How this tech startup is learning from its experience in Africa to digitize small banks in India
For six years, Techurate works with financial institutions in Africa to provide them with digital banking infrastructure. The Bengaluru-based digital banking technology startup was founded by Harshavardhan Pusala in 2015 with a focus on the African market where it provides a range of solutions with the broader aim of enabling financial inclusion.
The experience in Africa has given the tech startup the confidence to play a similar role in the Indian market, which has a considerable proportion of the unbanked population waiting to enter the organized economy.
Techurate now wants to approach financial institutions such as cooperative banks and microfinance institutions (MFIs) to integrate them into the digital platform. Harshavardhan, CEO and Managing Director of Techurate recounts Your story that this class of financial institutions typically has a limited scope of business in terms of customers or geographic reach, and may not have the budget to undertake such technological transformation.
“This is an untested market and no one wants to serve them, but we believe Techurate will be able to provide the right solutions for these types of financial institutions,” he adds.
According to reports, around 190 million adults in India still do not have a bank account. Traditionally, the unbanked have been largely integrated into the banking umbrella by institutions such as cooperative banks and MFIs.
Sendhil Kumar, COO of Techurate, said, “These financial institutions have huge digital aspirations, but don’t know how to achieve them.”
They face various challenges ranging from budget constraints, outdated technology and the difficulty of finding a reliable technology partner. Harshavardhan also notes that when it comes to banks’ capital expenditures for technology upgrading, about 50% of the budget is simply spent on readiness.
“We have experience dealing with such financial institutions and can have long-term relationships,” says Harshavardhan.
Lessons from Africa
Techurate’s core team had experience as banking technology professionals for almost two decades and had a strong connection to the African market. So they decided to enter this region first.
Techurate offers a range of digital banking solutions that have a direct impact on customers when it comes to opening a bank account quickly using just an image or disbursing loans faster and more.
“If someone really wants to reach the unbanked population, they need to simplify the onboarding process for which we have an AI-based solution,” says Harshavardhan.
Today, Techurate’s technology platform has approximately 12 modules who provide both web and mobile banking solutions.
Make an Indian model
In line with what they have done in Africa, Techurate wants to replicate their learnings in the Indian market to bring a complete digital model. In this model, when a potential customer is onboarded, the bank also provides a quick loan, but it must be spent within the financial institution’s merchant network.
Techurate’s CEO believes such a model creates a win-win situation for everyone – banks, customers and merchants. Banks can lend at competitive rates which work to the advantage of customers who can spend at merchants who are part of the network. Banks can provide these loans at zero interest rates and earn their income from merchant fees.
“If done well, it can be the greatest transformative force,” Harshavardhan believes.
Techurate is already a partner of Nagpur Nagrik Sahakari Bank, a 50-year-old financial institution, to carry out its digital transformation. It is also in talks with other financial institutions of a similar profile.
“We will aim to make the full spectrum of basic and digital banking services available at affordable prices,” says Harshavardhan.
According to a report by IBEF, as of November 3, 2021, the number of bank accounts opened under the government’s flagship financial inclusion campaign – Pradhan Mantri Jan Dhan Yojana reached 43.81 crores, a threefold increase compared to March 2015.
The business model of this startup allows it to enter into license or subscription agreements with its customers. The biggest challenge Techurate faces in India is the ability to gain the trust of smaller financial institutions and also provide cost-effective solutions. This environment is similar to the African market.
Techurate is a seeded company whose promoters are providing seed funding. The CEO claims that the company has always been profitable and has made a profit from the first year of product development.
Currently, Techurate has approximately 24 customers in 15 countries – mostly in Africa, with a few in Latin America and the Middle East as well. The banking technology market is quite a crowded space with companies like Infosys, Wipro, TCS, Temenos, Fiserv, Zeta, etc.
The startup believes it is at an inflection point for rapid scaling, with its foray into the Indian market. He recorded more than 50% annual growth in terms of turnover and remains profitable. Indications are that Techurate is likely to cross triple digits in revenue in the next fiscal year.
“Our learnings in Africa will help us penetrate the Indian market more deeply,” concludes Harshavardhan.