It’s been a busy two days for the innovation programme of YES BANK – YES FINTECH. At the ISME Ace in Lower Parel, Mumbai, the top management of YES BANK were busy listening to pitches of over 30 startups on Nov 21 and Nov 22 as they selected the next batch of 10-12 fintech startups that will join the autumn cohort of the accelerator.
YES FINTECH recently won the ‘Accelerator of the Year’ award at the India Fintech Awards (IFTA) 2017 in its launch year itself. YES FINTECH become the only Indian Fintech accelerator to be adjudged best in the industry among several corporate and other seed accelerators globally, for promoting innovation and disruption.
It was in January this year that YES BANK had announced the launch of its business accelerator programme – YES FINTECH (YFA) for fintech startups. YES BANK was looking at co-creating innovative solutions and assisting in bringing those solutions to the bank’s retail and corporate customers. The month of March saw it announcing the name of the first 10 startups that joined its inaugural cohort- including two global fintech startups – So Cash from Singapore and Paykey from Israel
Building on from the first cohort, the autumn cohort of YES FINTECH received overwhelming participation from global startups. As per the bank, over 500+ applications were received from across the globe including 162 global applications which were then carefully scrutinised to shortlist 33 startups from 10 different locations including international ones such as Israel, Hong Kong, Singapore, mainland Europe, London, and South Africa.
These primarily focus on B2B payments, process automation, digital banking, lending, Wealthtech and Investech, analytics, and cyber security. After the pitching sessions, a final of 10-12 shortlisted startups will make it to the 15-week programme that aims to provide an ideal springboard to graduate from innovative products into scalable businesses, along with access to YES BANK’s digital banking infrastructure as well as its robust customer network.
So what exactly is YES BANK looking to achieve through the second cohort of its accelerator programme? Aseem Gandhi, Senior President & Global Head, YES Accelerator spoke exclusively to Inc42 on the aspirations of the accelerator program.
Aspirations Of The YES FINTECH Accelerator Program
Speaking about the engagement of YES BANK with startups, Aseem stated, “This is our second cohort. We have been engaging with startups for the last 2.5 years. Earlier the approach was that startups would be reaching out to us. We have been engaging with startups that have typically developed a product and are looking to commercialise. That has been one way of engaging with them. The accelerator sort of helps us formalise another way, wherein they are still not ready to be commercial but need to test their product. They do have a product but they do not have a commercial proposition ready. That’s where we come in.”
Of course, there are multiple motivations for the bank. The first being that if you do a structured programme, you get some of the innovations early on as these startups are still at the stage of innovating. Thus they can develop these solutions to suit the bank’s use cases.
Secondly, the programme helps the bank keep pace with what’s happening outside. Says Aseem, “There is so much of change that’s happening outside from the technology perspective. 10-12 years ago when we were a startup ourselves, the technology would change once in a few years. So you could keep pace with the technology. Today the change is so fast that you yourself cannot develop all the technologies. Even the large technology companies are not that nimble.”
Now from a customer experience perspective, a lot of startups are providing small solutions but not large platforms. So they are fairly nimble to design it for the bank. The advantage that YES BANK gets from this programme is that it sets out the use cases and can get custom made solutions. Here Aseem points out that all the people who have applied in the second cohort have applied in response to the use cases the bank put out. This also ensures that acceptance of the technology also goes up internally as the solutions are custom made for the bank.
Thirdly, the accelerator programme also gives focus to the bank itself.
“When you put together a 15-week programme, it gives focus to the various teams involved in the bank to look at these solutions in a time-bound manner and then take them to some logical conclusion,” reveals Aseem.
For YES BANK, this conclusion has largely been positive if one goes by the experience of the first cohort. Aseem reveals that almost 9 of selected 10 startups have some sort of PoC (Proof of Concept) jointly developed with the bank. So compared to a regular accelerator where the intent is an investment, YES FINTECH is more focused on the bank being able to find a solution for itself and provide startups with market access where the bank becomes one of the first enterprise clients. And hence there is a greater focus on the organisation to make sure that it is a success, given the bank spends 15 weeks on the programme.
