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Simplifying Banking | Vinay Bagri @ Niyo Solutions Inc.
150 Plays4 years ago
Neobanks are one such disruptor that one day will completely eclipse the traditional banking system.
In this episode of Founder Thesis, Akshay Datt speaks with Vinay Bagri, Co-founder and CEO, Niyo Solutions Inc, which is one of India’s fastest growing neobanks.
After spending more than a decade in banking companies like Standard Chartered, ING and Kotak, Vinay took a leap of faith and started Niyo in 2015, with a vision to introduce better cash flows to the salaried segment. And today, Niyo products have touched over more than 1.5 million customers.
Tune in to this episode to hear Vinay speak about how Niyo is revolutionising banking with continual digital innovation.
Key takeaways!
- The story behind acquiring Goalwise.
- Pre-requisites to device an impeccable product roadmap.
- Fundraising journey.
Recommended
Transcript
Vinay's Childhood and Education
00:00:00
Speaker
Take a minute, I'm dead. You're not dead. I'm dead. I'm dead. I'm dead. I'm dead. I'm dead. I'm dead. I'm dead. I'm dead. I'm dead. I'm dead. I'm dead. I'm dead. I'm dead. I'm dead. I'm dead. I'm dead. I'm dead. I'm dead. I'm dead.
00:00:30
Speaker
India has seen three waves of banking. The first wave was led by nationalized banks like the SBI, the second by private sector banks like ICICI and HDFC, and now we are at the crest of the third wave, which is led by neo-banks.
00:00:47
Speaker
and the leader among the NIO banks is none other than the aptly named fintech startup, NIO. NIO is among the fastest growing NIO banks in India, having recently crossed the milestone of half a million customers. And in this episode, Akshay Dutt talks to Vinay Bagri, the founder of NIO, who is also a veteran banker. Listen on to understand how and why NIO banks are the future of banking.
Career Beginnings in FMCG and Transition to Banking
00:01:12
Speaker
Here's Vinay talking about his wonderful journey. Vinay,
00:01:16
Speaker
Tell me about Vinay as a child. What kind of environment did you grow up in? What were your parents doing? This city did you grow up in? So I grew up in various cities. My dad is a doctor and he was in command service when I was born. He was getting transferred practically every few years in India and then he went on deputation abroad. So if I look at my childhood, I've been
00:01:44
Speaker
to maybe ten fifteen schools across india and abroad so a major part one of my favorite countries is libya if i will look at my childhood maybe half of my childhood was spent in libya when my dad was in deportation there
00:01:59
Speaker
Otherwise, it was all over Rajasthan because, you know, Kundi, Kota, Jaipur, Bikale, so I'm studying in schools all across Rajasthan. And then, you know, for some reason, I also studied in Chennai for a year.
00:02:15
Speaker
But what I remember the most is, of course, the very, you know, when I was really young, it was, yeah, in Rajasthan. And then when I was like between sixth and tenth standard, then it was, of course, Libya. So, I found that. Okay. So, did you choose science or commerce, like in your plus two?
00:02:39
Speaker
Well, I chose maths. I always wanted science. My dad is a doctor. And that's the reason I didn't want to be a doctor. I see him last time. Extremely busy and hardly any time for anything except his work. And I thought maybe, you know, let me do something different. So I want to do engineering. So then Metwelt, as usual, Kota factory. I went to Kota. But they're always science.
00:03:05
Speaker
Okay, okay. And that must have been the first time staying away from parents in Kota. It was actually first time was Madras. So 11th I did in Triveni Academy Madras. Which is again for like IIT preparation. Actually, nobody knew and knows even my dad doesn't know why he put me in Madras. It's lost in history. But I knew that one year I was staying in Madras eating rice. I don't like rice at all.
00:03:32
Speaker
When my dad came to see me after one year, he was in Libya at that time. When he came to see me, he saw what the hell happened to you. He lost 15-20 kgs. So he shifted me to Kota, where again I lived alone. So Kota was all fun. So I moved to Kota with an idea of preparing for IIT. But that's the last thing I did. I was always having fun with friends.
00:03:58
Speaker
Did you crack in the competitive exam? No, that's the way the competition was there. I was not because I hadn't been in Libya all the time. It was a very cushy childhood. So you really don't see the kind of dedication needed to crack an intense exam in India.
00:04:15
Speaker
So when I saw a hidden quota, I just blew me away. I just couldn't handle it. So I didn't clear IIT. I did my B.S.C. from Rajasthan Maharaja College. Then I cracked IAM's written exam, went for all the interviews, slung all the interviews, and chucked it.
Banking Roles and Leadership Development
00:04:30
Speaker
Why is that? Like, why didn't you cluck the interview? I have no clue because I have given 12 IAM interviews. Wow. So I cleared written exam in 95, 96, 97. And I don't know.
00:04:44
Speaker
Maybe, again, if you were to ask me to reflect and what could be the only reason what I can think of, is that when I was doing my graduation in science, VSC, ECM, my sole objective was to do IMs. So I actually never studied anything other than preparing for CAT.
