Fintech
Fintech unicorn Zeta launches credit as a UPI-linked service for banks
Fintech unicorn Zeta, a provider of banking technology to financial institutions globally, has launched a digital credit-as-a-service product for its corporate customers, mainly banks.
The product is based on the UPI scheme credit lines that the Reserve Bank of India launched in September to reduce the cost of financial services and allow users to access pre-approved credit through their UPI-linked accounts.
Zeta, founded by serial entrepreneur Bhavin Turakhia and Ramki Gaddipati, estimates that the transaction volume on this scheme will exceed $1 trillion by 2030 and aims to capture around half of this market.
“Banks have pre-approved credit for millions of customers but are unable to distribute loans to them efficiently,” Zeta said in a statement on Friday, adding that credit products that leverage the credit line on the scheme UPI would allow “consumers to borrow exactly as much as they need, when they need it.”
Zeta is likely to break even in a few quarters, said Gaddipati, global head of technology and managing director for the Asia-Pacific region.
The company that has so far raised more than $340 million from investors including SoftBank and Mastercard, and was last valued at $1.45 billion when it raised $250 million in May 2021.
Zeta has spent more than $360 million building its global banking platform, the company said in its statement, adding that it has partnered with a dozen banks.
The price of Zeta’s new product will depend on the subset of services a bank requires, Gaddipati said.
“Each contract will take more than three years to provide us with significant revenue. Therefore, for the next three years, we do not expect credit as a service to generate significant revenue for us. However, it would accumulate contracts that represent substantial revenue that will come in subsequent years,” she said.
Outside India, Zeta’s goal would be to extend its products to small and medium-sized banks in the United States, Gaddipati said.
The Bangalore-headquartered company has presence in Dubai, UK, North America, Latin America, Europe and Asia. Zeta’s India business reported a nearly 33% increase in its operating revenue to ₹816.20 crore for FY23, helping it achieve a profit of ₹21.94 crore from a loss of ₹20 .7 crore in the previous year.
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