Open, a neo-banking platform focused on SMEs, plans to onboard 10 lakh SMEs by September 2020 and expand into the Asia Pacific market.

“SMEs face many difficulties in tracking and forecasting cash-flows, effectively managing accounts receivables and payables. They need to deal with multiple interfaces for accounting, payment gateway and payroll and there are no proper online tools that help them plan their day-to-day activities,” explains Anish Achuthan. During his stint with CitrusPay &  PayU, Achuthan interacted with a number of SMEs and realized that banking is broken for small businesses. Business owners struggle to identify and keep track of their income and expenses. This led him to start Open in 2017 along with Mabel Chacko, Ajeesh Achuthan and Deena Jacob.

Open is Asia’s first neo-banking platform focused on SMEs. So far SMEs have used many services to cater to their needs like collecting online payments via payment gateway, current account from banks, an accounting platform, various tools for invoicing. Through Open, all these services are bundled together in one single platform. “SMEs on our platform do not need to use multiple service providers,” says he. Open’s services come pre-integrated with tools to collect payments, do payouts, connect bank accounts, reconcile payments and do expense management with automated accounting and APIs that can help integrate banking into business workflows. Using Open, SME business owners are able to save at least 2-4 hours a day where they do not need to track payments using UTR numbers.

The company has had a good growth journey since its inception. It has on boarded more than 3.50 lakh SMEs on its platform with a transaction of US $ 10 billion on an annual basis.  “We onboard 35,000 SMEs in a month,” says the proud Founder and CEO. With a team size of 120, the company operates out of Bengaluru, Mumbai, New Delhi and Kolkata.

Moreover, Open has entered into partnerships with 6 of the 9 leading private sector banks in the country and recently got into a strategic alliance with VISA. The company has also launched a corporate credit card, a first of its kind, recently for startups called Founders Card.  This traction has helped Open with its funding journey. It recently raised a Series B funding of US $30 million led by Tiger Global, Tanglin Venture Partners Advisors and existing investors 3one4 Capital, Speedinvest and BetterCapital AngelList Syndicate. Prior to this round, the startup was funded by Beenext, Japan’s Recruit Strategic Partners, Unicorn India Ventures, Art Capital and other angel investors.

Not without challenges

One of the key challenges the company faces is with respect to regulation, mainly in terms of KYC compliance, which is physical and not digital. “I mentioned regulatory challenges primarily because to open a current account you still need a visit by the bank employee. You can’t do a 100 per cent  digital on boarding of this business as you have to rely on your partner bank for the bank employee to verify the details for the account opening process,” says Achuthan. The company is working closely with banks to enhance the onboarding experience on its platform. He says that apart from this challenge, things have been more positive as the Central Bank has been talking positively about Open Banking.

Onboarding customers

 “Surprisingly, we thought that initially building the trust amongst the SMEs will be difficult. Fortunately, we never had any issues on that front,” says Achuthan. He believes that most of the small businesses are very savvy about using online tools. Moreover, the company also had prominent partner banks like ICICI Bank which lent credibility. “I believe that small businesses are more proactive in looking out for solutions that can actually help them do accounting on the go, or like accepting digital payments,” says Achuthan. 

Talking about customer acquisition, he says that all their customers are acquired digitally. “Majority of our customer acquisition has always been organic maybe because as were did not have much funding in the first  year of operations.  When you are under pressure to get customers, you look for channels that are not regular, organic ones,” says Achuthan. Open focussed on content community based marketing like using question answer platforms in the web, using influencers or by using blogs. The company uses social media as well and does community events for trade exhibitions or start ups. “In our Open Up series, we bring in 50-100 entrepreneurs and broadcast it live on Facebook to other start up communities,” says he.

Where to from here?
“Open is the first player in the Indian market and we expect more competition in the coming months. This has given us an upper hand when it comes to relationships with partner banks,” says achuthan.

The company is constantly working towards retaining its first mover advantage by staying a step ahead. “We are already getting a lot of in-bound organic customers,” says Achuthan. The company is also coming out with larger campaigns focussing on brand building and is using organic channels for the same. It plans to increase spending towards marketing campaign. The company’s cost of acquisition has always been lowest in the market but it is looking at temporarily increase this spend to build the brand.

It is also looking at increasing the number of banking partners from its current number of 14. “Some of them are also distribution partners for us,” adds he. Open is also preparing itself from a product and technology perspective and has scaled up its team in the last three to four months.  “With all these strategies in place, we are all set to onboard 10 Lakh SMEs by September 2020 and expand into the Asia Pacific market,” says Achuthan on a concuding note.

Open

Founders: Anish Achuthan, Mabel Chacko, Ajeesh Achuthan and Deena Jacob

Year: 2017

City: Bengaluru

Funding: Angel Round – US $250,000  – Jitendra Gupta & Amrish Rau – July 2017; Pre-Series A – Undisclosed Amount- Unicorn India Ventures and Recruit Co. Ltd – May 2018; Series A – US $5 million – Beenext, SpeedInvest, 3one4 Capital – Feb 2019; Series B – US $30 million  – Tiger Global, Tanglin Venture Partners Advisors, 3one4 Capital – June 2019

Profile: Open is Asia’s first neo-banking platform focused on SMEs. Through Open, all these services are bundled together in one single platform. Open’s services come pre-integrated with tools to collect payments, do payouts, connect bank accounts, reconcile payments and do expense management with automated accounting and APIs that can help integrate banking into business workflows.