00:05:05
Speaker
And when the interviews happen in CAT, anything to do with my subject, actually I still remember one of the interviews, I think maybe because I am Bangalore, one of these interviews, they also, they forget about everything. Can you just tell me the nine books of chemistry, which is your subject? I can tell the name of the book. So maybe, you know, it was a good learning for me that while you can prepare for stuff, but I think, you know, doing what you're doing at that time is important.
00:05:32
Speaker
Eventually, I did my graduation from Jaipur MBA and my BSc graduation. In fact, I ended up doing one executive MBA with Diane Calcutta. But the fact that the IM interviews didn't work out, still probably is the disappointment which I get. I'm sure I totally deserved it, but that's okay. You can do anything in life sometimes.
00:05:57
Speaker
So like BSC and then in MBA you did like one after another and then what did you do after that? Like when did your working career start? So yeah right after MBA so I was you know MBA by the time I was I realized you know that I was anyway doing quite well so I was a gold medalist top in the class and all that so whenever the companies came in you had a choice to pick whatever at least in my case at that time FMCG was the rising sector this is 1998
00:06:27
Speaker
So, anybody getting a job in FMCG used to be the top job in a campus. So, I joined Parley on campus. And Parley, at that time, Ramesh Baya just sold Thumbs Up to Coca-Cola, which was a decision I'm sure he will always be regretting. At least, he used to be quite sad about it earlier. And from a consumer brand, he was left with this mineral water brand called Bisleri.
00:06:50
Speaker
You know once he sold a thumbs up his ambition was to make this lady, but the biscuits are also there Yeah, Pali biscuits were also there which was with another brother in the Pali family Okay, okay
00:07:03
Speaker
So with Ramesh Bhai, he had multiple businesses, including I think mango, fruity, you know, but his passion after Thamsaab was to make Bisleri like a household name. That's why, you know, he went to campuses and took hired MBAs and was completely revamped the whole culture with which there he was running.
00:07:23
Speaker
And in 1998, Vinuwater was a very novel concept. People would go to railway stations with this bottle, they would drop off the train, when trains filled with water in the tap, which is a very welcome bargain. That was the question. And Vinuwater was a very elitist thing. Luxury product, basically. Very luxury product available in five stars and boutique hotels and whatnot. And the task was in us to make this area a household name and sell it as a concept.
00:07:52
Speaker
And probably, if I would look at my career, other than the startup, which I've done now, that was something I was maybe the most proud of. Because we created as an across the India, everybody, including what I did in Rajasthan and my colleagues did elsewhere, basically created this whole concept of paying for water. And one rupee bottle in 2000, you know, 99, 2000 is a lot of money.
00:08:22
Speaker
10 rupees, 20 rupees to drink water was just amazing hard work by all of us. And I started my career as a management trainee sales, going on autos. The first few months was sitting in an auto, going to the shop and trying to convince them to buy within jeopardy. The next task was going in a truck. And the idea was that you go from a truck
00:08:47
Speaker
to one city in Rajasthan, one of the cities. So I'll maybe go from Jaipur to Delhi water, which is Shahjampur, or Jaipur to Bikaner, or Jaipur to Jodhpur, or sometimes you can do very remote areas. I still remember my most memorable journey, which we took from Udaipur to Dungarwar, and it was the area of Limbaram, you know, one famous arch.
00:09:06
Speaker
Because it was a deal area. They were very distrusting of people. So the thing is that if you're going on a truck or anything like that, you have to ensure that you don't see the sunset on the road. You have to be somewhere central. So very, very memorable memories of Paswada, Dungarpur, all those areas. So we really built that whole distribution chain.
00:09:33
Speaker
on the truck. Put these mineral water cartons in front of shops. Okay, I'm going to come back after two days. If you sell this, fantastic. If you don't, I pick it up.
00:09:44
Speaker
That's how we actually started. The whole idea is to take the truck, go in the direction, don't come going until the truck is sold. We really worked hard and I'm extremely proud of that part of the life where 7 o'clock meant 7 o'clock and it was not privileged.
00:10:06
Speaker
at all. But it gave a very good start to the career, discipline, hard work, and a willingness to try something new and be there with your hands dirty. Fantastic. So that was the first brush with professional life. Okay. So then what next? Why did you decide to make a move and where did you go? Somebody just introduced me to 3M.
00:10:31
Speaker
I got really fascinated by what 3M did with 70,000 products. It's an amazing company. One of my favorite companies. One of my favorite books was Build to Last and 3M was one of the companies featured there. When I got an opportunity, I just jumped on it and joined 3M. But then I had some family emergency because of which I had to be in Rajasthan. There was no big enough role for 3M in Rajasthan.
00:10:56
Speaker
That's when this whole ICICI thing was happening or banking was making banking more like FMCG. They decided to hire sales guys only from FMCG because there was no so retail talent in bank. When I joined ICICI, I started my banking career in Jopur selling personal loans. I was just completely shocked at how easy the life was.
00:11:21
Speaker
compared to FMCG because it was just too comfortable. By banking standards, everybody coming from FMCG was working like crazy. For us, it was working almost like 75% of what we would do in an FMCG because there's no retail deal, nothing. You make distributors, you make DST.
