Four FinTech Start-Ups That Are Championing Financial Inclusion In India
Sixty percent of Indians are unbanked and ninety percent of small businesses have no links to formal financial institutions. Yet a staggering 80% of Indians own mobile phones, and 32% will own a smartphone by 2017. The Indian Government is prioritizing financial inclusion through schemes such as Jan Dhan Yojana, Aadhaar enrollment, and payment bank licenses, and fintech entrepreneurs are emerging around the country.
This presents a huge opportunity for FinTech companies in India (ventures using technology to redefine existing financial systems and make them more effective) that leverage these technologies to promote financial inclusion.
Check out four innovative FinTech social ventures that are championing financial inclusion in India.
India has a student population of over 400 million, of which only 260 million is enrolled in schools. In India, education is seen as the key to unlocking new opportunities for the next generation.
While the urban elite have easy access to loans to study abroad, the poor are hardly able to fund their children’s schooling, leading to an increasing number of out-of-school children in the country. Shiksha Finance seeks to bridge the ever-widening inequality gap by offering student education loans to middle and lower-income parents to finance their children’s’ fees from nursery to high school. They also provide financing to educational institutions.
Started by two charted accountants, VL Ramakrishnan and Jacob Abraham, Shiksha Finance hopes to enrich India’s human skills, focusing on the bottom of the pyramid, by creating access to relevant products and services and thereby assuring quality education for all.
Shiksha Finance’s work has helped improve education infrastructure and reduce school dropout rates. To date, they have visited close to 2000 schools and are present in six locations in the state of Tamil Nadu. Shiksha has disbursed loans to 108 schools. From a team of 2 to 20 in a year, this social enterprise also invested in people, process and technology in its growth journey. This has enabled them to disburse Rs 1150 lakhs (USD 1.73 million) with over 180 customers.
Millions of small businesses in India don’t use formal accounting tools. Even today, over 40% of small businesses use pen and paper or manual modes of recording transactions. About 90% of SMEs have employee size of less than 10 and don’t require a full time accounting person.
Mohnish and Harshal Katre felt a strong need to offer them cost effective, simple solution of recording transactions and equipping them to grow further.
Hence, they founded ProfitBooks - a simplified cloud accounting software designed for the average non-accountant business owner and for accountants in small organizations. It offers tools to create invoices, record business expenses, track inventory and calculate taxes, thus saving businesses 240 hours each year.
ProfitBooks currently serves over 1000 customers in India, with 65% of customers being first time users of any formal accounting tool. The simplicity of ProfitBooks allows them to be disciplined and organised in business finances. ProfitBooks aims to serve 1 million SMEs by 2025.
Since most of India pays only by cash, many online businesses are facing payment-related issues when expanding. Sandeep Koujalgi and Vinuth Madinur saw this as an opportunity to enable the majority of India to access newer products and services by paying via a neighborhood convenience store - something that they are already used to doing.
Kyash has been designed such that any business, no matter how small, can get a country-wide retail network to get its payments collected in an automated and reliable manner. This means instant access to a market of several hundred million. For customers, it is a reliable and safe way to pay - with buyer protection features. For their cash collection partners, Kyash becomes an additional source of income.
Kyash is extremely passionate about making payments accessible to the 200 million Indians who have internet access but are unable to pay online. Their vision is to build a country-wide infrastructure that business will come to rely on to transact with most of their customers.
EasyKrishi (formerly Catalyst Labs) is a mobile software platform that connects small-scale suppliers with agricultural bulk buyers, verifying the variety and grade of the product and assuring quality control to bulk buyers. By aggregating demand, EasyKrishi lowers procurement costs by decreasing the number of middlemen involved and solves cash flow issues for farmers.
Farmers designate a leader that registers with EasyKrishi through their Aadhar (a unique individual identification number) number and inputs all goods to be sold. The goods are then placed on a digital market accessible to EasyKrishi’s network of buyers.
Interestingly, the founders of EasyKrishi found that farmers only tended to collaborate well when there is an economic activity due to barriers based on caste or political affiliation. Creating virtual groups helps breaks down the age old caste barriers to deliver economic advantage through aggregated demand.
By leveraging the Aadhar network, EasyKrishi also provides accountability to producers and more consistency to bulk buyers. So far, the social enterprise has connected with 4329 farmers and over 300 tonnes of commodity have been traded directly between farmer groups and bulk buyers, with farmers benefiting with an average 10-12% increase in selling prices.
These four FinTech social enterprises are part of the cohort of 10 start-ups that completed the ‘Vilcap FinTech India 2015’ accelerator programme run by Village Capital in partnership with DBS Foundation and PayPal.
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