A nascent sector is taking shape where startups like Fixerra, Stable Money and Upswing are working with large lenders to help shore up fixed deposits, recurring deposits and even help issue credit cards secured against fixed deposits.
While Stable Money is operating in the consumer-facing space, getting customers to these banks, Fixerra and Upswing are powering networks that enable banks to sell such products at large consumer-facing applications.
While banks have intensified efforts to raise deposits, after the Reserve Bank of India warned them about possible systemic risks due to credit growing faster than deposits, these startups are trying to make fixed-income products like term deposits attractive to young consumers.
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Meanwhile, venture investors are also placing fresh bets in the space. Stable Money has raised around $10 million till date and is in talks to close another major funding round. Mumbai-based Upswing closed a $4.2 million round in December last year, taking its total funding to around $10 million, while Fixerra has raised around $2.2 million from angel investors.
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ETtechFrom hardly selling fixed deposits a year back to now garnering around Rs 4,500 crore worth of deposits, third-party applications are showing a lot of promise, said industry insiders.
“Customers are used to accessing stocks, credit and mutual funds through technology enabled platforms, they cannot go back to traditional means for their fixed income investments; that is where players like us come in,” said Saurabh Jain, cofounder of Stable Money.
Bengaluru-based Stable Money started with fixed deposits as a core product but eventually wants to offer other fixed income investment options like bonds too. The company has an OBPP (Online Bond Platform Providers) licence already.
Get where the customer is
“Customers spend a huge amount of time on ecommerce, payment and travel apps these days, so we are trying to see how to take banking products to those locations. While credit is flowing through super apps, we are looking to take deposits live on such apps as well,” said a senior banker at a private sector bank.
The trend caught up with small finance banks and medium sized private sector lenders taking the lead, trying to shore up their current and savings account balances with higher interest rates through fintechs.
Wealth management platforms like Groww and Angel One are offering fixed deposits already. The next phase will be when ecommerce players, travel portals and payment apps offer fixed deposits.
“Super apps have realised that core payments are not revenue generating, credit is a challenging product to manage, but deposits can get you sticky customers, it can be monetised as well, hence there is growing interest in the space,” Fixerra founder Akshar Shah said.
Since it is not possible for each of these consumer-facing applications to tie up with multiple banks, platforms like Fixerra and Upswing can help power these marketplaces.
Generating revenue
Unlike many other fintech offerings, these products are revenue generating, given banks are ready to shell out a commission to the customer acquisition channels. Banks are getting term deposits at a nominal cost compared to sourcing through the branch network or their mobile banking channels.
However, this niche sector will grow faster when the top five-six lenders start using these channels to source deposit customers.
“Currently we are getting the early adopters who are getting attracted to the higher interest rates. Eventually we will get larger banks and consumers will come for the trust; that is when the sector will mature,” said Jain of Stable Money.