UK fintech Tide to test launch in India
Tide Bank, the UK-based fintech platform which offers business banking services to small to medium enterprises (SMEs), sole traders, freelancers, and limited companies, announced the news as part of a worldwide expansion plan.
Not officially classed as a bank, Tide is a financial technology company that provides online current accounts. The fintech's banking services are provided by PrePay Solutions, who are regulated by the FCA via an e-money license.
In the initial phase of its entry to the Indian market, Tide will alpha test its product based on its global technology stack, with Tide India is set to go live in Spring 2021.
Explaining the decision to select India as its first international market, Tide, which already operates a technology centre in Hyderabad predominantly for software development, said its platform is a suitable fit for the sub-continental region.
Indian SMEs, many of which are underserved by incumbent banks, provide a fertile marketplace for the fintech, it said.
Part of Tide’s long-term strategy is to place itself in regions accounting for 25% of the world’s small to medium-sized enterprises.
According to recent reports, as of May 2020, there are an estimated 63.05mn micro industries, 0.33mn small businesses, and approximately 5,000 medium enterprises in India. Uttar Pradesh has the largest number of estimated MSMEs with a share of 14.20% of the total MSMEs in India.
According to data released by Invest India, the country has the highest fintech adoption rate globally and is ranked on a par with China. Digital payments value of $65bn in 2019 is expected to grow at a CAGR of 20% till 2023.
“India was selected as our first market outside the UK due to its vast SME population, and the entrepreneurial spirit that is so prevalent in the country,” said Oliver Prill, Tide’s COE. “As an aspiring global business financial platform operating in the largest SME market is a must.”
Prill explained, “As a company, we already know India well and we are confident that Tide can adapt to make business banking better for Indian SMEs. With investment and the expertise Tide already has in the country, we can help underserved SMEs thrive.”
As home to 10% of the world’s SMEs, Prill said Tide will provide opportunities to “digitally-savvy companies” to the Indian economy. FinTech already has a thriving presence in India due to government digitisation efforts and high smartphone penetration.
Gurjodhpal Singh, CEO of Tide India and former Senior Vice President and Business Head of India's leading Payment Service Provider PayU, will lead the company's business arm in India.
Despite the expansion drive, Prill said the European market will continue to dominate Tide’s growth strategy and that the move to India is building on that established position.
“The UK market will remain a key focus for Tide, with a dedicated team building Tide India. As well as beginning our international journey, we expect 2021 to be another year of significant growth,” he said.
Despite the COVID-19 crisis, Tide, which has almost 300,000 members and has managed £10bn in transactions since it launched in 2015, has experienced a strong upward growth trajectory.
The fintech recently claimed to have over 5% of the UK business banking market and said growth had continued because it has remained open for business throughout the pandemic and the digital-service experience is preferred by customers.
The Tide business financial platform offers business accounts and related banking services, as also a comprehensive set of highly usable administrative solutions, such as full integration with accounting systems. It claims that all solutions are designed with SMEs in mind, using advanced technology. The company also has plans to embark on Series C fundraising later this year.
Zafin: Banking is now in the era of the tech ecosystem
The development of tech ecosystems is placing the future of post-COVID banking in jeopardy. At a time when Big Tech can replicate the functions of traditional financial institutions, what can banks do to retain a grip on the market?
John Smith, EVP Ecosystem at Zafin, has a few ideas. A SaaS cloud-native product and pricing platform for financial institutions, Zafin is preparing the next generation of banks to cope with this precise challenge.
Smith is responsible for the strategic and tactical management of the company’s ecosystem, including the creation of new business models to support growth and differentiation. We asked him four questions:
Q. Have the events of the pandemic caused an irreversible shift in the digitalisation of banks? If so, is COVID the sole cause or are there other factors?
It’s a great question and one that I am asked a lot. Without a doubt, the COVID-19 pandemic has driven a significant shift in the acceleration of digital. In fact, I’ve seen some estimates show there to have been as much as four to six years of digital adoption growth since the initial lockdown started.
While the pandemic may be the primary reason for this growth, two other drivers include fintech disruption and the high costs of operating a traditional retail bank. Both of these factors have caught the attention of banking executives as they set their minds on accelerating digital transformation with a focus on high return, low risk.
Q. Some commentators believe banks must learn from Big Tech in order to survive. Do you agree? Please expand.
I agree completely; we’re living in the era of the ‘ecosystem’. All the seismic shifts we’re seeing in technology, be it aggregation, embedded finance, DeFi or hyper-personalisation are all enabled by the foundation of an ecosystem.
When financial institutions work with a strategic partner like Zafin, which has made the strategic investments in a best-in-class ecosystem, they’re able to capitalise on opportunities more quickly and safely, and will be better positioned for growth now and at the other side of the pandemic.
Q. What are currently the obstacles to adopting Open Banking? Is it more likely to 'take off' in some regions rather than others?
I would argue that Open Banking has been in the US for some time and will only continue to grow there. By definition, Open Banking is about the secure sharing of financial information that customers are aware of and have authorised. Under that definition, we’re seeing aspects of this well underway even though its full potential remains to be seen.
Third-Party Providers are a natural outcome of Open Banking, whereby they can create propositions beyond what a bank normally does to enable banking functions such as payments, borrowing, saving and so on. Once again, some of these are already present through industry-led initiatives, whereas regions such as the EU have taken the pathway of regulation such as PSD2.
The industry-led initiatives we’ve seen in the US have also had the added advantage of guard-rails that regulatory bodies like FFIEC and CFPB provide. There are also other technology-led initiatives such as API definitions that are set out through the FS-ISAC.
I would argue the future of Open Banking in North America will be through the natural evolution of the guidelines and API definitions that have been published, as well as the natural progression of industry initiatives.
Q. Are there any other bank tech trends you'd like to discuss?
Coreless banking. Zafin has been pioneering some of the work around externalising functions out of the legacy core to drive a more ‘fintech nimble’ bank, while not having to deliver a ‘heart and lungs’ core bank replacement.
Real life examples of this include moving some of the core functions of a banking system, such as product and pricing to a platform like Zafin. Origination, onboarding, KYC, risk, and compliance are all other examples of externalising banking functions for added agility.