Moving Towards the Fintech Age

The Banking and Financial Services industry is witnessing a rapidly changing landscape, with the rise of fintech companies being the catalyst. Traditional banking products, services, and channels are losing relevance as customers, increasingly influenced by social media and technological advancements in other spheres. There is immense, and largely unfulfilled, demand for better customer experience and convergence in services. Mobile-internet based banking services are being rapidly adopted, resulting in bank queues shortening by the day. Service levels are no longer the differentiating factor. A customer experience that is efficient, convenient, personalized and streamlined at every touchpoint is what sets financial institutions apart. The changing regulatory environment and other macroeconomic indicators have also contributed to making this a never before opportunity for the rise of fintech start-ups and their disruptive digital banking solutions.

Digital banking has influenced world economy manifold. Alternative Lending is probably the greatest innovation by fintech companies if you were to ask millennials. The traditional banking system has extremely rigid norms and mandates a cut-off credit score to qualify for a loan of any kind. Young adults, the self-employed, and people who have moved cities/countries have little or no credit history if they have not taken a loan previously or do not have a credit card. Such people would have a zero FICO or CIBIL score. In emerging economies alone, individuals, as well as institutions, rely on cash nearly 90% of the time. This increases the cost of servicing customers for financial institutions while leaving little or no usable data to assess the creditworthiness of such businesses and individuals.

Fintech startups like the UK-based Aire; Kabbage and Lending Club in the US; Data signs, Capital Float, Rubique, Finomena, OptaCredit and the likes in India have recognized the need for democratizing the credit score. Consequently, they have leveraged the power of Big Data, machine learning and Artificial Intelligence (AI) to assess creditworthiness. App-based lending services have used these techniques to assess “intent to pay” rather than the conventional “ability to pay”. This has helped transform B2B and B2C lending for Micro, Small and Medium Enterprises (MSME) and individuals. Forbes estimates, the 1,000 fintech companies in the world have collectively raised US$105 billion in funding and are currently worth nearly US$870 billion. Investment in fintech firms has more than doubled between 2014 and 2015, with California and New York in the US, the UK and France being the global hubs. They are followed closely by India and China, primarily because of a large population and a fast-rising middle class. In India, experts predict, as people and jobs become more mobile, alternative lending – rather than staying on the fringes – will be the new ’normal’.

It wouldn’t be too far from the truth if one stated that Alternative Lending is the poster-boy of fintech industry. It is worth noting, however, that the young adults living in urban areas aren’t the only beneficiaries of digital banking. It has also started touching the lives of the rural population in emerging economies, which were, so far, unbanked. According to a McKinsey Global Institute study, 2 billion people globally do not have a bank account or access to credit., At least 200 million MSMEs in emerging economies have little or no access to credit, impeding their growth. This gap between demand for credit and its supply is estimated to be at US$2.2 trillion. For governments, the predominant use of cash leads to leakage (estimates peg it at one-third of cash payments), enabling corruption and affecting the efficiency of delivery of government aid and subsidy.

Access to a smartphone, connected to an ecosystem of thousands of mobile apps running securely over a cloud computing infrastructure, provides the much-needed basis for a suite of basic financial services. A digital wallet (linked to a traditional bank account) can be used for payments and remittances, wages and government subsidies, transacting at stores and paying utility bills and school fees. All this at a finger’s touch saves time, money and effort, that too at no risk and greater convenience. Fintech startups can partner with financial institutions to provide digital banking solutions, at costs 80% to 90% lower than the cost of building brick-and-mortar bank branches. Over time, based on the database created by transactions made through digital wallets, credit risk may be assessed for providing loans. As the use of digital payments and other digital products increases, the benefits to all users increase, creating network effects that can further accelerate adoption. According to studies, in Kenya, the use of M‑Pesa mobile money system grew from 0 to 40 percent in the first three years of its launch in 2007—and rose to 70 percent by 2015, much faster than traditional banking could ever hope to achieve.

