A neo bank financial startup announced a funding of USD 65 million
A neo bank financial startup has raised funds. What an interesting and exciting piece of news it is.
Let us talk about the neo bank industry and the startups working in it. A neo-bank is also called the online bank, internet-only bank, virtual bank, or digital bank, is a type of direct bank that has its operations only through the online medium. Such banks do not conduct their businesses in the traditional physical branches.
In the UK, the term used is Challenger Bank, which refers to the number of fintech banking startups that had come up during the time of 2007-2009 financial crisis. The services which are offered by the neo bank are not as vast as the traditional physical banks and a large amount of the income of neo banks is the transaction fees which is received when customers make transactions with their debit card.
Looking back at the history of neo banks, the term has been in usage since the year 2016 to tell how these banks are proving themselves as a challenge to the traditional banks. Neo-banking startups are not regulated by the RBI, but they are indirectly under the preview of RBI. Neo-banking and the services are not directly regulated in our country, India but they are supervised under indirect regulations, which is through partnerships with regulated companies. Such partnerships make sure that the offerings and the products are in regulation with the norms.
Coming to the neo bank industry of the country, the transaction value in this area is expected to reach USD 47936 million in the year 2022. The transaction value is predicted to grow at a CAGR of 20.59% between the year 2022 to 2026, thus resulting in a projected total amount of USD 101346 million by the year 2026. In the year 2022, the average transaction value per user in the domain of Neo-banking segment is USD 4714.1 in the year 2022. The number of users is predicted to increase to 17.11 million by the year 2026.
According to a report published in November 2021 by Crisil, the assets under management (AUM) of neo-banking financial companies will be growing at 8-10% in the next fiscal year, which will be instrumental in improving economic activity, and strengthening the balance sheet buffers.
Let us now talk about the funding of a neo-banking startup that has taken place recently.
Announcement of funding of a neo-banking startup
The neo-banking startup, Finova Capital has raised USD 65 million worth of funds as announced on March 31, 2022. This round of funding that has taken place saw the participation of various investors like Norwest Venture Partners, Maj Invest, and Faering Capital. Norwest Venture Partners made an investment of USD 45 million and the remaining amount was invested by the other two investors.
The startup plans to use the funds raised to grow its loan book, make investments in technology, and even expand and move forward with its vision of enabling financial inclusion at scale. The startup before this round of funding had raised USD 35 million in the year 2020. The investor in that round of funding was Sequoia Capital.
About the neo-banking startup that has announced its funding
The neo-banking startup, Finova Capital was founded in the year 2016 by Mohit Sahney and Sunita Sahney and has its headquarters in Jaipur, Rajasthan. It is a Non-Banking Financial Corporation that has been given a license by RBI. The idea of the startup originated with a belief that if supported well then micro and small-medium enterprises can play an important role in the growth of the Indian economy. The startup is of the ideology that by supporting and creating enabling opportunities for micro and small businesses, lives can be enriched and communities can be transformed.
The aim of the neo bank startup is to reach out to financially excluded unorganized and unreached MSME sectors. The objective of the startup is to make finance available at a reasonable cost and deliver in a transparent manner. Finova stands for Financial Innovation. The startup is engaged in providing loans to both urban poor and rural poor to meet their productive requirements in having new businesses and for growing an existing business. The startup is a young, growing company with a big vision: to transform credit delivery to unorganized, unreached, and unserved segments.
The mission of the neo bank startup is to provide innovative, affordable, and customer-centered credit in a time-bound fashion to micro, small, and medium enterprises through friendly teams, efficient products, and robust processes, to catapult them to new horizons. The vision of the neo bank startup is to be a leading financial service provider, admired for a high level of customer service, and respected for our ethics, values, and corporate governance.
The neo bank startup has its presence in more than 100 cities like Sirohi, Kota, Bikaner, Ghaziabad, Greater Noida, Bhopal, Indore, Ashok Nagar, Ujjain, Guna, Shahdara, Uttam Nagar, Ambala, Hissar, Karnal, Sirsa, Panipat, Yamuna Nagar, Durg, Dehradun, Haldwani, Ranchi, Bokaro, Jamshedpur, Bilaspur, Vidisha, Bina, Betul, Nagda, Losal, Udaipur, Bundi, Bassi, Baran, Lalsot, MertaCity, Gangapur, and many others.
The startup has the backing of 34 banks, NBFCs, and AIFs.
The neo bank startup is offering something which will be of great help to small businessmen. We wish the startup a bit of good luck and hope it has a bright and successful future ahead.