00:11:38
Speaker
Business automatically happened and business was going through the roof for any kind of lending product. Nobody had seen this kind of a boom in home loans, car loans, personal loans, credit cards. Everything was just going through the roof. I was in Jodhpur with ICICI, then Santa Char opened a branch in Jaipur. My whole reason to leave 3M and work was to go to Jaipur.
00:12:00
Speaker
So, it was just in route to Jaipur, but this way. In route to Jaipur and ICSCI, naturally, in nine months, it was difficult for them to make transition for me, although they had offered and it was a... I just loved ICSCI culture also. It was very good, matching what we wanted to do. And then moved to Stanchart in Jaipur, again, doing personal loans.
00:12:24
Speaker
I would say extremely cushy time from then on in banking because everybody who came to FMCG was just so much better at distribution than most anybody else who was there.
00:12:38
Speaker
setup like direct selling agents who would source loans? Yeah, DSA and DST. So DST is people who you control. Okay. And DSA is people who are independent and who go source for you. And then even some referral model also came in, which are like completely gig economy workers. So there were three broad models under which you will try and do your business.
00:13:00
Speaker
Oh, I was in, like ICC, I was in Jodhpur for nine months practically. We were rocking there. I'm going to move to Jaipur in a stenchart. Practically, hardly one year. Again, business was just going through your charts. So I got promoted to Gandhil Rath. I just found in Gujarat.
00:13:15
Speaker
So I was again in Rajasthan and Gujarat for two years. Again, business was off the charts. Then I got promoted to take care of East as a region. So I was in Jaipur, then I moved to Ahmedabad from there to take care of Gujarat and Rajasthan. Hardly six, nine months, the numbers were through the chart. So they moved me to Calcutta, take care of East as a region. Again, hardly one year in Calcutta. Calcutta was beating big cities like Delhi, Bombay in numbers. So next week, I got promoted again to take care of South as a region based out of Bangalore.
00:13:45
Speaker
that time unsecured when I was selling loans. So my headquarters was Bangalore, so I moved to headquarters. And that's my first brush with Bangalore. And the city, currently, I'm in love with my second favorite city after Chandigarh. So I moved to Bangalore, took care of the South region. And within a year's time, got promoted as a national sales head, taking care of the entire country, again, doing loans.
00:14:13
Speaker
2008-2009 happened where all the money we gave, I don't know how much of it came back, but we lost because of the meltdown and financial meltdown across the globe, especially hit and start lending in India.
00:14:29
Speaker
And then it started to shift to other side of banking.
Inspiration and Challenges of Starting NIO
00:14:33
Speaker
We're collecting money instead of giving money. I thought that was super. So I moved on to what we call in banking parlance, from assets to liability side. So again, in a leadership role, for any kind of savings account, salary account, current account, who's coming into the bank, most part of our portfolio, also was ahead of consumer bank strategy for a period.
00:14:56
Speaker
So it was a fantastic 10 years. Before I knew, I already spent 10 years in stanchart. I was shopping with Jaipur, then Ahmedabad, then Calcutta, then Bangalore. Bangalore went to Gurgaon. Gurgaon to Bombay. So it was an amazing journey all over the country with stanchart. Why do you think you did so well? I mean, what were the qualities or the growth hacks? What made you successful?
00:15:26
Speaker
Yeah, I think, as I mentioned, banking was very easy for most of us who came from FMCT just to share hard work and aggression we had around distribution. I would rate it to two things. For most of my career in banking, at least for the first seven years, I was the first person to enter the branch every single day.
00:15:51
Speaker
We're very, very aggressive in taking targets. The idea is not to grow 10% or 20%. Ambition is big. We understood distribution. We would hire in mass. At one point in time, at least Moto and our team was, anybody more than motorcycle will hire you.
00:16:09
Speaker
It was, I think, sheer aggression and hard work. And then once you reach headquarters, I think when I reached Bombay, which was overall headquarters for Stanchart, and you spend, I think, one or two years in the headquarters, then I think you really become a banker where you talk a lot and do little. And I enjoyed that. As I said, it was really comfortable, comfortable nine to five life.
00:16:37
Speaker
Then you moved to Kotec. What was the reason? Actually, I moved to ING. The reason was that ever since I had been to Bangalore and from then I moved all over the place, I wanted to see if I can somehow get back to Bangalore. I just loved the vibe of the city, the weather and everything else. Were you married by that time?
00:17:00
Speaker
Yeah, I was married very early in my life. One year into my job, I was typical, the first thing you get a job, my wife was really solid and extremely supportive in all these transfers and movements and all that. Then Akshay, ING Vyasha was the only major bank who was doing retail banking or aggressively doing retail banking and was headquartered as a bank.
00:17:28
Speaker
Okay. So that was one important reason, but not the main reason. The main reason was ING had this business called ING Direct, where they were very successful across the world, but especially successful in Australia, where they were the fourth largest retail bank in Australia. Okay. ING is headquartered in Australia, is it? It's headquartered in Netherlands. Okay.
