Developing a fully cloud-native Banking as a service infrastructure: Decentro Founder

by IANS |

New Delhi, Jan 23 (IANS) The Indian fintech industry is expected to grow tenfold to reach $1 trillion in assets under management (AUM) and $200 billion in revenue by 2030.

The digital lending market, with a $515 billion book size by 2030, will shape much of this growth, according to a recent report by Chiratae Ventures in collaboration with EY.

According to Rohit Taneja, Founder and CEO of Decentro, a banking and payments infrastructure startup, the year 2023 will ride on the back of innovation led by fintech players with financial inclusion being the prime focus.

"At the same time, we are seeing the government and the central regulator being extremely supportive of the latest technologies in banking and finance, starting with cloud as the foundation. As a company, we are super bullish of this decade being the decade of India when it comes to the BFSI space and innovative projects in the same," added Taneja.

In a free-wheeling interview with IANS, Taneja touched upon Decentro's USPs like its unique digital lending solution and how Cloud has made Decentro extremely agile and flexible.

Here are excerpts from an interview:

Q: Tell us about Decentro's mission and vision. What is your USP when it comes to the fintech landscape?

A: Decentro is a full-stack banking service platform that empowers companies to embed financial solutions into their products and services. For example -- a marketplace embedding a payments solution, or a neo-bank embedding a card or lending service. The offerings by Decentro have relentlessly empowered over 300+ companies across India and soon beyond. With a 10X faster to-go live window, at a 90 per cent reduced Capex + Opex witness the potential of a frictionless flow of money and financial data, with Decentro's modular products such as KYC and Onboarding; Payment collections and Payouts; Lending Stack as a service; Prepaid Card Issuance and Management and Ledgers & Reconciliation.

Q: Decentro enables neo-banks, marketplaces, and fintech to seamlessly integrate and offer banking solutions via its APIs. Tell us about some of your top customer success stories.

A: Decentro's foundation lies in empowering any kind of platform with a plug-and-play API or SDK-based solution in the fintech vertical. Some of these customer journeys that stand out in their respective industries are mentioned below.

1. CreditWise Capital

CreditWise Capital, an RBI-registered NBFC, launched Twin 2, an AI & Whatsapp integrated bot that offers 2-wheeler loans to its customers within 2 minutes. In its tryst to simplify the credit discovery and onboarding process., Twin 2 required a partner that could help them by digitizing the loan origination process including KYC documents collection and verification and credit bureau reports in the backend, among other things.This is where Decentro's APIs helped Credit Wise Capital's Twin 2 with KYC and banking prowess. Decentro's KYC module not only helped to collect and validate multiple IDs from the database of various governmental authorities but also furnished a hit rate of 92 per cent for successful CKYC downloads so far.

2. Volopay

Expense management is at the core of financial planning for every organization that strives to streamline its expenses, reimbursements, and other adjustments to maintain a healthy financial status. Volopay has developed a modern business account to act as a financial control center that manages cards, spending, and vendors.

With Volopay, organizations can issue physical and virtual cards to employees. Controlling, tracking, and setting spending rules for each card is possible, along with facilitating domestic and International money transfers.

The API-enabled banking platform offered by Decentro is helping Volopay streamline its services. Decentro's API banking platform allows Volopay to ensure transparency, control, and maintain the speed of transactions.

Furthermore, with its simple yet powerful APIs, Decentro has also enabled access protocols and bank-grade security encryption for Volopay customers, ranging from small startups to large corporates.

The result is that within 8 weeks of this association, Volopay had successfully incorporated over 150 Virtual Accounts for its users, and processed Rs 65 lakh worth of payments seamlessly.

3. GyanDhan

Touted as India's first and largest education financing marketplace, GyanDhan aims to equalize and expand access to education. Providing end-to-end education loan assistance, GyanDhan with its digital-first company has its eyes set on democratizing education.

The lending business is tricky. Between high-value disbursals and recollections, Gyandhan's choking point became Cashflow Management and automated instantaneous disbursals.

Decentro's API product suite enabled GyanDhan to offer a smooth credit flow and extinguish any reconciliation hassle. The promise of secure transactions on the back of lenders' accounts (with account numbers) for Gyandhan's lenders and loan seekers alike came in the form of Decentro's Restful APIs.

Furthermore, the challenge of tracking the source of transactions and bookkeeping them for Gyandhan was also solved by the virtue of Decentro's Virtual Accounts APIs.

This association since its inception has enabled 1,000+ disbursals already, backed by 20,000+ Successful API transactions.

Q: Tell us about Decentro's digital lending solution and how it makes it easier for Fintechs and lenders to work together in full compliance.

