“In union, there is strength.” – Aesop
At the launch of its recent offering, SmartUp, Smita Bhagat, Branch Banking Head (North) and Co-head, ecommerce, HDFC Bank, told fledgling startups, “We help you grow your business and as a result we grow too.” In this one statement, Smita has aptly summed up the traditionally conservative banking sector’s evolving interest in the fundamentally risky, yet rapidly, growing Indian startup ecosystem. Today, it’s not just VCs and angel investors who are clamouring for a share in the startup pie. The banking sector (banks in general) has also woken up to slowly plant their feet in startup soil.
The reasons are pretty much clear. India is amongst the first five largest startup communities in the world, with the number of startups crossing 4,200 (at a growth of 40%) by the end of 2015. According to the Nasscom Startup Ecosystem Report 2015 titled ‘Startup India – Momentous Rise of the Indian Startup Ecosystem’, in terms of providing a conducive ecosystem for the startups to thrive, India has moved up to third position and has emerged the fastest growing base of startups worldwide. With the government’s ‘Startup India, Stand up India’ initiative, these numbers will go further north. No wonder, given the slew of measures being rolled out, it is changing fast. As per a report by Microsoft Ventures, the number of startups is expected to zoom from 3,100 in 2014 to an expected 11,500 startups by 2020.
These startups are constantly creating new business models, generating employment, scripting their success stories even beyond local borders. Needless to say, these new age businesses are a rising force and are now beginning to attract the interest of banks. Banking is one of the oldest professions of the world and with increasing digitisation and smartphone penetration, it itself is undergoing a sea change. Consequently, the times are ripe for a symbiotic collaboration between banks and these technology startups. These startups not only have potential as their clients but are also useful for banks in adding to their technology prowess. As a result, banks are engaging more and more with startups in different ways such as offering exclusive services, funding, and opening exclusive branches.
Exclusive Startup Bank
The fact that the startup community is now being recognised as a serious banking community was established by SBI’s launch of InCube – its first exclusive startup bank branch in Bangalore. Through ‘SBI InCube’, the bank will be helping, guiding and counselling the entrepreneurs in starting a new company or business enterprise.
And why this exclusive treatment for startups?
Talking at the launch event, SBI Chairman Arundhati Bhattacharya summarises the rationale behind it by saying, “We want to be a part of the growth of startups and India itself. We will support entrepreneurs in their ventures and let them do their job of innovating.”