The acquisition of a 5% stake in the Indian bank North East Small Finance signals that the unicorn fintech startup is keen to expand its footprint in the country. The central bank, which has toppled many young firms with stringent regulations, has thus far been unsuccessful in restraining Slice’s growth. The stake will help the firm mitigate challenges posed by regulators and give it a foothold in one of Asia’s largest economies.
The Bengaluru-based startup invested in a small finance bank in Guwahati, showing interest in the region’s growing economy. The startup is likely looking to tap into the region’s growing small business and consumer market. With access to affordable credit and a strong customer base, the small finance bank could be a valuable asset for the startup.
At a time when many fintech startups operating in cards and lending categories are struggling to comply with stringent new Reserve Bank of India guidelines, the investment by one such startup, LoanKwik, is a sign that there may be potential in the sector. LoanKwik’s mission is to make it easy for people to get loans from credible lenders. It has already signed up over 10,000 lenders as part of its platform and aims to expand its reach even further. The company believes that providing easier access to credit will help stimulate economic growth and improve living conditions for underserved communities in India.
However, Slice says its goal is to become the go-to platform for shopping, dining and entertainment recommendations for social media users. Given that bankrolling a $1.55 billion startup may provide some short-term benefits for a stakeholder like Tiger Global, it’s likely that Slice would continue to attract other generous investors as it ramps up its business efforts.
The company did not respond to a request for comment. Perhaps they were too busy updating their website or preparing for their next big unveil. Who knows, but whatever they’re up to, we’ll be sure to keep an eye on them
As India’s second most populous nation, it is no surprise that banks and fintech startups are exploring ways to improve their engagements. Federal Bank and SBM Bank India have courted many startups as customers in recent years, as they look to supercharge their businesses. Fintech companies like Cleartrip and Paytm are looking to improve the customer experience by integrating banking services into their platforms. This integration is proving to be a boon for both companies, as the startups gain access to the bank’s AUM (assets under management) and institutional investors become more interested in investing in Indian tech firms.
While the older generation of Indian bankers largely favor M&A deals, younger entities are increasingly interested in launching their own businesses. This shift is likely a direct result of India’s rapidly growing economy, which has created more opportunities for young firms to succeed. In addition to Mintoak, other young companies that have received investment from larger banks include ride-sharing app Uber and food delivery service Grofers . These deals demonstrate that bigger banks are not afraid to back up new players in the market and help them grow into powerful competitors.
SBM Bank is looking to become one of the leading banking-as-a-service providers in India. It has already gained backing from two notable investors, Accel and Quona, and is looking to continue attracting more investors. The bank’s vision is to provide its customers with innovative financial products and services that they need and want.
Now, firms in the South Asian market are required to undergo a rigid vetting process before being granted access to the banking system. This means that many lending apps that were previously unregulated have now been forced to adhere to strict regulations in order to continue operating. While this may have had a negative impact on certain businesses, it has likely done more good than harm by ensuring that predatory lenders are kept out of the market altogether.
North East Small Finance Bank is a subsidiary of RGVN (NE) Microfinance which services customers in the north eastern region of the country. The bank counts Pi Ventures, SIDBI Venture Capital and Bajaj Group among its backers. NE SMFB focuses on providing financial services to small businesses and low-income groups in order to help them grow and improve their living conditions.
