Niyo, a neobanking startup backed by the likes of Accel and Lightrock, is planning to launch a travel tech platform in the next few weeks, people familiar with the development said. The startup aims to build on the success of its global forex card as it ventures into the travel industry.
Niyo’s decision to venture into a new industry comes at a time when fintech startups across the board have been adjusting to a dynamic regulatory environment, especially around digital lending. All loan disbursals and repayments have to now be executed only between the bank account of the borrower and the regulated entity, without any involvement of a pass-through or pool account of the lending service provider (LSP) or any third party, the Reserve Bank of India stated. The rule rendered prepaid payment instruments (PPIs) useless and forced several fintechs to tweak their business models.
Currently, the Accel-backed startup allows customers to open their own savings bank accounts. It also has an investing platform, Niyo Money, and offers several other banking-related services.
Niyo was founded in 2015 by Vinay Bagri, who has had stints with banks such as Standard Chartered and Kotak Mahindra, and Virender Bisht, who previously worked with MakeMyTrip.
Niyo Global card
Introduced around 2018, the Niyo Global card is a key product of the Bengaluru-based startup, boasting of around a million users already. Expectations of the customer base doubling every year have given the company confidence to go deeper in the area.
The Niyo Global forex card is also among the top revenue generators for the company. It competes with Axis Bank’s co-branded credit card with Vistara, IDFC First Bank’s first wealth credit card, State Bank of India’s Elite credit card and several others that larger players in the industry offer.
Asked about the reasons behind the company’s decision to launch a travel tech platform, one of the people cited above said, “Niyo’s current products are core banking products, which are not very different from what other players offer. Niyo could do something to gain an edge but how much can someone differentiate a normal savings account?”
The company, through its partnership with DCB Bank, Yes Bank, Equitas Bank, and others, facilitates the opening of savings bank accounts, disburses loans and helps with wealth management services, such as starting mutual funds and the like.
Catering to a small subset
So, to add another layer to its offerings, Niyo’s travel tech platform will essentially cover the whole spectrum around travel where users can book visas, travel experiences, concierge services, tour packages, travel insurance, and the like.
“The company will target passport holders. If one doesn’t have a passport, Niyo does not see them as customers. The company knows that if you own a passport it means you’re going to travel abroad and that you have got the money,” another person aware of the company's plans said.
According to the latest available government data, there are only about 96 million people with an Indian passport, across all age groups. Further, from the total number of passport holders, the millennial and Gen Z numbers — segments that Niyo will continue to focus on – are much lower, leaving the company with a smaller set of people to cater to.
Adding to Niyo’s challenges, the travel tech space is already populated with giants such as MakeMyTrip, EaseMyTrip, Thomas Cook and several others, who are already fighting for a bigger chunk of the travel market.
Market competition is, however, unlikely to deter Niyo’s ambitions. Internally, Niyo was estimating that its margins would double from the current levels once the travel tech platform takes off. Currently, its margins are around the 3-4 percent range, and once travel-related services are live, the margins could increase to about 10 percent, thanks to the healthy commissions that Niyo expects to earn from every transaction on the platform, another person aware of the company’s plans revealed.
“One does not travel abroad if one does not have money and if they have enough money — they’re easily monetisable. So, Niyo will not make a lot of money if a user travels to Goa but if they’re going to Europe, the spends are higher and so are Niyo’s earnings,” the person said, adding that monetisation does not appear to be a challenge for the company. Internally Niyo was giving itself five years so the travel tech platform could “excel”.
Pivot on the horizon?
Over the past year, as Niyo prepared its tech stack for the travel tech platform, the loans that the company has been giving out and the rewards mechanism have aggressively become more travel-centric. That essentially means that while neobanking will continue to be the company’s core product for now, a pivot to a fully travel tech platform later, cannot be ruled out yet.
Niyo is unlikely to hit the markets for fresh funds as it has over $80 million in the bank, Moneycontrol has learnt. The company has so far raised over $170 million from investors such as Accel, Lightrock, Prime Venture Partners and several others, according to data on startup intelligence platform Tracxn.
The company did not respond to an email from Moneycontrol seeking details.