A new wave of FinTech start-ups in India are tapping into the country's rapidly growing dependence on smartphones and demand for digital solutions by offering consumers and businesses the option to bank virtually.
“In today's day and age, as a consumer, I get everything on my phone: I get groceries, I get a cab, I get health care and I can make payments, so why shouldn't my money be available to me at my fingertips?” says Anuj Kacker, co-founder and chief executive of Freo, an India-based neobank that is aiming at a tech-savvy generation of white-collar workers.
The company's focus is on offering credit, which has helped Freo to grow rapidly since its launch in August last year to almost one million users.
Neobanks, which are 100 per cent digital and use apps and online platforms to support customers, have been mushrooming in the US, Europe, the Middle East and South-East Asia in recent years.
But India is only now catching up with the trend thanks to the country's surging digital dependence — and the potential is enormous, analysts say. The surge in demand has been fuelled by the pandemic, which has pushed people towards greater use of technology to avoid in-person contact.
The number of internet users in India is expected to rise to 900 million by 2025, up from 622 million in 2020, according to a report by the Internet and Mobile Association of India and Kantar. In 2017, there were 357 million internet users, which was just 27 per cent of the population, figures from Cisco show.
“Neobanking in India is fast gaining momentum,” says Shishir Mankad, managing partner and head of financial services at consultant Praxis Global Alliance. “While still at a nascent stage, India has already seen a rapid emergence of neobank players in the last two years.”
Currently, there are about 30 companies that are active in India's neobanking sector, according to Praxis.
Traditional banks are trapped in archaic — and more costly — ways of working, industry insiders say. While brick-and-mortar lenders have mobile apps and online banking, they are not purely digital and customers still need to visit branches for certain processes, they add.
Neobanks have positioned themselves as being more nimble and offer services that are either unavailable or not as accessible through traditional lenders, alongside regular banking options, Mr Mankad says.
However, neobanks are not eligible for banking licences under the Reserve Bank of India regulations, despite the competition with physical banks for customers.
Because neobanks in India do not have their own licences, they have to tie up with traditional banks, a business model that is followed by the majority of the sector globally. This means that neobanks can also offer regular banking services through their platforms.
However, these are, in fact, provided in the background by partner banks, analysts say.
“The bank is responsible for regulatory, compliance, cash reserve ratios,” says Mr Kacker. “But as a FinTech, I'm able to use all my strengths, which is product, tech, data, consumer, marketing.”
The main incentive for traditional banks to partner with neobanks is to bring in new customers, says Amit Jain, chief executive and co-founder of Ashika Wealth Management.
“In today’s India, with such a low cost of internet and mobile data and the young tech-savvy population, it is the most profitable association for both banks and their customers as it saves a lot of transaction costs for both,” Mr Jain says.
Neobanking is a sector that is “growing in India by leaps and bounds”, despite the challenge of having to depend on a partnership with a physical bank, he adds.
However, neobanking will not replace traditional banks any time soon, industry insiders say.
Despite Freo's wide range of services, it is generally not the “primary bank account” of customers, Mr Kacker says, adding that the company is positioning itself to be their “primary digital bank account”.
Open, a Bengaluru-based neobank, has positioned itself as a digital banking service for start-ups and small and medium-sized businesses.
The idea for Open came about because “business banking is broken for small businesses”, says Anish Achuthan, the neobank's co-founder and chief executive.
“They struggle a lot when it comes to tracking cash flows,” Mr Achuthan says. “They have to deal with multiple interfaces, like a banking interface, a separate interface for managing their accounting and another separate interface for managing their payments. That took away a lot of their time.”
Established in 2017, Open integrates these financial elements into one digital banking platform. It now has 2 million businesses in India signed up and processes $24 billion of annualised transactions, while it is still adding 100,000 new businesses a month, Mr Achuthan says.
“When we offer Open as a solution to the customer, there are a lot of non-banking components to it — for example, automated book-keeping or expense management,” he says. “These are not the forte of the banks basically, so that's why we believe [neobanks and traditional banks] won't cannibalise each other.”
The company has raised more than $100 million in investment to date, with Google, Visa and Singapore's Temasek among its investors.
“There's a lot of investment that has flowed into neobanks and we're seeing a lot of FinTechs now getting into neobanking,” says Mr Achuthan. “It's now really growing as a larger industry.”
Neobanks in India raised about $900m in investment last year, up 800 per cent over the previous year, figures compiled by RedSeer Consulting show.
When we offer Open as a solution to the customer, there are a lot of non-banking components to it — for example, automated book-keeping or expense management
Anish Achuthan,
co-founder and chief executive of Open
But profitability for the neobank sector is still some way off, says Mr Achuthan.
“Like any other FinTech start-up right now, our focus rather than profitability is to continue to grow the customer base,” he says.
“Some of the services are offered free to the customers.”
Currently, neobanks generate revenue through commissions on customer acquisitions and various banking products, as well as transaction and service fees. But, unlike traditional banks, they are unable to lend out customers' money to generate revenue, says Mr Achuthan.