Uniquely poised among the emerging economies is India with the third-largest smartphone market i.e. 314 million mobile web users as of 2017. Faced with the herculean task of delivering on its promise of financial inclusion and transparency, the Indian Government is relying on innovative digital solutions. Hundred million new mobile wallets have been created in India in the past one year by fintech start-ups that did not exist a decade ago. More than a billion citizens have been brought under the digital grid through India’s Unique Identification Program (UID) in five-and-a-half years, which is probably the fastest digital service growth in history. In a massive exercise, the government has also opened more than 200 million bank accounts linked to the UID to deliver government welfare funds including wages and pensions, aimed at reducing leakage.

The widespread use of digital finance can uplift the GDP of emerging economies by as much as 6%, or US$3.7 trillion, by 2025. Close to 1.6 billion unbanked people can gain access to formal financial services if the India example can be replicated by fintech start-ups in other countries. An additional US$2.1 trillion of loans can be provided to individuals and businesses. Governments can potentially save US$110 billion each year from leakage. Together, the resulting growth in aggregate demand could create 95 million new jobs.

The global economy witnessed a lackluster 2016. With uncertainties surrounding the policy stance of the new administrations in countries like US, UK, and France, 2017 is expected to be a year of moderate growth too. The huge opportunity created by fintech start-ups has the potential to jumpstart the global economy, creating a win-win situation for financial services businesses as well as emerging countries. The demand created by emerging markets, in turn, would be enough to fuel businesses worldwide. Traditional Banking and Financial Services firms are now beginning to take note of this. Investment Banking behemoth Goldman Sachs, for the first time in its 147-year history, has entered into the world of retail lending by building a technology infrastructure called Marcus by Goldman Sachs, a new online personal lending platform, where credit-worthy borrowers can apply for fixed rate, no fee personal loans up to US$ 30,000 for periods of two to six years.

While this is an unprecedented chance for the fintech start-up community to impact every life across the globe, there is also the risk of handling exponential amounts of sensitive personal and financial data pertaining to individuals and businesses. Especially when financial institutions and/or governments are involved, this may well turn out to be a double-edged sword. While competition may be tough, making margins wafer thin, investing in top-notch security infrastructure may eventually turn out to be a greater differentiator than innovativeness alone. Following established industry practices such as performing KYC, due diligence and AML checks along with fair interest rates will ensure healthy growth for this sector. Fintech startups must remain wary of going down the microfinance route, which started with great promise but faced issues due to lack of transparency, poor governance, coercive recovery practices and high lending rates. This opportunity can only turn into a remarkable success story if fintech startups stay close to their core competence: accessibility, ease of use, low cost and innovation.

Not So Risky Business

Mike Patel is a leading medical practitioner in the suburbs of London and works with NHS. His parents are migrants from a village near Amritsar, India. Patel saves £100,000 a year and wishes to invest the money where he gets assured returns at no risk. So he buys a house with the savings he built over the last 5 years. Unfortunately the real estate market crashed suddenly, when he decided to sell the house. What he had perceived as a risk free investment, ended up giving him virtually no returns. Buying a house in UK is a good investment since rents turn out to be higher than monthly mortgage payments. However investing further in a second home whether in UK or India may not be considered as wise as the benefits are few and real estate market is facing volatility in both regions. Also, there is no hedge for risks in this market.  On the other hand, if he had invested the same funds in his ISA, after offsetting for inflation, the returns would have been negligible again.

Contrast this with Lakshmi Narayan Reddy’s decision to invest his savings in some early stage startups. Reddy is a Senior Consultant in a leading Information Technology Firm and does a great deal of research before making an investment decision.  Under the UK Government’s tax break measures EIS/SEIS, investment in an early stage startup leads to a 50% tax relief. He invested £50,000 in startups ‘A’, ‘B’ and ‘C'. Each of these companies had less than 50 member staff and £200,000 gross assets. Being a smart and savvy investor, he received £25,000 tax relief on his income tax bill for the year. Startup A yielded him 60% profit on his investment, while B ended up failing and C remained flat in terms of growth.

  • If he continues to hold his shares in company A for 3 years, his gains from the investment is free of capital gains tax.
  • Reddy can claim loss relief against other income, for the amount invested in company B. While losses are not completely recovered, according to estimates, almost 80% of the money can be written off as loss.

