RBI mandate to impact CRED; Bhutan and their national digital ID program, and more fintech funding news

The last week of June had some very interesting things happening, for the Fintech World.

This week, we dive into them and look beyond the surface.

P.S. I am moving my deep dives onto Substack. Subscribe here if you don't want to miss out.

India:

1.       The Reserve Bank of India's recent mandate to process credit card payments through the Bharat Bill Payments System (BBPS) is causing quite a stir in the fintech world. It's like the RBI is trying to herd all the financial cats into one corral, and not everyone's jumping the fence willingly.

Imagine you're throwing a party, and suddenly you're told everyone has to enter through one specific door. That's essentially what's happening here, with BBPS becoming the sole entryway for credit card payments starting July 1st. But here's the kicker - some of the biggest names in the game aren't ready for this party yet.

Take HDFC Bank, ICICI Bank, and Axis Bank, for instance. These banking giants, with their millions of credit card customers, are like the popular kids who haven't RSVP'd. Their absence from BBPS leaves platforms like PhonePe and Cred in a bit of a pickle. It's as if these fintech companies have set the table, but the main course isn't showing up.

Only eight out of 34 credit card issuers have hopped on the BBPS bandwagon so far. It's like watching a slow-motion game of musical chairs, with everyone eyeing the July 1st deadline nervously. The payments industry is practically begging for a 90-day extension, crossing their fingers that the RBI will throw them a lifeline.

But here's where it gets really interesting: credit card payments are just a drop in the BBPS ocean right now, making up a mere 1.5% of transactions. It's like discovering a hidden room in your house - there's enormous potential once it's fully utilized.

So, why is the RBI pushing for this change? Think of it as installing a high-tech security system. By centralizing credit card payments, the RBI aims to keep a sharper eye on fraudulent activities and gain deeper insights into payment patterns. Although I am conflicted here. Frauds happen at the time of sale, while bill payments after the billing cycle ends. If the RBI wanted to monitor the number of disputes raised on the billed transactions wouldn’t it have been easier to set up a centralised Online Dispute resolution, with strict TATs? Or is the inuendo that a lot of fraud is being caried out during bill payments? In which case reassessing the certifications of the current BBPS agents could suffice?

Anyway for now, it's a waiting game. Will the big banks fall in line? Will the deadline be extended? And how will this affect the average credit card user? Full report here :

Asia:

1.       Last year, Bhutan’s parliament passed a law to embrace the National Digital Identity on the blockchain, making it one of the first in the world to embrace the decentralised self-sovereign identity. And as of writing this, the country has achieved 10% voluntary enrolment. This paves the road for enhanced service delivery, especially as their citizens move more and more online with their lifestyle.

The reason that Bhutan chose not to go the Aadhar way, like what India did, was also a conscious policy decision, one with citizen identity and privacy being at the Center of it. And now they are looking to roll out the digital identity to work on feature phones and with low internet speed as well. Full Video here

2.       Virtual banks just need to be good at one or two features or products that they can scale and generate revenue, and that deposit sizes shouldn’t really matter. According to CEO WeLab Bank CEO Tat Lee, at least. To that end, the bank is focusing on two areas: Wealth management and lending.

And to bolster their loan offerings, the bank just announced it is consolidating the online lending business of sister company WeLend with the bank’s. This is meant to create scale. WeLend has been operating big-data-driven alternative credit-scoring models for more than a decade. It’s the main financing partner in Hong Kong to Tesla and Apple. 

Europe:

1.       Societe Generale  wanted to build up a success story in the online banking domain, when they decided to acquire Shine, the fintech startup that offers banking services and accounting and reporting services to freelancers. Four years ago in 2020. However, recently they admitted they weren’t sure of that strategy. And since then the bank has signed and exclusive acquisition contracts with Ageras, to sell Shine to them.

Ageras isa consolidator in the fintech and accounting space. Founded in 2012 to serve as a matchmaker for small businesses and accountants, it’s since expanded to become all-in-one fintech platform for small businesses that covers banking, accounting, tax filing, etc and has acquired several fintechs in the process. Ageras is building a portfolio of companies that offer adjacent products. In some ways, Kontist, Tellow and now Shine more or less offer the same product. When you create an account, you get an IBAN and a card. You can create invoices, receive money from your clients, get reminders when it’s time to pay your taxes and generate accounting exports.

This M&A strategy is a way to diversify the company’s footprint in Europe as fintech still remains a fragmented market — there are some outliers that manage to successfully attract customers in multiple countries but those are exceptions.

Funding:

1.       Italian fintech Banca AideXa , a digital lender specialising in providing credit to micro and small businesses, has secured €16 million in fresh capital.

2.       LXME , the first Indian platform for improving women’s financial health, secured $1.2 million.

3.       @BoltTech , and insurtech player in Hong Kong, raised $246 million in their series B.

4.       Gynger, a platform that lends capital to companies for technology purchases, has raised $20 million in a Series A round led by PayPal Ventures.

5.       Finbourne, which has built a platform to help financial companies organize and use more of their data in AI and other models, raised $70 million at a just over $356 million post-money valuation. 

6.       Cadana, the API based payroll management fintech, came out of stealth with a fund raise of $7.4 million.

7.       Paris-based Ramify, a wealth management and financial advisory platform, raised €11m in Series A funding.