00:17:53
Speaker
And they're across the world, but one of the most successful franchises of something called as ING Direct, which was an ING business without a single branch. Wow. So if the world's first truly neo-bank, it has become a very common word these days, but finally, I would say it was ING. So ING Direct as a whole theory and being like the world's largest bank in Australia, doing mortgages by the tons without a single branch was always extremely fascinating for me.
00:18:23
Speaker
And when I came across a gentleman who had moved from Australia to India, who was an Australian, moved from Australia to India to take care of retail banking for Angie Dasha in India, and he was the person who actually created that whole Angie direct. He came from 17 years of experience from zero to one of the key people who took Angie to us.
00:18:42
Speaker
And I found an opportunity to work with him in Bangalore on something like ING Direct and building India's first or try and build at least India's first branchless brand was really too good to pass.
00:18:55
Speaker
That's how I chose ING and moved with them to bank. In Australia, how did they build it? Because it was time for mobile apps to need it. Yeah, there was no mobile. It was completely built on phone. I mean, the normal call center. The whole thing was built on a call center. It was so amazing. You advertise a newspaper, you call a call center, you get your loan done. There's no branch. So you can't do anything with anybody except on phone. This continues to be an important case study. So how did the ING Direct do in India?
00:19:24
Speaker
No, there was no Angie Drake. It could never get launched in India. At that time, India KYC was not so easy. It was all face-to-face, video KYC, nothing. So it was impossible to do an Angie Drake kind of a model in India. We were contemplating something like that. We were building some models, and then we took over Angie Gashabang, and it was a part of Kotak.
00:19:47
Speaker
I'm sure Kotak 8-1-1, to an extent, was maybe somewhere inspired by Angie Derek. Okay. So were you there when Kotak took over? Yeah, of course, of course, of course. I was there within Kotak took over. We were part of the leadership team. I met with them multiple times, was extremely impressed with all my interactions with him, very, very customer-focused, amazing business acumen. Actually, everybody knows about it, but I thought I'd be able to say that. Actually, if you were to look at me, the inspiration to do entrepreneurship,
00:20:17
Speaker
A lot of it actually came from my interactions with Uday Kotak. I was so inspired by how one man's vision created a mammoth enterprise like Kotak, which is adding so much value to consumers' life without compromising anything. So, Uday Kotak is a first-generation entrepreneur, is it? Yeah, banking is definitely first-generation. Okay. There was some financial business which was there earlier.
00:20:42
Speaker
It sores it for hundreds of other people. But for him to take his financial services business, who built a bank of cortex eminence, when HDFC and ICS here were at its peak, I would say, in terms of aggression, is absolutely remarkable. And it was one man's vision, I would say.
00:21:00
Speaker
hard work, dedication, and most importantly, the focus to customer. It was like unbelievable. Kodak Insurance, I still remember when everybody in India was trying to get an insurance policy as big as possible because the margin for huge, the larger the policy, the better for any bank or anybody else. Uday Kodak, the first question you would ask if you get a very large policy, why is the customer taking this policy? I hope there's no
00:21:25
Speaker
So focused on missile and being honest to the consumer was very, very inspiring, extremely inspiring. What did he have before the bank? Was it an NBSC or what was it like? How did he build the bank?
00:21:37
Speaker
I think he had a financing services thing which was more in corporate banking stock market. And he applied for a license and he got the license and built a bank. Yeah, before license, NBFC, so this was very early, I'm talking 80s, I think, and I hope I'm right, I'm not sure. And then my 90s actually caught up when it was lending a car loan.
00:22:02
Speaker
They were the experts, they were in consumer lending, they most used to do secured lending or lending business years. I mean, the concept was everybody who was underwriting quote-unquote was a chartered account. It was like a benchmark. The best underwriters in India, for example, today, I think the best underwriters in India maybe aren't with Bajaj.
00:22:26
Speaker
In 1990s, 2000, early, the best underwriters in India, at least in my personal opinion, were in Kota. And is there a Mahindra connect there? Why is it called Kota at Mahindra? Any connect with that Anand Mahindra? Yeah, I think it was initially a GV with the minority street from the Indira, I think, so again, I'm not sure.
00:22:42
Speaker
What did you think that you want to do? Like you were inspired by Uday Kotak and you thought that... Uday Kotak plus Angie Direct plus Bangalore.
00:22:59
Speaker
I would say two things. Kotak, all leadership roles were in Bombay. As I mentioned, Kotak is a very, very fair place. Fair to everyone. Fair to customers, of course, but extremely fair to employees also. And when the merger happened with ING, it was a very fair dealing.
00:23:19
Speaker
where everybody in ING was given enough and more opportunities, big opportunities, I think as an entity bent backwards to accommodate everybody possible. I was also given an option to work out of Bangalore if I really liked Bangalore so much. All those things were there, but I realized that if you were to be something really meaningful in Kotak, it has to be in Bombay. My family was nicely settled in Bangalore.
00:23:45
Speaker
I was kind of keen on being in Bangalore and then I realized that the world was opening up key vice key was just starting to happen through biometric etc. I thought why not try and build India's energy direct.
00:23:59
Speaker
It was a little fire with the background and with the kind of success I had in all my jobs. I reached out to a few of my ex-bosses and told them that I was done.
