Consumer neo-banking platform Niyo has raised $100 million in a Series C funding round at a time when consumers are increasingly turning to these platforms for accessing banking services.
This is Niyo's largest fundraise till date and comes almost three years after its Series B round in July 2019. The current funding round was led by Accel & Lightrock India with participation from Beams Fintech Fund. Existing investors Prime Venture Partners, JS Capital are also participating in this round along with others.
Founded by Vinay Bagri and Virender Bisht in 2015, Niyo offers digital savings accounts, wealth management services including mutual fund investments, prepaid cards and other banking services in partnership with banks. The startup's partner banks include SBM Bank, Equitas Small Finance Bank, DCB Bank, Yes Bank and ICICI Bank.
In its next leg of growth, the platform is looking to begin lending to consumers.
In an interview with Moneycontrol, Bagri who is the co-founder and CEO of Niyo said, "Lending will complete our stack. We already have wealth management and banking services, lending will make us a complete financial services provider."
Neobanks can be seen as a technological layer over traditional banks with a completely digital presence. Banks partner with players like Niyo to grow their presence digitally, which can help increase customer acquisition faster than growing their physical presence.
Niyo is also looking at securing a non-banking finance company (NBFC) licence and in the second half of 2022 the company will look at offering insurance to its customers as well.
"We are also looking to double our tech and product capacity to build products faster. We also want to also spend on marketing to reach out to more customers," Bagri added.
Niyo currently has around 500 employees, over 250 of which are dedicated to tech, product and design.
Anand Daniel, Partner at Accel, said, “Vinay, Viren and team have built a fantastic product with a clear value prop for customers which is reflected in their phenomenal growth. We look forward to partnering with Niyo in changing the way India banks.”
In the consumer neo-banking space, Niyo competes with players like Jupiter and Epifi which raised $86 million and $50 million in their last funding rounds respectively. This makes Niyo's Series C round the largest fundraise in the consumer neo-banking space.
Epifi is currently valued at $315 million while Jupiter is valued at $710 million. Niyo did not divulge its valuation post the current round.
Ashish Garg, Principal at Lighrock India said, “Neobanks are an emerging asset class in India and believe that the quality of Niyo’s team, customer understanding and technology stack will enable them to emerge as the leader of the space.”
In November 2021, Niti Ayyog had floated a discussion paper on licensing and regulating digital banks. The paper suggested creating a new set of regulated entities which will function as full-stack digital banks. While the Reserve Bank of India is yet to take a decision on this, neobanking platforms can be regulated entities through NBFC or other licences.
Niyo currently has about 4 million customers across its banking and wealth management products and processes transactions of over $3 billion. In its Series B round in July 2019, Niyo had raised $35 million from Horizon Ventures, Tencent and JS Capital.Avendus Capital was the exclusive financial advisor to Niyo on the transaction.