During a trip to Singapore in 2018, Ankit Parasher, co-founder of DipTab Ventures run intra-city logistics platform LetsTransport, found himself short of money as his card stopped working. Being used to credit card payments, he assumed he would withdraw money as and when needed instead of traveling with foreign currency.
“My card stopped working and I had very little cash. I had to borrow money for almost a week to survive,” Parasher recalls.
In a Quora post, soon after the Singapore experience, Parasher recounted how his bank’s relationship manager and the branch manager said that the issue would be addressed in “five business days”. It was then he realised that being a premium customer for banks did not guarantee better experience or better resolution of issues.
Former LetsTransport brand manager Udita Pal faced a similar issue when she lost her credit card ahead of a trip to Hong Kong and could not get a replacement for 15 days.
Their experiences got Parasher and Pal thinking about a fintech play that would address the challenges of business transactions in foreign currency. In January last year, they incorporated Poziom Ventures, which is building a neo banking platform called Salt.pe that aims to help SMBs ( small and medium businesses) avoid banking pain points, especially when dealing with foreign currency.
Having managed finance and capital requirements for driver partners and clients at LetsTransport, Parasher, who exited LetsTransport in August last year, says he wants to make banking accessible for SMBs.
But, how does one pivot from building and running a logistics platform to solving problems in banking?
Parasher believes his time at LetsTransport has prepared him to take on the challenge. “Every business to business (B2B) company is a finance company by default in the specific field. At LetsTransport we were working on logistics but we also worked with the ecosystem for drivers to start accepting payments into their bank accounts,” Parasher says.
He adds that the company has witnessed the kind of change financial inclusion can bring about, especially when those driving vehicles on rent can take loans to buy their own.
“We will start with servicing traders who are in the import and export business and need to pay clients outside of India or receive money from clients outside,” he says.
The company will also expand its services to freelancers who receive payments from companies outside India as well as services companies such as BPOs that work with companies in other markets.
The product, which is in pilot mode with select clients, will launch in April 2021. Poziom Ventures is also in talks with early stage investors to raise its first round of equity capital. For now, Salt.pe offers transaction facilities, virtual and physical cards for businesses as well as online wallets.
“Cross-border payments is a regulated market and since the Indian rupee is restricted for free trading, the complexities of managing the process becomes difficult. If you look at the amount of business activity in import and export in trade, it can be overwhelming and that is where we will start with,” Parasher says.
Neo banking is gaining momentum as companies and individuals across the world continue to adopt digital banking solutions.
According to research by Zion Market, the global neo bank and challenger bank market was estimated at $18.6 billion in 2018 and is expected to generate $394.6 billion by 2026. The predicted CAGR for the sector is nearly 46.5% between 2019 to 2026.
However, there cannot be enough neo banks, Parasher says.
“We are working with bank and non bank partners for API (application programming interface) integration and will be building our product for customer end, banks and client efficiencies,” he says.
For now, ease of cross border transactions is what the company promises SMBs.