00:24:22
Speaker
Also in the process were also very increasing in the ZDAC which we probably would like to bother. You can always, you know, we'll be more than happy to have you. I was very very fortunate to work with very remarkable bosses and colleagues.
00:24:42
Speaker
If you like to hear stories of founders then we have tons of great stories from entrepreneurs who have built billion dollar businesses. Just search for the founder thesis podcast on any audio streaming app like Spotify, Ghana, Apple Podcasts and subscribe to the show.
00:25:02
Speaker
When you put down your papers at Kotak, did you already have the idea clear? Did you have a founding team or a co-founder or things like that when you resigned from Kotak? Yeah, absolutely. I did not have a company registered or things or a founding team or other because it will not be fair for me to do my work, especially the kind of ethics we have grown up with.
NIO's Product Innovation and User Growth
00:25:27
Speaker
So, you know, I was having a discussion. So I live in a community which is full of venture capital. So I live in a place called Palmetto's in Bangalore. So it used to be like a hub of venture capital. You name a VC and so there was some connection to Palmetto's that VC. I had a lot of my friends who I used to play badminton with who are major capitalists.
00:25:47
Speaker
And they said that, yeah, why are you doing a job and all that stuff? We think with anyway the kind of understanding you have a banking and your ability to work hard, why do you don't do something on your own? And I always scepticalize it here. I don't know a bit of tech, anything on tech. I do nothing except restarting it. I can't do anything. So I just jokingly told one of my friends that you give me a million dollar, you give me a founder who's a techie.
00:26:16
Speaker
And I leave the job. It's a promise. To his credit, he actually arranged both. Wow. Which VC was this? This is a VC called Prime Ventures. Okay. And Sanjay was the gentleman we were in touch with. So, you know, he said, okay, I've got a guy who's a CTO at MobyQuip and he's also looking to do a startup. So why don't we go do some speed dating?
00:26:41
Speaker
So my co-founder flew in from Gurgaon, and both of us met for a week. Every day, we would just discuss, and we just gelled really well. It is like a marriage startup thing. If it is working, it's working. It's not working.
00:26:58
Speaker
We just got very good vibes with each other, very respecting, very different talent each other had. It can be a team like a banker and a tech person who would be a good team to go for. But being a banker also, you lead a very cushy life. For me, to lead that life at least bare minimum, I needed funding. Here, I had that $1 million commitment, which was handy.
00:27:23
Speaker
This discussion happened and the whole thing actually got closed in less than 10 days. Starting the discussion to finding a co-founder, to getting a company for a million dollars, and we figured out the product of the company. So then I first resigned from Kotak because I was a leadership team. There was a six-month gestation period. My co-founder joined first and started the company, and then I joined in April 2016.
00:27:48
Speaker
What was the plan? Did you have a clear plan that this is what you would launch? We were clear. We wanted to do something in retail banking and something for salaried customers. After my loan stint, I did a lot of liabilities business, but my favorite business was always salaried because it was so much more profitable.
00:28:12
Speaker
He's sticky. He's good about that business. And easy to scale up because with one deal, you get like thousands. Yeah, you get thousands of deals. So we said, okay, salary count, we wanted to do. The idea at that point in time is, in India, you get a salary in 30 days, which is every two weeks. So he said, why can't we bring the US space cycle to India?
00:28:40
Speaker
That was the whole concept with which we started the business. And then once we actually got into it, we realized the difficulties with credit card required. It was so complicated to achieve that we said, Kiara, let us try something else. And we'll get to this when India is ready for it. We started with a tax solution, again, towards salary.
00:29:07
Speaker
So where we said that, you know, we will give you a card and it was India's first multi-wallet card. But every card will have wallet with, so you won't see it for you, it's a card. But in the back end of the card, I've created various wallets. Each wallet corresponds to your tax item. So India taxation used to be very complicated. Even today, it is complicated or even more complicated.
00:29:30
Speaker
So food, you get 2,000 rupees off. At petrol, you get 5,000 rupees off. If you do something, you will get... So there were 22 items. Whereas a salaried employee, you could get a waiver. So you're saying, like, for, like, submitting those to your employer so that... Yes, yes. You get the tax rebate. So it was a super complicated thing. Why is that employer doing anything to employee?
00:29:53
Speaker
We created various wallets, each wallet corresponding to a tag. And it used to be very, very manual. You have to build some money. Yeah, very manual. And the whole concept was, go spend anywhere. I will automatically figure out, it's my tax, and send the report to your employer. The things I'm very proud of always is, when we've done, we've innovated. Nobody in India sold this slurry in trucks.
00:30:21
Speaker
a set of people in god-forsaken places. I'm very proud of that. And the second thing I'm most proud of after that was my start, which was multi-volleyton. So it was extremely successful from the launch itself. What kind of numbers did you see in the first launch, like Neo by IDFC? What kind of traction did that see?
00:30:40
Speaker
we had decided to cap the program at 5,000 and analyze it. So we achieved 5,000 within a month and then we analyzed how it is behaving and all that. And that was again through digital marketing that you did the acquisition. Actually, India's first bank account that had a waitlist. Wow. Okay. So we had 100,000 people waitlist in first one. Wow. And they gave it only 5,000 people.