The industry also faces other major challenges, including “regulation, compliance, and fraud”, says Raghunandan G, founder of Zolve, a neobank that is aiming at Indians migrating to the US for banking solutions.
Zolve launched five months ago and has already signed up 300,000 customers on its platform, Mr Raghunandan says.
“Any fraud transactions would hit the bottom line significantly,” he says, adding that neobanks do not want to make the user experience too cumbersome with layers of restrictions, so they have “to walk a fine line”.
Regulation and licensing are the main issues holding back the sector's growth and profitability, Mr Mankad of Praxis Global Alliance says.
“While Indian neobanks continue their market penetration with more use cases and novel offerings amid a heavily contested space, their reliance on traditional banks due to RBI mandates, lack of physical presence and unlicensed status create certain bottlenecks to their unbridled growth,” he says.
While being purely digital is the essence and main selling point of neobanks, it is also a major challenge, according to S Anand, chief executive and co-founder of neobank PaySprint.
“Unlike traditional banks, neobanks don’t have a physical presence, so customers cannot literally walk into any branch for complaint resolution,” he says.
The other main roadblock is the fact that there are no RBI licences for neobanks, he adds.
There are, however, some promising signs for the industry in terms of potential regulatory developments.
In a November discussion paper on regulating the neobank industry, government public policy think tank the Observer Research Foundation offered a “template and road map for a digital bank licensing and regulatory regime for India”.
Meanwhile, finance minister Nirmala Sitharaman unveiled plans to set up 75 digital banking units across the country during India's annual budget presentation last Tuesday.
“In recent years, digital banking, digital payments and FinTech innovations have grown at a rapid pace in the country,” Ms Sitharaman said as she presented the budget to parliament. “Government is continuously encouraging these sectors to ensure that the benefits of digital banking reach every nook and corner of the country.”
There is hope that neobanks already operating in India will “be at the front of the queue” if the country does start issuing digital bank licences, says Freo's Mr Kacker.
“It's possible that we can be stand-alone entities, where we can become deposit-taking and allowed to take a portion of that money and lend it out to make money.”
What sanctions would be reimposed?
Under ‘snapback’, measures imposed on Iran by the UN Security Council in six resolutions would be restored, including:
- An arms embargo
- A ban on uranium enrichment and reprocessing
- A ban on launches and other activities with ballistic missiles capable of delivering nuclear weapons, as well as ballistic missile technology transfer and technical assistance
- A targeted global asset freeze and travel ban on Iranian individuals and entities
- Authorisation for countries to inspect Iran Air Cargo and Islamic Republic of Iran Shipping Lines cargoes for banned goods
Trippier bio
Date of birth September 19, 1990
Place of birth Bury, United Kingdom
Age 26
Height 1.74 metres
Nationality England
Position Right-back
Foot Right
French business
France has organised a delegation of leading businesses to travel to Syria. The group was led by French shipping giant CMA CGM, which struck a 30-year contract in May with the Syrian government to develop and run Latakia port. Also present were water and waste management company Suez, defence multinational Thales, and Ellipse Group, which is currently looking into rehabilitating Syrian hospitals.
The biog
From: Upper Egypt
Age: 78
Family: a daughter in Egypt; a son in Dubai and his wife, Nabila
Favourite Abu Dhabi activity: walking near to Emirates Palace
Favourite building in Abu Dhabi: Emirates Palace
EA Sports FC 24
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The biog
Simon Nadim has completed 7,000 dives.
The hardest dive in the UAE is the German U-boat 110m down off the Fujairah coast.
As a child, he loved the documentaries of Jacques Cousteau
He also led a team that discovered the long-lost portion of the Ines oil tanker.
If you are interested in diving, he runs the XR Hub Dive Centre in Fujairah
The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
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At a glance
- 20,000 new jobs for Emiratis over three years
- Dh300 million set aside to train 18,000 jobseekers in new skills
- Managerial jobs in government restricted to Emiratis
- Emiratis to get priority for 160 types of job in private sector
- Portion of VAT revenues will fund more graduate programmes
- 8,000 Emirati graduates to do 6-12 month replacements in public or private sector on a Dh10,000 monthly wage - 40 per cent of which will be paid by government
THE SCORES
Ireland 125 all out
(20 overs; Stirling 72, Mustafa 4-18)
UAE 125 for 5
(17 overs, Mustafa 39, D’Silva 29, Usman 29)
UAE won by five wickets
Earth under attack: Cosmic impacts throughout history
- 4.5 billion years ago: Mars-sized object smashes into the newly-formed Earth, creating debris that coalesces to form the Moon
- 66 million years ago: 10km-wide asteroid crashes into the Gulf of Mexico, wiping out over 70 per cent of living species – including the dinosaurs.
