Bengaluru-based neo-banking fintech startup — Open — has raised $5 Mn Series A funding led by Beenext, Speedinvest and 3one4 Capital, as it aims to increase the team headcounts and launch new products to accelerate customer acquisition and growth.
Prior to this, Open raised undisclosed pre-Series funding in May last year led by Unicorn India Ventures and Recruit Co Ltd. These investors also participated in the startup’s latest funding.
Launched in 2017 by serial entrepreneurs Anish Achuthan and Ajeesh Achuthan, Open is a neo-banking startup, which means it operates digitally only. It offers individuals a bank account number and an IFSC Code, in partnership with its partner banks, to get started with. The accounts are linked with startup’s artificial intelligence (AI)-driven accounting engine that automates bookkeeping and expense management, along with enhanced APIs to drive his/her banking needs.
In India, neo-banking is slowly gathering the industry’s attentions. Startups in this sector reportedly don’t need a license to run, and operates just like Paytm Payments Bank, Medium earlier reported. However, they will have to comply with the regulations under the Payments and Settlement act. They keep customer’s money in the nodal bank account of the bank with which they have tie-ups.
“Banking is broken for small businesses as traditional business banking services have not focused on the needs of these businesses. The funding will help us accelerate customer acquisition and growth as we target to onboard 1 million small businesses into the platform in the next two years,” the statement said, citing Open cofounder Anish Achuthan.
The startup is currently offering its neo-baking services to India’s small and medium enterprises (SMEs). The 30-member startup Open claims to have already on-boarded more than 30K SMEs, processing over $2 Bn transaction.
“Based on our track record in Europe, and together with our regional partner Beenext, we have started to back strong, proven startups like Open in the Indian market,” Speedinvest general partner Stefan Klestil said.
According to a 2017 report by Allied Market Research, the collective customer base of neo banks is expected to grow at a CAGR of 50.6% from 2017-2020. Another Indian startup in the space is the mobile-only bank, Digibank, launched in April 2016 by DBS Bank. This app is also integrated with AI-driven services.