00:31:09
Speaker
That really showed us what we could achieve if we had the whole canvas without any constraints. That product is just like a bank account of any other bank. You get a debit card, you can save money, you can put it into an FD or an RD.
00:31:27
Speaker
like do bill payment. So all of those, like say what I have on my ICICI bank app, everything is there on. Yes. Like you had launched the same thing. Absolutely. Okay. And what did you learn like, you know, on observing the data for those 5,000 sign-ups and how did that influence the next product? Like what were the learnings from that? No big learnings were, actually first was that you were shocked by the waitlist.
00:31:56
Speaker
100,000 people waitlisting, waiting, requesting you to open account is like, we never will, because bank account is very commodity product. And something we were found by the amount of money people were willing to deposit in the account of a relatively unknown bank. These were two big learnings. This actually then gave you the confidence to do something big and ambitious and
00:32:20
Speaker
Something big, something really big. And that's when we went ahead, Equitas launched Neo X by Equitas on 25th of March. And today, I would say in terms of digital accounts open every day, early on a mobile banking app, we would be definitely among top five in the country. Well, how many accounts are opening every day? Like what is the number?
00:32:45
Speaker
5,000 accounts, everything. Wow. And this is Adhar based KYC, like a completely digital KYC. How did a completely digital KYC happen through OTP? And how is Neo X different from Neo in terms of the app, the features? Did you have some learning based on which you added some features or something like that? Yeah. One of the key learnings for us, Akshay, was that
00:33:13
Speaker
bank account, if you combine it with a wealth account, then the stickiness of the user, balances of the user, just the whole ease of operation for a user just changes dramatically. What is the difference in bank account and wealth account? Wealth account is like a mutual fund account. Like we're paying money and grow. So we bought a company during pandemic,
00:33:41
Speaker
which was a wealth management company. Okay. Which one was it? A company called Goalwise. Okay. Goalwise. I've invested on Goalwise. Yeah, I've used that up. Yes, it was a good company, great team of founders. Yes, yes, yes, very good company, very responsive people. So we bought that company, the founders came on board, and we integrated the product into Nuance. So as an integrated zero commission mutual fund account, and a bank account,
00:34:11
Speaker
It is the India's only offering today. So what is the number of accounts that you have today, like on NeoX? We are almost touching half a million. And how does that compare? Like what are similar banks who have this number or just like to get an idea of what half a million means? Yeah, if you look at half a million, there's of course no structure, which is close to that. But if you were to take maybe
00:34:40
Speaker
accounts acquired by banks, then maybe after the top four, this would be the highest number of accounts open by any bank.
Digital Marketing and Community Engagement
00:34:48
Speaker
Okay. In this period, like in about two quarters, you acquired half a million. About four months. Four months. Wow. What do you think you will be at the end of this year? Like how many accounts will you be? At the current run rate, we should be at 2 million accounts. And the issue is to do some 30, 40 million accounts over the next four to five years.
00:35:09
Speaker
And where would that put you in the ranking term, like 30, 40 million accounts would be like? Yeah, top five, top five for sure. Like bigger than a lot of the small PSU bank? Yes, hopefully. And how do you earn that from this? Like, is it the same thing, like the percentage of MDR, like you again issue a physical card? Yeah, yeah, it is it is largely driven by MDR. Okay.
00:35:37
Speaker
So you cross-sell some insurance, wealth products, lending products, and so on. Okay, okay, okay. But the investment, per se, is again zero commission. So that is, you're not earning on that? No, we don't earn there. We earn on stocks, the domestic stocks. So people can do equity also through NeoX? Yes, equity. Okay, so NeoX is like equity, mutual fund, like a complete, like a full stack,
00:36:06
Speaker
app for money. Anything to do with money, you can do on that. Yes, absolutely. Okay. Amazing. What is your user base like? Is it typically millennials or what type? Yeah. Typically, people are less than 35 years. These are young salary professionals, basically, who want to- They are already married, and then 60 percent would be salary.
00:36:36
Speaker
20 percent would be self-employed and other categories, and another 20 percent would be students. What is your customer acquisition cost? How much does it cost you for each customer that you onboard? When do you make up that money? Yeah, so let's put it this way. It's little sensitive data given that some other competition coming to us. Yeah, sure. However, if I were to look at my cost of acquisition,
00:37:06
Speaker
It'll be probably one tenth of a physical, anybody had a physical problem to open the accounts. So, you know, your background is physical distribution. I mean, that's what you have excelled at throughout your career. But now you are, I mean, you are in a different kind of a game now. So how did you personally
00:37:32
Speaker
cope with that change, you know, from being in a comfort zone, because physical distribution, what you were doing earlier? In the easiest. Digital acquisition actually is more like an accident, as I mentioned, the travel card came from my own experience. I was traveling in Switzerland.
00:37:50
Speaker
And I accidentally ended up using my new card, which is a tax benefit for some spend. And I just realized nothing got charged because accidentally the bin had been set for zero forex. And then we said, why don't we make this into a product? This is so much better than the forex card I'm carrying. Then we said that, how will it sell? Because none of us had experience with digital marketing.
