The Open Bank Project in India

A few months ago I broke up with my cofounder and stopped working on our idea to build a digital credit card service for SMEs in Europe (see my blog post). Even though I find the idea still fascinating I decided to take some time off and started freelancing instead. Freelancing is a great way of working with different teams on different problems and that has many benefits, nevertheless, I see this as an intermediate step before jumping into my next startup.

But in the meantime, I am lucky enough to be able to work with different FinTech startups and support them on their open banking journey. Additionally, I have taken on one “passion project” which is supporting the Open Bank Project (OBP) in their expansion to India. I know the team behind OPB for a few years from various FinTech events as they have been one of the first Open Banking players in Europe. Even though OBP and my previous employer figo are in the same space, they are not competitors.

The Open Bank Project is an open-source API solution for banks which enables them to offer more than 220 APIs with relatively little effort and resources. The APIs do not cover only access to a bank account but also include KYC, Card, ATMs and a lot more. Clients of the Open Bank Project are Tier 1 banks from around the world incl. HSBC, BNP and SocGen. But an Indian bank isn’t among their customers (yet) and that’s where I am trying to help. As my wife is from Mumbai, we are spending a few weeks per year in Mumbai to visit her family and I am more than happy to make use of the time in India to dive into the local FinTech and banking scene. For me this is an interesting switch for various reasons: doing business in a different country with a different culture is always exciting, however, also helping banks to open up instead of working with startups to connect to banking infrastructure is a totally different angle for me.

Furthermore, India is quite an interesting FinTech market. I remember, when I first came to Mumbai at the end of 2014, I wasn’t very successful in finding many startups or bank activities in this sector. But a lot has changed since then on all different kind of levels.

Startups

First and foremost, the Indian startup sector is booming in general. Investors are pouring many into many new and growing startups along with successful exits as well. Just have a look at AngelList India and you will see what I mean. Out of all the industries, FinTech startups seem to be getting a lot of attention. Everybody in the West knows about PayTM and it’s own success story, but there is so much more these days. Just to name a few: Zest Money is offering a consumer lending service for online shoppers without requiring a credit card and raised 20m USD earlier this year, Cred is a credit card loyalty scheme founded by Kunal Shah who sold is previous startup FreeCharge for 60m USD and raised an astonishing 120m USD for Cred a few months ago, and lastly, Open offers banking services to companies and startups and raised 30m USD in June this year. And this is just the tip of the iceberg. 

Banks

Additionally to the activities in the startup sector, also banks are getting more and more active. Most bigger banks have launched some kinds of APIs and Developer Centres (e.g. Yes Bank or RBL Bank) and banks are hosting many hackathons and are trying to cooperate with startups. As a European, I should emphasize that there is currently no regulatory requirement for banks to provide these kinds of interfaces. Banks are doing it out of their own interest, as they see the Indian economy growing quickly and are looking for ways to win new customers. As European banks are mostly trying to defend their position, banks in India are experiencing that the “pie gets bigger” and that innovation is required to partake in this growth. Their biggest challenge is it currently to be able to work with FinTech startups in a fast and agile way – something the Open Bank Project can help with 😉

Tech infrastructure / Regulation

Lastly, also the required tech infrastructure and regulation is a key driver in the market. I have been blogging about the Unified Payment Interface (UPI) before (see here) and it is a success story of its own. It was just reported that UPI crossed one billion transactions in the month of October (source) and a few weeks ago I was able to use UPI for the very first time myself (with the bank account of my wife) and it is pure joy. While UPI was not an initiative by the regulator but got introduced by the National Payment Council, the local regulator (RBI) is now implementing a new interface for data sharing. It is called Sahamati (see official webpage) and there is a lot of hope in the market that it will be a similar success than UPI. I highly recommend reading this insightful blog post by Aaryaman Vir Shah.

Since the open banking mindset is currently suffering in Europe and especially in Germany due to the technical implementation of PSD2 by many banks, it is refreshing to see what is happening in India. I spent the last six weeks in Mumbai and was able to learn a lot from people I met over there. I believe that Open Banking will have a massive impact in India, especially in lending but I believe we will see a lot more than that. The Open Bank Project is the perfect vehicle for banks to join this trend and start working together with thousands of startups and developers quickly. If you want to know more about OBP or just want to chat in general, please reach out to me.