Sinha – who also outlined the future of application programming interface (API)-led banking, Cashfree Payments’s growth opportunities as well as the startup’s global expansion plans – was speaking at the
ET Future of Money Summit
, an initiative to
spotlight the innovations and developments
that will shape the future of finance and steer India’s transition to a truly digital and cashless economy.
Payments and API banking solutions provider Cashfree Payments, which processes over 1.5 million transactions daily for a single merchant, works closely with all major banks to build the core payment gateways and banking infrastructure that powers the company’s products and is also integrated with major platforms such as Shopify, Wix, Paypal, Amazon Pay,
and Google Pay, among others.
“It’s high time we start recognising larger fintech intermediaries on top of which smaller fintechs can be developed. These larger fintech intermediaries, or super-fintechs, can take the load away from banks for things around data, accessibility, and privacy. They can also enable creation of more fintech innovations and make the entire accessibility of banking services much easier for the larger market,” said Sinha in a virtual interview with Miloni Bhatt, Editor – Digital Broadcast, ET.com.
Super-fintech platforms – which aggregate APIs across multiple regulated entities – can enable tiered access to banking and other financial APIs, where entities will need to meet predefined risk criteria to gain access to a specific tier, thus enabling a range of banking-as-a-service (BaaS)-driven fintech models.
“Today, the entire ecosystem is working on bank and fintech partnerships. Now, it’s getting difficult for banks to work with all kinds of fintech as banks don’t have some kind of tiered access based on the use case. So banks either open all of their APIs to fintechs or they don’t give anything,” Sinha said, as he explained the need for a super-fintech model.
“However, if the bank creates a layer in between them, or a super-fintech layer, then super-fintechs can provide tiered access to smaller fintech firms, depending on the use case. So it’s time the entire ecosystem looks at regulating this kind of intermediary, so that more filters can be created and things are done in a more structured, disciplined, and secure way,” Sinha added.
Watch the full interview here:
Banking-as-a-service platform, Accounts
Last year, Cashfree Payments launched Accounts, its BaaS platform that enables fintech startups, neobanks, and other account issuing platforms to integrate their products with major banks via API, and allows their users to create banking accounts and manage their transactions digitally.
Besides bank accounts, Cashfree Payments is now working on other products like cards and will work on fixed deposits and investment offerings.
“I believe once we’re ready with the entire platform for all the products, then we’ll see a lot of neobanks and different kinds of platforms being able to create a better, more easier experience for users. There’s a very big charter we are pursuing and we’re just getting started,” said Sinha.
The startup already has around 10 beta customers using Cashfree Accounts, with ‘good traction’ being seen both on the small and medium enterprises and consumer space, said Sinha.
“What Cashfree Payments is trying to do is create a platform that will aggregate APIs of all these major banks so all these third-party developers, neobanks, and fintech platforms can just integrate Cashfree API and go live with their banking products within weeks. This way, the entire banking, payment democratisation could be done much faster in the ecosystem compared to the way it happens right now,” said Sinha.
Currently, working with a single bank takes about three to four months to integrate with their APIs, which means working with four to five banks will take at least 15-18 months.
Embedded financial services
Going forward, Sinha believes the entire innovation around fintech will be needed around enabling integrated payments and banking services and solutions for Indian users, including the next 500 million+ first-time online users from Bharat.
“Instead of offering just vanilla payments or vanilla banking services, if they can be part of a larger app and embedded with payments and banking, then you can increase the use case and usage in the Indian digital ecosystem. A lot of people may not see value in a pure banking or a pure payments app. But if you bundle it with something which users like or use, then the usage of core banking and core digital payments will grow in those markets,” predicted Sinha.
The integration of banking and payments with other services will not only democratise access to banking services and enhance user experience, but also provide more options in the hands of users, thus increasing overall competition among banking and payment services providers, said Sinha.
Cross-border payments & global plans
In July, Cashfree was also among several entities that received the Reserve Bank of India nod for its cross border payment solutions, after it was found acceptable as per the conditions defined for testing for the second cohort under the regulatory sandbox.
“After the approval, any consumer finance app or any wealth management app can use Cashfree Payments in the backend and consumers will be able to seamlessly buy any of the foreign stocks that are listed in those foreign exchanges. So that’s the approval and this is the first it is going to happen in that this was not allowed before. So we’re very excited,” said Sinha, who expects to go live with three or four exchanges ‘very soon’.
Cashfree’s cross-border payments product will enable Indian fintech companies to purchase assets listed on foreign exchanges such as NASDAQ, including publicly-listed shares, exchange-traded funds (ETFs), mutual funds by Indian investors, via unified payments interface (UPI) or net banking.
The startup, whose products are used in eight other countries including the USA, Canada, and UAE, is also looking to expand its presence in emerging markets, including those in Southeast Asia, Middle East, North Africa, and Sub Saharan Africa.
Cashfree is backed by Silicon Valley investor Y Combinator, Apis Partners,
() and was incubated by PayPal.