In recent years, India’s consumer banking sector has undergone a significant digital transformation, largely driven by initiatives like the Unified Payments Interface (UPI) and the emergence of various payment aggregators. These advancements have streamlined personal banking experiences, making transactions faster and more efficient for individual consumers. However, the corporate banking landscape has not kept pace with this rapid digitization. Many businesses still grapple with outdated systems, cumbersome paperwork, and manual processes that hinder operational efficiency.
Recognizing this disparity, TransBnk, a Mumbai-based fintech startup, has embarked on a mission to bridge the technological gap in corporate banking. The company recently secured a $25 million investment from Bessemer Venture Partners, aiming to accelerate its efforts in modernizing the sector.
The Current State of Corporate Banking in India
Despite the digital revolution in consumer banking, corporate banking in India remains entrenched in traditional practices. Businesses often rely on multiple internet banking portals, manual reconciliations, and extensive use of spreadsheets to manage their financial operations. This reliance on antiquated methods not only increases the risk of errors but also consumes valuable time and resources.
India is home to approximately 75 million small and medium enterprises (SMEs), making it the world’s largest SME market. These businesses stand to benefit immensely from modern financial infrastructure that can simplify and automate their banking processes. However, the lack of innovation in corporate banking has left many of these enterprises without the tools they need to thrive in a digital economy.
The Market Potential
The untapped potential in India’s corporate banking sector presents a lucrative opportunity for fintech innovators. According to a February 2024 report by Chiratae Ventures and The Digital Fifth, the country’s B2B fintech industry is projected to reach a market size of $20 billion by 2030. Additionally, India already boasts 26 fintech unicorns with a combined market value of $90 billion, as per data analyzed by JM Financial last year. Despite these impressive figures, most fintech startups have concentrated on consumer payments and lending, leaving core banking infrastructure largely unaddressed.
TransBnk’s Innovative Approach
Founded in 2022 by former bankers Vaibhav Tambe, Lavin Kotian, Pulak Jain, and Sachin Gupta, TransBnk aims to revolutionize corporate banking by offering a common operating system. This platform serves as a single window through which businesses can access the banking ecosystem, providing a foundational layer of microservices that support various use cases, including treasury, liquidity, and escrow management.
CEO and co-founder Vaibhav Tambe explained the company’s vision:
During our banking days, we always got a lot of customers asking us for a single, consolidated platform for transaction banking or corporate banking on a single particular stack. And we thought, let’s take up this challenge… The idea was that can we consolidate and integrate with multiple banks and then create a single platform, be it in the form factors, like the web interface or mobile app, or maybe SDKs, or API?
As of now, TransBnk collaborates with 60 banks, with 40 fully integrated into its platform to process transactions, payments, and core functionalities like reconciliation. The startup serves 220 customers, 80% of whom are merchants, including lenders, fintechs, and non-bank financial companies (NBFCs). The remaining 20% are banks that have white-labeled TransBnk’s software to offer corporate banking services to their clients.
Global Context and Comparisons
Globally, several companies are working to modernize banking through software platforms. For instance, Finastra, Temenos, and Infosys’ Finacle are known for their efforts in this domain. In the United States, firms like Treasury Prime offer embedded banking solutions for enterprise customers. However, in India, startups focusing on corporate banking infrastructure remain relatively scarce, making TransBnk’s initiative particularly noteworthy.
Financial Performance and Future Plans
Over the past year, TransBnk has demonstrated impressive growth, with revenue increasing more than twelvefold, reaching approximately $12 million in annual recurring revenue. The company achieved profitability after taxes in February and maintains healthy gross margins of around 80%. Currently, TransBnk enables about 110 million transactions monthly, covering 11,000 bank accounts and utilizing over 1,500 APIs.
The recent Series B funding round, which includes $4 million in secondary funding, also saw participation from Fundamentum, Arkam Ventures, 8i Ventures, Accion, and Japan’s GMO Venture Partners. With this latest infusion of capital, TransBnk plans to expand beyond India, targeting markets in Southeast Asia and the Middle East. The company also intends to extend its reach to sectors such as real estate, pharmaceuticals, and renewable energy.
CEO Tambe highlighted the company’s growth trajectory, noting that its valuation has increased sevenfold since the last funding round, although specific figures were not disclosed.
Conclusion
TransBnk’s recent funding and strategic initiatives underscore the pressing need for modernization in India’s corporate banking sector. By providing a unified platform that integrates with multiple banks and offers a suite of microservices, TransBnk is well-positioned to address the longstanding challenges faced by businesses in managing their financial operations. As the company continues to expand and innovate, it holds the potential to significantly transform corporate banking in India and beyond.