In the UK, real estate has been the preferred vehicle of investment for Non-resident Indians. However, the sector is witnessing sluggishness in growth since the past year. According to the Guardian, the annual growth rate for house prices has slowed down to 6.9% in October, versus 9.3% in June 2016. Experts opine that this is largely due to two factors:

  • Effect of Stamp duty changes introduced 2 years ago are playing out now
  • The uncertainty triggered by the EU referendum result.

Similarly, in India, the real estate industry has been witnessing a slowdown for the past 3 years. The effect of demonetization has dried up demand and prices are expected to fall by 20% till mid-2017. The crackdown on black money and benami property has further sucked out liquidity from the market contributing the decline.

A slight uptick in risk appetite can fetch high returns. Therefore, the expat community in UK has now started investing in technology startups and SEIS/EIS is a never before opportunity which has unraveled itself at the right time.


Risk Warning: This article is for information purposes only and targeted exclusively at investors who are sophisticated to understand the risks and make their own investment choices. Examples used here may not be of real people. Pitches for investments are not offers to the public. Spark10 does not provide investment advice and is not regulated by the Financial Conduct Authority.

After a successful cohort 1, we are thrilled to launch our second cohort on 25th February 2017

During the previous acceleration program, we had brought international investors and mentors to nurture and support the nine startups we had selected for our first cohort in the last summer. Of the nine, five startups have successfully raised the next round (angel) of funding with an average raise of Rs. 57 lakhs and the highest raise at Rs. 1 crore.

In this cohort, Spark10 has picked up five startups for its second cohort which will be run from The Hive, collaborative workspaces at Virtuous Retail’s integrated lifestyle development – VR Bengaluru.

This cohort includes a startup that’s using artificial intelligence to drive market intelligence to advertisers, a stock and market analytics engine that helps individual investors to make better buy/sell decisions, an internet based community focused on beauty and trends, an AI based cognitive technology & data genome company and a startup that’s revolutionizing information security and a customizable cross-industry CRM platform.

We are really excited about the new set of companies that are part of it. We would like to invite you to our Launch Event on 25th Feb – #Spark10Origins to support and encourage these companies.

Paul Smith has kindly agreed to share his experiences in his Keynote address – “Building a Startup Ecosystem That Works!” Atal and Gouri (Director of Spark10) will also address our next big project related to cross-border investments that would interest many of investors and founders.

We are looking forward to meeting you all at the event. Don’t forget to RSVP.

Event Details:




Startup Accelerator, Startup Funding, Business Funding, Startup Investment, Hyderabad, India

Spark10 Startup Accelerator – Partners


The count has begun for the launch of our next Cohort. With just a month to go, we are actively working with our investors to finalize on the selected startups. We are also associating with the large established companies to provide best services and support to our upcoming startups of Cohort 2017 – A.

Below listed are a couple of partners who share our beliefs and values in supporting the entrepreneurship and creating a sustainable global community.


The Hive: Venue partner

The Hive is a co-working / shared office platform, backed by the Xander Group. Our first centre is a 60,000 sq.ft. space with attached suites & residences, fitness club, spa & salon, rooftop pool, lounge bar and microbrewery. It is located at VR Bengaluru, the city’s latest community-centric lifestyle destination.


UREKA: Learning and Development partner

Ureka Ltd is a start-up ecosystem enabler and knowledge provider founded by a group of Sloan Fellows from London Business School that specializes in Entrepreneurship Development and Internationalisation.

They have a presence in London, Bangalore, Hyderabad, Lucknow and soon to be in Dubai.

Ureka’s international network is its biggest asset and it leverages these strong linkages to source experts, mentors, speakers, investors and to provide market access and incubate exchange programs with world leaders in the field. It has direct access to the international networks of the prestigious London Business School, Oxford University, University of London, Yale School of Management and Chicago Booth to name a few.


Amazon Web Services (AWS)

AWS provide startups with low cost, easy to use infrastructure needed to scale and grow any size business. Some of the world’s & India’s hottest startups, including Pinterest, Dropbox, Snapdeal & Redbus have leveraged the power of AWS to easily get started and quickly scale. AWS Activate is a program designed to provide startups with the following resources.