“In short, the programme’s aim is to enable us to find 20 new solutions in a year, curated just for ourselves, and of course some more on the side while providing fintech startups the opportunity to test, improve and scale their solutions to more than 2 Mn clients,” he concludes.
What Does The Cohort Mean For Startups
While the accelerator does not itself make an equity investment in the startups, it is designed in a manner that it has partnering investors. Those partners and investors from the ecosystem are invited on the demo day. If they find these startups interesting, they are free to reach out to these startups on their own to invest in them.
And of course, one of the things that really helps them in getting those investments is if the bank decides to tie up with them or extends them a commercial contract. “Equity is not such a big issue. The idea is that the technology should find a use case which is designed for the Indian regulation and then to get a large commercial contract like ours. So that’s the more beneficial outcome for the startup than equity funding,” he adds.
If one takes into account this line of thought, then the last cohort has been fairly beneficial for the participating startups. Aseem reveals, “We are in a stage of signing off six out of the 10 startups; three more are in the stage of finalisation, and one startup did not graduate as they realised that their use case or the thought they had around their technology was not strong enough. That again is a useful learning experience, as rather than spend time on the same use case, they are now going to think of a new business model.”
YES FINTECH: Looking At Future Technologies And Beyond
When it comes to the sectoral focus of the Autumn Cohort, Aseem points out that besides looking at use cases coming from the bank, the idea is also to get on-board startups which are using newer technologies so that the bank also learns and develops with the theme.
Additionally, the bank has a strong focus on corporate banking and transaction banking which is around cash flows, cash management, and trade services. That’s one area where more digitisation means less friction in flow. Hence the more one enables the customer to manage his flow, the better it is for business. Also, the bank is building a strong liabilities franchise. So the ease of opening bank accounts; efficient customer servicing; other methodologies for authentication besides eKYC; issues regarding security; anything new in payments that can enhance its current offerings; frugal innovation- all are focus areas for the accelerator.
Adds Aseem, “Our whole focus as an organisation is three fold- simplify, scale and synergies. So whatever simplifies the ease of doing business for our customers or improves operational efficiency is what we focus on. As part of this cohort, we have around 50% startups from outside India. The focus from our side is to look at ‘future now’ strategy. Some technologies are futuristic- so how do we bring them to the present for the bank as new technologies at times make life easier for the customer.”
For instance, currently, Blockchain is the technology making waves everywhere, including banking. YES BANK has been a frontrunner in implementing blockchain use cases. In the first week of January this year, the bank completed its first Blockchain transaction with Bajaj Electricals focused primarily on invoice discounting. Now it is looking at multiple products like remittance, trade-related transactions, and is trying to explore what can be done more with blockchain, both in domestic and cross-border transactions.
No wonder, among the 32 startups that pitched during the two days, there were startups experimenting with Blockchain such as Easter Egg, which offers a decentralised multi-sector Blockchain platform. Similarly, pitching a new form of revolutionary real-time KYC tool to the bank was Israeli based startup Verum View. Another Israeli startup DOV-E pitched a solution for easy, hassle-free mobile payments, while London based Gnani.AI pitched an AI-enabled speech technology for vernacular Indian languages.
But what is the one technology that will majorly impact the future of the banking system?
Aseem believes that is AI. “There are so many uses that it’s unimaginable how AI can change banking. Banking is primarily a knowledge and experience based service and AI can help refine and enhance it so much more. When you look at processing of transactions or account openings, it could make it more efficient. On the decision side, it could learn about various variables, and could really change the face of decision-making. Across the bank, AI takes a different shape or form when you look at a different part of the bank.”
It is these fast-changing, futuristic technologies that YES BANK aims to leverage through the YES FINTECH program. Aseem believes that while as a service provider, the bank is better at figuring out the problem statement, startups are better at arriving at a solution faster given that they are not limited by constraints. Which of these 32 new age fintech startups will ultimately make it through to the next cohort of the accelerator and shape its future offerings, will be known in a few days. Stay tuned!