00:38:17
Speaker
Then Vinit, who's our CMO today, one of the brightest professionals I've met in my life, he just said, let's just try and put it out there. We'll try and get higher, some digital marketing people, and see how it goes. We had caught fire. Both of us were shocked. But they gave us a lot of confidence that we can build a full-fledged
00:38:44
Speaker
digital marketing, performance marketing business, one, three brands. Because Neo Global is the biggest brand created in the travel segment in banking, I would say, in the last one, two years. No one is opposed to that. And we created the brand practically without spending any money. There was no ad, nothing.
00:39:09
Speaker
But with that, we got confidence that we knew X when we launched. We knew that you know how to create brands, why not go all out? And then money on IPL, we sponsored India's test championship in UK. Now we are, next month you will see, again, we are doing some big bang campaigns. So now we are very comfortable with digital marketing and pandemic has accelerated our thought.
00:39:36
Speaker
consumer adoption and also government is very RBI, everybody is very comfortable as long as checks and balances are there to create or facilitate digital banking. Okay, so NeoX also has the Neo Global built into it? We did not use any, we did not have it initially, did not have a zero forex market component.
00:40:01
Speaker
And we realized that NU group is such a strong brand. Everybody is buying NUX and because it is NU, they are assuming it is a Zero4X product. And when they are spending abroad, they are saying, you know, you're cheating. Okay. So we realized Kibos and thankfully, because the travel season had not started, we launched this. We realized we have to live up to customer's expectation. So we changed the product. Now the product is Zero4X.
00:40:28
Speaker
Okay. So how do you remain connected with customers? Throughout your career, your way of remaining connected with customers was through physical interaction. Now, how do you stay close to the voice of the customer? So we have a very, very robust community. It is called a new community.
00:40:52
Speaker
It has got around 2,000,000 people typically every month and leave their thoughts. And on what? Like on Facebook or what? No, it's a community. It's a separate page in itself. On your website? Yeah, you can say it's on my website. But yeah, it's a typically separate link. You can access it through my website. You can just type directly in your community, go there. And so it's a... It's like a forum, basically.
00:41:18
Speaker
It's a forum episode. While I read some Twitter comments and Facebook and a little bit we get, so I have a daily pulse of social media which comes to me. But personally, my favorite medium of understanding where the customers are going through is new content.
00:41:34
Speaker
because it is a very modern, young, vibrant society community, and they are very connected to me. They will name me and write, or your product is like almost being present in person.
00:41:54
Speaker
I try and make it a point that at least once a day, I go to a community page, there'll be some 10-20 messages addressed to me, just go through them, see what people are saying. Okay, okay, okay. I'm trying to Google new community, new bank community also. Yeah, you just say NIYO community. So that's your way of
00:42:20
Speaker
staying close to the voice of the customer basically? Yes. Okay. People come here just to give feedback or is it like a discussion around money and finance and all of that also? It's two, three things. One is people can come here, give feedback about product. They can raise their concerns. Then we keep bouncing off our new product ideas,
00:42:50
Speaker
They can give product ideas, what do they want from us next? In this community we realized here, we'll have to make new X0 for Xmarker, which is the basic thing they need from us. They did a poll, what kind of card they like, put our designs there for them to choose which design they want, and you can do the top designs accordingly. With them, do you need loans first or stocks first? However, they say accordingly first, we'll prioritize that.
00:43:17
Speaker
Very, very useful. This is essentially like your fanboys in a way, like your power users who come here to help you make the product better.
00:43:32
Speaker
I hope they are my fans. I'm sure they are not because a lot of time a product fails to live up to the high expectations. But definitely our sounding boards, they definitely are well-wishers who try and inform us what to do better. A lot of times, they respond to queries of other people.
00:43:58
Speaker
So, which is very, very good to see and we're very thankful for every new users in your community.
Future Aspirations and Reflections on Entrepreneurship
00:44:04
Speaker
So, what has been your fundraise journey? You raised that first 1 million from Prime Ventures before starting out. Yeah, and then Social Capital and JS Soros reached out to us. We were not in the market at that point in time. They reached out, we liked speaking to them, so we placed series A from them, which was around $13 million.
00:44:26
Speaker
And when was this? This was in December 2017. When you had that tax-saving product, this was at that time? Not a product, also. Okay, by that product also, okay. And then in January of 2019, Tencent and Horizon Ventures reached out to us. Again, people who work with great reputation, we raised 35 million from them and other people put it together.
00:44:54
Speaker
That was January of 2019. So in overall, we have raised around 50 million. And that time was, Neo Global was like the flagship, the Neo Global, Neo Bharat. Neo Bharat was the biggest puller, but Neo Global was also doing well. It was just shaping up. That was the last raise in 2019. Yes. Okay. And when do you plan to do your next raise? Well, anytime now, I think you were waiting for Neo X to become successful.
00:45:23
Speaker
because after pandemic travel naturally was not really exciting. In blue collared with all this migrant labor problem, et cetera, that was also at its share of ups and downs. We really wanted to have a product which is independent of pandemic. I would just put it this way. New York's really lived up to the billing. Now we're in good shape. We have a lot of inbound interest.
