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Why It's Time Indian Startup Founders Rethink Business Banking

Why It's Time Indian Startup Founders Rethink Business Banking

Saikat Pyne
Saikat Pyne

India has emerged as the third-largest startup ecosystem in the world after the US and China, according to the recent Economic Survey. The government recognized over 14,000 new startups in 2021-22, against 733 in 2016-17, bringing the total number of recognized Indian startups to over 61,400.

Source: ET Tech

In this age of widespread tech adoption and accelerated pace for technological innovation, traditional retail banking often fails to serve the banking needs of a growing organization. A conventional bank's offline-heavy & manual operating procedures can also be heavily restrictive for digitized and highly nimble Indian startups that deserve an equally flexible, affordable and savvy banking solution to keep up with their rapid growth. This has led startup founders from multiple leading brands like UpStox, HealthifyMe, ShareChat, Rupeek & Betterhalf.ai, among others to turn to neobanks for their business banking needs.

By operating on an online-only model, this new breed of banks can leverage emerging technology like artificial intelligence (AI), automation and cloud computing to offer banking services more efficiently to enterprises at lower costs. By skipping over challenges faced by the traditional banking system, neobanks can deliver a faster and more convenient user experience. Neobanks also come with a host of other benefits that can prove helpful for a business's banking needs.

Save Time With Higher Payment Automation

Neobanks offer the flexibility of streamlining payments to vendors, employees and customers without the need for bank branch visits, lengthy paperwork or additional software. By automating & simplifying accounts payables, organizations can now eliminate errors from manual processes, manage and track pending invoices, calculate and schedule salary payments, and instantly make pending tax payments. This can save hundreds of man-hours every month and improve a business's overall efficiency.

Easier Access To Credit

Applying for working capital loans from traditional banks and money lenders can be disappointing for business owners, given the time-consuming loan disbursal process, lengthy paperwork requirements and fixed repayment plans. Neobanks can underwrite organizations using their proprietary credit decisioning algorithms that use elements like customer payments to judge their creditworthiness. This means a business can now access collateral-free working capital loans with flexible repayment plans, facilitate company expenses with corporate credit cards and have an online credit line to manage its business's capital requirements until its customer payments clear its bank account.

More Effective Financial Analytics & Insights

Most small and medium businesses get access to limited financial analytics & insights in the form of lengthy bank statements, that are then manually reconciled by their accounts team. With neobanks, business owners can do native integrations with business accounting tools like Quickbooks, Zoho Books and Tally, access bank account statements with built-in search and filters, view real-time financial insights, and automatically reconcile all bank transactions.

In today's post-pandemic reality, most traditional banks are likely to invest in digitizing some of their business processes like customer support, loan disbursals, etc. However, given that neobanks have a headstart in their technical expertise, they have an opportunity to leapfrog the gaps in conventional banking by offering round-the-clock digital services, more innovative solutions, faster response times, exceptional customer service and more advanced security. This will enable business owners to access banking services anytime, anywhere, and manage their money more effectively without ever visiting a bank branch.