In 2016, when India woke up to demonetisation, one thing was crystal clear: the dire need for technology systems and plays that made financial inclusion and payments simpler.
And despite the mushrooming of different fintech players, the need for disruption persists as core systems have still not been transformed by technology.
This was one of the reasons that led Bhavin Turakhia and Ramki Gaddipatta to start Zeta in Bengaluru in 2015.
The umbrella platform, which began operations only by 2018, provides full-stack, cloud-native, API first offerings that include a digital core and a payment engine for issuance of credit, debit, and prepaid products. This enables legacy banks and new-age fintech companies to launch modern retail and corporate fintech products.
Why build Zeta?
Bhavin is the elder of the Turakhia brothers, who shot to fame when they sold Directi for $160 million in 2014 and again when Diyank Turakhia, sold Media.Net in August 2016 in a $900 million deal to a consortium of Chinese investors. The brothers, now billionaires, started out as teenagers with Rs 25,000 borrowed from their father.
Known to have famously bootstrapped their companies, Bhavin also founded Flock, a corporate communication platform that competes with Slack.
On why he thought there was a need for a seamless payments platform, Bhavin says,
“I have always believed that frustration is the genesis of entrepreneurship. In payments. That has been the case for some time now. If you talk to anyone, CFOs, HR Payments department, employee reimbursement claims, nobody loves payments. In fact, every single person in the corporate world hates payments. And it is pervasive across the world. This was the problem with communication before WhatsApp, Instagram, and Facebook. New modes of communication made it fun and exciting, and nobody has done that for payments. Zeta stands for payments with purpose.”
Not a fintech platform
Bhavin explains that most companies around the world have built platforms where they’re merely moving money, one ledger to another. To fix this, Zeta started with the source of funds - bank accounts, credit account, savings, etc – and created a platform that adds a modern experience on top of the source of funds.
“We don’t want to be a fintech, neobank, or bank - we want to power them,” he says.
On what led them to build the platform, Bhavin says, “While fintech is opening up across the globe, regulatory wise, it is one sector that is ahead of the players.”
India has opened to the idea of open banking, and the RBI has allowed account aggregator access. Clearly, regulators are taking a lot of initiatives, but the tech stacks aren’t changing. And then, he says, are fintech platforms that are growing and looking at different use cases such as mobile wallets for kids and students for pocket money.
“But in many ways fintechs cannot provide what they want to provide, They can only innovate if banks can open up APIs and information. But banks cannot do that with their existing tech stacks. So there is a massive gap in the middle.”
What does it do?
The Zeta stack is integrated with many banks as an added layer. This enables using banks as a service that both banks or fintechs can leverage.
Bhavin says Zeta focuses on enabling fintech platforms, banks, and neo-banking platforms to provide meaningful and innovative services to both, the top and bottom of the pyramid.
“If we are able to create massive change in this industry and bring it from the traditional to modern, we can make significant impact. It will also make services and credit more accessible to people,” he says.
Zeta facilitates financial services with better information. Bhavin says that when banks went digital, information that was on paper went digital. Close to 90 percent of the screen is where you’re trying to figure out the characters and details.
“No banking platform has been built from scratch to service new-age use cases. We have built a universal issuance platform that provides for that, to fundamentally change the way finance will be used,” Bhavin says.
A ‘Fusion’ ecosystem
Bhavin and Ramki came up with the idea in 2015, and began working on it. But it took them till 2018 to launch the first use case. The platform began with employee benefits and cards; they would charge a fee for the card swipes.
Late last year, the fintech startup launched Fusion, an API-based Platform-as-a-Service (PaaS) offering for fintechs. It provides the infrastructure a fintech may need to build financial or payment products in one place.
Bhavin explains that the platform allows fintechs to instantly access a pre-integrated banking ecosystem, which includes access to banks, card networks and manufacturers, payment networks and many more such services critical to building financial products.
"With an IndiaStack focus, Fusion also offers compliance with RBI norms and data security standards, enabling fintechs to quickly build products such as wallets, forex cards, savings accounts, and more,” he says.
Fusion offers a modern card issuance solution and complete flexibility to define, control, and manage programmes. The platform also allows just-in-time funding, state-of-the-art security, and over 15 powerful tools that give real-time access to various kinds of data and business operations capabilities for fintechs to build, expand, and improve their financial offerings.
“As a universal issuance platform, Fusion unifies core banking services like savings, current, and loan accounts provisioning and management with the most modern payment switch and payment instrument issuance platform, in a seamless API-first, event-driven technology stack that is accessible as a cloud service,” Ramki says.
Revenue and the market
Zeta has roped in the likes of Sodexo, the digital employee benefits company, as its investor, and has a valuation of $300 million. The founders had initially pooled in $45 million of their personal wealth into Zeta.
While the team refused to share numbers, Zeta’s Fusion platform follows a SaaS model of fixed and variable fee. The team has already tied up with RBL Bank and IDFC First. Zeta is also looking at a global market. The platform is already operational in Southeast Asia, and is launching operations in the US.
“We are not fintech, we’re more techfin,” Bhavin explains.
Fintech refers to companies where different financial services are delivered through a better tech experience to reduce friction, cost, and increase revenue. Examples are companies like RazorPay, PayTM, etc. Techfin, on the other hand, focuses on how the financial products are delivered. Baidu, Alibaba, and Tencent are examples of techfin companies.
Having found the niche it wants to grow in, Zeta seems poised to go from strength to strength.
(Edited by Teja Lele Desai)