00:45:49
Speaker
which are great. So anytime now, we should raise. Are you looking at a unicorn valuation? Yeah, I wish so. But valuation is more like beauty. It is an eyes of the builder. So we always like to table whatever is available. And then we decide what they think is a fair value. What was the last valuation in 19? Again, it is slightly confidential.
00:46:16
Speaker
Cool. I wish you all the best in this fund. I hope that I'll see the unicorn news soon. Thank you. Thank you so much for your wishes. I want to understand now how you are coping with the way the business is shaping up. What skill sets have you tried to acquire? What do you do on a day-to-day basis to lead the business? I would say the biggest skill set I've acquired is
00:46:46
Speaker
in product management, where you really look at product from a perspective of, are we innovating? Are we making it better than the best in the world for the consumer? That is the real biggest difference between, let's say, my banking career or my FMCG career, which is all about distribution and doing business with products which are added over to you.
00:47:14
Speaker
to hear where you are building products on your own. So that journey of product management and focus on, insane focus on customer experience is, I think, my thing which I'm really changed as a professional compared to where I was here. And majority of my days spent in
00:47:43
Speaker
interactions with teams across the company, working together to make a better product. I think that would summarize it. What I do someday is try and have a better product and a better user experience. We are really far still, I feel. We'll get there.
00:48:08
Speaker
So what do you think are the things that you need to plug? Like, what are the gaps right now with you? Like, what's on your wish list? Yeah, there's very, you know, small things, what a user expects from their banks, which will work with a partner bank and make it happen. Very small things like everything to create joint account on the fly, everything to, you know, get checkbooks, everything to get account number, which is same as your phone number.
00:48:36
Speaker
a lot of other small things, innovative things, just duty of the app, that when you open the app, it looks very pretty. Who's managing the alliances with the externals, the bank partners, and all of that? Largely, it is done by me and my co-founder and our CEO, Vinit.
00:49:05
Speaker
But for NeoX, we have a business head who is my ex-colleague from Kotak Days. He runs the NeoX business end. Similarly, on Neo Bharat, I have another one of my colleagues again from Kotak Days called Darpan. He runs that business end to end. So are you also planning to apply for a bank license?
00:49:32
Speaker
like become like a full-fledged bank in yourself? Yes, we would like to apply for a digital bank license when available. So today you have three kind of licenses, small and payment. We hope digital bank license is available in India soon. And if it is available, we would definitely be the first ones to apply. Do you have some visibility on whether it's going to become available?
00:50:18
Speaker
The advantage of that license is just that the percentage of revenue that comes to you is 100%. There is no sharing then. That is the basic advantage.
00:50:32
Speaker
That is one advantage, but I would not say that's the advantage why I would do it. The reason I would do it is I can innovate faster. Okay. Things like the bank account has the phone number, joint account. We can just move it faster clip if you don't have any dependency on anybody else. Our ambition, Viren and me,
00:50:59
Speaker
It's to leave a legacy. It's not about doing a business, etc. We really want to leave our legacy on stamp on the whole digital banking thing in India. For that, you need a kind of independence to make it happen. Not saying that we don't have efficient butter banks.
00:51:22
Speaker
but maybe we can move even faster if you're the only ones taking decisions. Who do you see as your closest competitors, like the companies that you track most closely in terms of what they're doing? Kota K21. Which is also again like a pure digital product. A digital product. In SBI, I think there are two products where we would like to emulate their success.
00:51:52
Speaker
How many accounts do these two products have? Like how big are they? I do not have exact numbers. But Kota K-21 one should be around 15 million. And SBI? SBI. Bigger than Kota. It should be bigger. I guess it is 30 to 40. So in a couple of years, you would look at overtaking them, maybe two or three years. Yeah, at least hope to acquire similar numbers.
00:52:19
Speaker
There are two types of founders. One is people who start up very early, just out of college or very young founders. And then there are founders who have a full career behind them. So between these two, which one do you think is a better path to take? Or is there a benefit of one path versus the other path?
00:52:40
Speaker
Young is one I won't say because when I was young, startup was not so fashionable. Young has its advantage that you can fail early, you don't have so many responsibilities, kids, fees, all that to take care of, and you have that energy which only comes with youth. When starting late, what we have done,
00:53:07
Speaker
The advantage is that you're financially not too worried. You're risk taking ability if you're financially well settled, especially if your partner is working like in my case. You're not so afraid of failure and you know that, worst case worst, you can try and go back. It's much easier when you're young.
00:53:34
Speaker
But at somebody like my age, if something like this doesn't work, other options just retire and enjoy life. There's a plus and minus, and when you start late, you have a little bit of experience, which is helpful, especially in dealing with people.
00:53:58
Speaker
So I think it's both ways. I don't know which is a good one. But actually, the last five years, I really enjoyed creating some products which, success failure, all this will happen. But I can always look back at tremendous pride in what we innovated. How many products were first in the market?
00:54:25
Speaker
You know, prepaid with a virtual account number, international travel on a debit bin, 04X, first new bank in India. So we are really very, very proud for innovation more than anything.
00:54:42
Speaker
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