  • Technical Enablement –Access to Solutions Architects to help startups improve their architecture and increase security, reliability, and scalability, and reduce costs
  • Commercial Enablement –Help startups with AWS Credits leading to reduction in the cost structure as they scale their business
  • Go to Market Enablement –AWS Marketplace, Partner Network, public case studies, joint white papers, business development connects, conference showcasing, etc.


Qapitol QA

Qapitol QA ensures positive online and offline customer experiences resulting in business success. At QQA, they support QA Acceleration at all stages of startup and product evolution and help startups test faster, wider, deeper, better, cheaper to provide them with actionable intel. With Qapitol QA startups can iterate fast and reach the market faster.



Razorpay aims to revolutionize online payments by providing clean, developer-friendly APIs and hassle-free integration. They offer a fast, affordable and secure way for merchants, schools, e-commerce and other companies to accept payments online.


World Startup Factory (WSF)

World Startup Factory is a co-creation platform for startups and all the stakeholders that see value in this process. It’s a startup accelerator based in The Hague, The Netherlands. WSF support entrepreneurs with impact-driven solutions backed by convincing business models.


Penta Security - Cloudbric

Penta Security has been named 2016’s Asian Cyber Security Vendor of the Year by Frost & Sullivan. Cloudbric is a cloud-based web security service, offered by Penta Security. They offer an award-winning Web Application Firewall (WAF), DDoS protection, and SSL, all in a full-service package.
Cloudbric aims to bring enterprise-level website security to small and medium businesses. For easier access to the everyday user, Cloudbric offers a comprehensive suite of protection without complicated installation steps, downloads/updates, nor overwhelming technical jargon. Protect your business and sensitive data with Cloudbric before hacker’s attack.


DigitalOcean (DO)

Hatch is DigitalOcean's global incubator program designed to support startups as they launch and scale. This includes access to DigitalOcean's cloud for 12 months, free technical training, mentorship, priority support, and an opportunity to connect with other startups, accelerators, and investors.


Bizjumper – Value Partner

Bizjumper simplifies the business pitch and extensive plan by providing an online solution that can help shape up an idea into a successful startup and financial community can leverage this platform to create a volume based and extensive business plans for their end customers.



Why startups should apply for Spark10 Startup Accelerator

Spark10 is an angel-backed mentor-led startup accelerator. Designed to accelerate your business within a short period of time – 3months. Spark10’s acceleration program is intensive and crams a lot of workshops, talks and milestones every week for you to reach or learn. It gives you a direction and a channel to focus all that enthusiasm you already have.

The program has regular reviews and mandatory milestone reporting. And the founders must justify the progress, speed and failures to program team, investors, mentors and even experts from that specified field.cynthia-perez-6

To apply for the program, fill up a short form (click here) to book your slot for the personal interview.

In the 13-week acceleration program, startups and its respective founders receive the following support and benefits:
1. Access to Capital
Spark10 no longer have a fixed valuation for startups. Rs.10Lakhs is now offered for equity based on a fair market valuation of your startup. Along with this, you also potentially have access to a capital pool of Rs. 2 crores in the form of convertible debt upon graduation and investor’s discretion. At graduation, during Demo Day, you will also have access to Spark10’s investor network with an opportunity to raise the next round of funding.

Four of our cohort 1 startups have closed next level of funding of about 2.55 Cr combined. 

2. Global and yet Specialized Mentorship
As a part of the program, you will have access to Spark10’s diverse mentors that come from various industries, domains, functions and geographies to help you develop your business into something far more robust. 

Cohort 1 startups had continuous support of 25 mentors on board all throughout the program and a pool of 50 odd mentors to tap into anytime they needed for a mentoring session

3. Increased Visibility

We can proudly say that as a part of Spark10’s cohort, you will be much more visible in and to the members of the eco-system, not just here in India, but abroad as well. Right publicity n take your startup much further than you had imagined.

Two of our cohort1 startupOhlook and Ornativa got covet in national daily and television.

How to Apply?

We are coming to your city to select the next big startups.

If you think you are one among them, fill up a short form (click here) to book your slot for the personal interview.


Spark10’s Cohort 2017-A

Follow us on Twitter (@spark10india) or Facebook (@spark10accelerator) for updates on the application and dates. Speak soon.


Divya Jyothi Sampathi

Marketing Associate

Spark10 Startup Accelerator


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