The Exchanges

Q Open is a new bank for small and medium businesses, helping them with all their banking needs. Today, they have an enterprise suit also for the banks. I'll let Anish talk more about Open, but first let's deep dive into his own journey. Anish, can you share, you know, your trust with entrepreneurship? How did you get started in entrepreneurship, your family background, and about your parents?

A So Siddhartha, sir, I was born in Kerala in the small town called Perindulmana, which is near to Calicut. And I, my parents were into the government service. My dad was an engineer and my mom used to Work as a school teacher. And I always aspired to become a journal, a journalist throughout my, uh, throughout my school. And because of that, I used to always like, you know, uh, have this, uh, ability to connect with news or keep exploring more things, the curiosity to learn things. And, uh, that's when the, when the internet started by the, while I was in seventh standard, I got my first email address and by ninth, I got started building websites. And, uh, I also happened to read the story of, uh, Sabir Bhatia and the Dotcom, and I was really inspired by what the potential that internet can bring, and especially dotcom, because it was actually connected to the, my dream of like doing something on the media space. And, uh, 2001, I ran away from my home to a place called Truandrum, which is the capital city of Kerala, which is 300 kilometers away from my, uh, place where I grew up to do my first dotcom startup called India first dotnet. And in the initial three, four years, I used to Stay in a tumble and a railway station. And I have like three more, three of my friends who was co-founders at the point of time, they were going to college, which was also supporting me. So I ran thi…

AI assessment note: “my parents were into the government service... to do my first dotcom startup”

Q Now moving a little forward, right. Can you describe the open banks offering today? What are the various offerings?

A So we have three different business lines today at open. The first is an SMA business banking platform, which we offer to small businesses. Second is like an enterprise business where we help banks to launch their own near banks. So we have like the 15 out of the top 17 banks in India currently deploying our solution. And then we have a third division called switch where we offer our infrastructure to other fintechs or non fintechs to build fintech services. Um, now if you could allow me, I'll just come to the first part of this, where we actually started, which is open money. Primarily when we, you know, in 2017, I was working in pay you and before that in citrus, when we interact with a lot of these entrepreneurs, one thing which you realize that everybody's talking about that business banking is broken for them. And I always used to wonder why is business banking broken? Because I thought like, whatever, whatever complains or whatever we crib about the Indian banking system, I know that the Indian banking system is much better than what we have from the outside world. But then I realized that the problem is not just about banking. It does that. Today, as an entrepreneur, I have to use multiple tools. I'm using a Zoho. I will be using a tally. I'll be using an expense management systems and all of this, and I'll be using a payment gateway. All of the systems isn't talked to e…

AI assessment note: “we have three different business lines today at open. The first is an SMA”

Q And what was the persona of the first hundred users and then the first thousand, the next, let's say, 900 users?

A I think the first hundred users, we had a, I would not say wrong persona, but we were, we were thinking that the traditional SMEs and the, will not use your platform because they may have hesitation towards using something which is a non-bank thing. So we started focusing on the mostly the online savvy millennial users. For example, we started focusing on people who are, Homepreneurs who are very active on selling on Instagram and Facebook, who have a established set of followers, then the freelancers basically. So this was the initial set of customers we had on the hundred. But the moment when the distribution changed from hundred to thousand, when the bank brand just started selling it, then we got like a rice trader in Ahmedabad who's actually doing it for payouts. Then we started getting like people like, you know, manufacturing units, the small time B to B traders. And that's when we also got the feedback that, okay, Hey, uh, can, okay, your invoicing is good, but I'm using a tally or I'm using my own software, uh, accounting software. If I can connect that with the banking, this can add value. Then we start to build the tally plugin basically. And then it exponentially took it from thousand to 20,000 in no time, basically just because of this, a small feature, which we've got.

AI assessment note: “first hundred users... Homepreneurs... distribution changed from hundred to thousand... rice trader in Ahmedabad”

Q And currently there are so many new banks for businesses, right? Go Neo is there. Banks are building their own new banks. What's open's mode right now?

A Right. So personally, if you ask me, like, I'm not a big believer of this new banking as a story, because I don't really believe that today's customers need another bank account onto it. So that's where like on the SME side or on the business side, what we have actually tried to do is that banking is just a base layer for that. What we are actually trying to do is that bringing the account payables and the receivables. For example, like if, as a platform telling Siddhartha saying that, okay, hey, you're outstanding from your customers is like 10,000 rupees. And here is a split of those customers basically, or when you are doing a, Payout to a vendor, automatically recording that entry into your accounting system, and then instantly showing that, okay, this is your profit and loss in the balance sheet, automating your BKP. So we had actually built a complete financial OS on top of your banking, or ability to bring all your other bank accounts together in one unified platform. So this is what, when, even when today banks are launching their own neobanks, for example, today some of these banks are launching SME, Any banking positions. They were, they were either focusing on, they're not fully, they don't know, they're not built a completely interconnected module. For example, the traditional, the bank strength has been on the banking sites, but when it comes to building the accoun…

AI assessment note: “what we have is like an early mover advantage, obviously”

Q And what are the various regulations, licenses that you have to take? So this is for other fintech entrepreneurs listening to this podcast.

A So, you know, I'll talk about neobanking first, and maybe again for the benefit of the others, I can touch a little bit on the fintech license as well. So, in fact, today neobanking is not fully directly regulated by RBI. The regulation is on the banks, the partner bank. For example, if it's a bank like an ICAC or an SBI or an AS bank, which is partnering with a neobank, then, you know, they have to ensure certain Guidelines, which RBA has this thing, for example, in terms of the ISMS audit, in terms of certifications, in terms of PCI DSS and things like that. Now, there are also certain other regulations, like, for example, the PAPG license, which RBA has initiated, which is mandatory for anybody who is actually collecting, storing, and managing payouts for, on behalf of like, or aggregating funds, they have to go through this thing. So PAPG is like, I think, a first step towards some kind of a regulations on this space. Apart from that, pretty much the It's the regulation is on the bank, but having said that, the, because it is indirectly regulated through the banks, you have to go through a lot of this audit process because the banks has to actually submit the audit back to the RBI in terms of for every partner. So you have to go through a very strict audit process, and many times like this is one area where I'd seen like a lot of index get stuck because they don't take it s…

AI assessment note: “regulations, like, for example, the PAPG license, which RBA has initiated”

Q And in today's environment, right, with, with talks of a recession, and you have been a five-time entrepreneur, what would be your advice to entrepreneurs who are starting up right now?

A I think, I've, I believe, first of all, I'm not an expert when it comes to recession, because the times when, like in the .com bubble and probably the .com recession, Probably we were really young basically, or I would not have been somebody who has been like, you know, handling a major fund, but I always feel that sometimes it's the best time to start is when there is a recession, because what would happen today? Uh, what would happen during this downturn or like if you have like the, for the next 12 to 24 months is that a lot of these larger companies or funded companies will be heavily focused on very sharp, focused on revenue generating products. Otherwise they would have probably ventured into Some of, some of the other territories or just for making news or thought leadership or, okay, rather than trying to eating up onto that. So this is like a good opportunity for a lot of entrepreneurs. So they don't have to worry about like, you know, some well-funded startup coming and like, you know, really competing or shutting you off. And in, and also recession means, recession or downturn means a lot of good opportunities. I'll give you a simple example. What we have seen during The COVID times and what probably we are expecting during this downturn is like banks who are ramping up their infrastructure during this COVID period of time. And even now let's look at this next two ye…

AI assessment note: “sometimes it's the best time to start is when there is a recession”