 26 PER CENT STAKE IN THE COMPANY WORTH US $2MILLION IN MARCH 2016