- 50,000 years ago: 50m-wide iron meteor crashes in Arizona with the violence of 10 megatonne hydrogen bomb, creating the famous 1.2km-wide Barringer Crater
- 1490: Meteor storm over Shansi Province, north-east China when large stones “fell like rain”, reportedly leading to thousands of deaths.
- 1908: 100-metre meteor from the Taurid Complex explodes near the Tunguska river in Siberia with the force of 1,000 Hiroshima-type bombs, devastating 2,000 square kilometres of forest.
- 1998: Comet Shoemaker-Levy 9 breaks apart and crashes into Jupiter in series of impacts that would have annihilated life on Earth.
-2013: 10,000-tonne meteor burns up over the southern Urals region of Russia, releasing a pressure blast and flash that left over 1600 people injured.
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
The specs
Engine: 5.0-litre supercharged V8
Transmission: Eight-speed auto
Power: 575bhp
Torque: 700Nm
Price: Dh554,000
On sale: now
RESULT
Manchester United 2 Tottenham Hotspur 1
Man United: Sanchez (24' ), Herrera (62')
Spurs: Alli (11')
Scream%20VI
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ALL THE RESULTS
Bantamweight
Siyovush Gulmomdov (TJK) bt Rey Nacionales (PHI) by decision.
Lightweight
Alexandru Chitoran (ROU) bt Hussein Fakhir Abed (SYR) by submission.
Catch 74kg
Omar Hussein (JOR) bt Tohir Zhuraev (TJK) by decision.
Strawweight (Female)
Seo Ye-dam (KOR) bt Weronika Zygmunt (POL) by decision.
Featherweight
Kaan Ofli (TUR) bt Walid Laidi (ALG) by TKO.
Lightweight
Abdulla Al Bousheiri (KUW) bt Leandro Martins (BRA) by TKO.
Welterweight
Ahmad Labban (LEB) bt Sofiane Benchohra (ALG) by TKO.
Bantamweight
Jaures Dea (CAM) v Nawras Abzakh (JOR) no contest.
Lightweight
Mohammed Yahya (UAE) bt Glen Ranillo (PHI) by TKO round 1.
Lightweight
Alan Omer (GER) bt Aidan Aguilera (AUS) by TKO round 1.
Welterweight
Mounir Lazzez (TUN) bt Sasha Palatkinov (HKG) by TKO round 1.
Featherweight title bout
Romando Dy (PHI) v Lee Do-gyeom (KOR) by KO round 1.
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MOST%20POLLUTED%20COUNTRIES%20IN%20THE%20WORLD
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Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
Price: From Dh1,700,000
Available: Now
STAGE%201%20RESULTS
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Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
FIGHT CARD
1. Featherweight 66kg
Ben Lucas (AUS) v Ibrahim Kendil (EGY)
2. Lightweight 70kg
Mohammed Kareem Aljnan (SYR) v Alphonse Besala (CMR)
3. Welterweight 77kg
Marcos Costa (BRA) v Abdelhakim Wahid (MAR)
4. Lightweight 70kg
Omar Ramadan (EGY) v Abdimitalipov Atabek (KGZ)
5. Featherweight 66kg
Ahmed Al Darmaki (UAE) v Kagimu Kigga (UGA)
6. Catchweight 85kg
Ibrahim El Sawi (EGY) v Iuri Fraga (BRA)
7. Featherweight 66kg
Yousef Al Husani (UAE) v Mohamed Allam (EGY)
8. Catchweight 73kg
Mostafa Radi (PAL) v Abdipatta Abdizhali (KGZ)
9. Featherweight 66kg
Jaures Dea (CMR) v Andre Pinheiro (BRA)
10. Catchweight 90kg
Tarek Suleiman (SYR) v Juscelino Ferreira (BRA)
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
Learn more about Qasr Al Hosn
In 2013, The National's History Project went beyond the walls to see what life was like living in Abu Dhabi's fabled fort:
The biog
Favourite books: 'Ruth Bader Ginsburg: A Life' by Jane D. Mathews and ‘The Moment of Lift’ by Melinda Gates
Favourite travel destination: Greece, a blend of ancient history and captivating nature. It always has given me a sense of joy, endless possibilities, positive energy and wonderful people that make you feel at home.
Favourite pastime: travelling and experiencing different cultures across the globe.
Favourite quote: “In the future, there will be no female leaders. There will just be leaders” - Sheryl Sandberg, COO of Facebook.
Favourite Movie: Mona Lisa Smile
Favourite Author: Kahlil Gibran
Favourite Artist: Meryl Streep
Defined benefit and defined contribution schemes explained
Defined Benefit Plan (DB)
A defined benefit plan is where the benefit is defined by a formula, typically length of service to and salary at date of leaving.
Defined Contribution Plan (DC)
A defined contribution plan is where the benefit depends on the amount of money put into the plan for an employee, and how much investment return is earned on those contributions.
'Texas Chainsaw Massacre'
Rating: 1 out of 4
Running time: 81 minutes
Director: David Blue Garcia
Starring: Sarah Yarkin, Elsie Fisher, Mark Burnham
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