Decentro, India's leading banking infrastructure platform, has announced an automated lending stack for Non-Banking Financial Companies (NBFCs) and Fintechs. Decentro's API suite for automated lending offers a complete digital lending solution inclusive of re-payments, easy loan disbursement, and KYC verification for regulated lenders (banks or NBFCs), LMS providers, and FinTechs in compliance with the new digital lending guidelines issued by the Reserve Bank of India (RBI) recently.

The RBI has made it mandatory for lending merchants to modify their payment flows and find a way to transfer money to their borrowers without passing through a Fintech or third-party account/pool account.

In light of these guidelines, Decentro's digital lending solution helps automate direct repayments and disbursals between the regulated entity account and the borrower. It makes it easier for Fintechs and lenders to work together in full compliance.

The entire lending stack is available as plug-play APIs and a dashboard that helps access detailed and customized statements and repayment reports for accounting & compliance.

With seamless integration being the key, this lending suite automates the splitting processes of repayment amounts and disbursals, along with facilitating direct digital lending and co-lending models involving multiple lenders.

Additionally, it also verifies and validates customers' identities before approving them for loans, ensures seamless loan disbursements direct to borrowers, and auto-reconciles millions of transactions with their transaction status.

Q: You raised your series A round amid a global funding winter, signaling a big vote of confidence from investors. Given the focus has now shifted from agrowth at any cost' to profitability, what are some of the big trends you are seeing in the Indian fintech landscape?

A: Yes, we raised $4.7 million in a Series A funding round led by Singapore/US-based Rapyd Ventures, Leonis VC from Europe, and California-based Uncorrelated Ventures in October 2022.

Here are some of the key trends that we are seeing in the Indian fintech landscape:

1. The advent of the Open World

2022 was the year when regulators and customers alike witnessed the impact of open banking initiatives. While Open Banking APIs are still in their early stages, their impact has been multifold. The natural extension of the open banking service is bleeding into Open Finance.

As RBI and NPCI look to build on customer data privacy and open banking, the crowded private fintech payments arena will see strong players emerge to offer and build financial services ecosystems to achieve profitability.

2. The API angle

It is imperative to recognise that for a diverse economy like India, which has a wide range of financial needs, collaborative -- rather than competitive -- efforts are required to meet those needs. As the boundaries between banking and other financial services providers continue to blur, APIs will become an effective tool for banks to create new opportunities in cross-selling products or transactions.

The differentiating factor will lie in adaptability, when even incumbents & non-fintech players such as marketplaces, and SME SaaS will embrace API banking closely.

3. The Big Data World

The promise of 2023 is more "closed-loop" solutions powered by fast and intuitive data collection. The need for any player in the finance and banking eco-system in the coming year is to make sure that there is ample data to make informed decisions in the product's or offerings' journey.

4. Focus on Risk Management

The banking sectors are still reeling from the aftereffects of the pandemic, making risk management the core of every activity at banking and insurance firms.

Therefore, in 2023, the focus will be more on accountability and responsibility as well as a revamped risk strategy with greater investment in data, infrastructure, reporting capabilities, and compliance.

5. The advent of personalized journeys

From the traditional players like banks to the fintech that is operating in the space, the key focus for both stakeholders would be to keep up with the demands of a technologya?s native customer base. In 2023, the ability to anticipate customer needs and provide great experiences will act as the differentiator.

The year 2023 will ride on the back of digitization and decarbonization in terms of innovation, backed by a favourable regulatory landscape.

Q: What has AWS and cloud technology enabled you to do better?

A: Managing infrastructure is always challenging and it requires time and resources for any organization. AWS has been a very reliable infrastructure partner for Decentro. The ability to scale and add additional computational power within just a few clicks saves up hours that would have otherwise been spent on adding racks of servers and managing them.

AWS has helped us to maintain a lean team of 15 developers with only 1 person on the infrastructure. This lean structure makes Decentro extremely agile and flexible, while supporting more than 1 million API hits daily, and in tens of thousands during rush hour.

The ability to scale up services automatically as needed to handle traffic is a big booster for business. Our load testing has shown that we can scale up to handle 8X the traffic within minutes.

The Infrastructure setup and installation costs, in both time and resources have been around 40 per cent lower than maintaining our infrastructure. This is from the benchmarks of server hosting and maintenance costs in the Indian context.

At the same time, AWS is quite holistic and full stack when it comes to cloud services, just like we cater to banking. This enables us to leverage deeper services for covering the entire range of infrastructure and integrations as needed.

For example, AWS Lambda for automatically triggering events, Amazon SQS for queueing transactions, and much more.

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