UK-based Neobank ‘Tide’ Forays Into India With INR 1000 Cr Investment Plans

UK-based small and medium enterprise (SME) focused neobank Tide plans to invest more than £100 Mn (INR1000 Cr) in India as part of its launch strategy. The platform had announced India as its first international market in 2020 and it will launch its India services early next year (2022). 

As part of its India chapter, Tide announced today that it will create over 1,000 jobs in the next five years. It has already hired over 200 professionals for its Hyderabad technology centre in 2021. The new jobs will span across roles in product development, software development, marketing, risk-compliance and member support.  It also has a business office in Gurugram.

Founded in 2015 and launched in 2017, London-based Tide  has over 350,000 SME members in the UK (5.5% market share).  Tide has been funded by Anthemis, Augmentum, Creandum, Goodwater, Jigsaw, Latitude, LocalGlobe, Passion Capital, SpeedInvest and The SBI Group.

“Tide recognises the ambitions of both the UK and Indian Governments to build India-UK bilateral relationships with an enhanced economic partnership and sees SMEs as being crucial to economic growth in both nations. Tide is committed to serving the 64 Mn and growing Indian SME sector and will help unleash the true potential of Indian small businesses,” said Oliver Prill, CEO,Tide.

In addition to business accounts and related banking services, Tide plans to offer administrative solutions to businesses. It plans to target 2.5 Mn SMEs over the next five years. Tide will also focus on the unregistered and unorganised sector, helping small businesses digitise and bring them into the mainstream, said the company.  

“We, at Tide, are committed to serve India with our innovative business banking solutions and support the country’s post-pandemic economic recovery. Through this, Tide looks to contribute to both the countries’ vision in developing a roadmap to a free trade agreement with a target of £100 Bn by 2030,” said Gurjodhpal Singh, CEO, Tide.

Tide recently announced its collaboration with RBL Bank which will provide the bank account infrastructure for Tide’s India platform where members (SMEs) will have an option to open current and savings accounts. Singh added that the company is also looking at collaborating with the active fintech startup ecosystem in India and will announce engagements going forward.

In 2021, two other UK-based fintech majors Wise and Revolut have announced plans to launch in India and have started actively hiring for the same. 

Indian Neobanking Opportunity

Unlike traditional banks, neobanking platforms do not have their own banking licenses in India. Instead, these new-age digital entities partner with traditional banks to offer full-scale banking services to small and medium enterprises (SMEs) and retail customers.

Neobanks might have got a boost during the current pandemic that calls for restricted movements and digital payments. But the model is now being tailored to meet fast-evolving customer requirements, especially in the B2B space. 

More than half a dozen neobanks are currently operational in India looking to disrupt the banking sector, including key players such as Open, NiYO, Hylo, PayZello, InstaDApp, Jupiter,  YeLo, ChqBook, FamPay, Walrus, epiFi, Finin and RazorPay X among others. And most of them have forayed into business management solutions such as cash flow analysis, tax filing, payment collections (generating links to accept payments on behalf of businesses), payroll management and accounting management to cater to their corporate clients. Neobanks do not have lending curbs like small finance banks as the capital comes from their partner banks’ lending books.

Neobanks have been a draw for investors too, as they are focussing on SME), mostly an underserved and untapped market in India. 

Globally, the neobanking market is expected to reach a value of $333.4 Bn by 2026, rising at a market growth of 47.1% CAGR from 2020, as per KBV Research. In India, prominent neobanks have raised more than $500 Mn since 2019 including Jupiter’s $24 Mn round, the $335 Mn raised by Razorpay since 2019; $35 Mn each raised by Open and Niyo; epiFi which raised $13.2 Mn from Sequoia and Ribbit Capital last year; and over $43 Mn invested in FamPay since 2019.

According to a 2020 report by Matrix Partners and McKinsey and Company, neobanks are yet to report profitability, but the long-term outlook of this sector remains bullish. However, for long-term sustainability, creating some regulatory frameworks will ensure that banking and neobanking roles are clearly defined, say some fintech experts.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.