India’s Niyo has raised $100 million in a new financing round as the consumer-facing neobank platform looks to add lending and other features to its offerings and make deeper inroads in the world’s second largest internet market.
Accel and Lightrock India co-led the Bengaluru-headquartered startup’s Series C financing round. Existing investors Prime Venture Partners, JS Capital also participated in the round, which brings the six-year-old startup’s all-time raise to about $150 million.
Niyo provides digital savings accounts and other banking services to largely salaried individuals in India. It works with banks to help them deliver a more modern and expansive user experience and features.
It also operates a wealth management product to help users invest in mutual funds and domestic equities. Some of its most popular features include zero-percent forex markup and something called “invest the change,” which rounds up a customer’s spendings and invests a part of it.
Niyo co-founder and chief executive Vinay Bagri told TC in an interview that the startup has amassed over 4 million customers across its banking and wealth management products. Most of these customers are in their 20s and early 30s, he said.
The startup said it is adding over 10,000 new users each day and is processing more than $3 billion of transactions on an annualized timeframe. Virender Bisht, co-founder and chief technology officer of Niyo, said the startup is seeing “massive tailwinds for digital financial products” since the outbreak of the pandemic.
“Launched less than a year ago, our first-of-a-kind product offering ‘NiyoX,’” he said, “is democratizing the superior digital banking experience for users, and has witnessed tremendous user adoption.”
Niyo plans to offer lending to customers starting next month. The size of the loans will be in the range of ₹70,000 ($930). As it broadens its offerings, it is also looking for inorganic growth via acquisition opportunities, said Bagri.
Scores of startups are attempting to modernize the banking experience in India. But the challenge they face is that unlike in many countries, banking is very affordable in India that has made it difficult for them persuade customers to make what is a considerable switch.
As an industry executive described to TC, the current generation of neobanks are largely only offering an “experience layer” to customers. But many startups are hoping that India will soon give them licence to own and operate their own digital-only banks.
“We are excited to back the fastest growing neo-bank in India, Niyo. 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,” said Anand Daniel, partner at Accel, in a statement.