Digitising SMEs is the key to their easy access to credit: Tide India CEO

India has around 64 million SMEs, accounts for 10 per cent of the total number of SMEs in the world, thus making it the largest accessible SME market globally. As per a recent survey conducted by LocalCircles, about 60 per cent of small businesses in India are likely to scale down, shut down, or sell themselves by the end of this year. Gurujodpal Singh, CEO, Tide India, a business banking fintech companies in an exclusive interview with Bizz Buzz elaborates on how fintechs can help SMEs get easy access to products like bank accounts, credit cards, managing cash flows, etc., and shares the vision ahead for Tide in India

As the country emerges from the pandemic, SMEs are going to be crucial to the economic recovery and they will need all the support they can get in order to get back on their feet. Fintech has a key role to play here, with digitisation being a key factor in the post-Covid recovery, organisations like Tide will be there to help SMEs to streamline their financial admin and focus on building and growing their businesses

Tide plans to invest more than £100 million (Rs 1000 crore) in India next five years. The funding Tide raised in its recent Series C round will be used to grow both the Indian and UK businesses, with Tide also reinvesting revenue into the Indian market. The new funding will support further investments in product and help the operations in Indian expansion

How can FinTechs help address the credit gap for small businesses?

India has around 64 million SMEs, 10 per cent of the total number of SMEs in the world, thus making it the largest accessible SME market globally. Significantly for a fintech dedicated to serving SMEs, the number of companies incorporated and registered during April-December 2020 alone (the Covid-19 pandemic) went up by nearly 21 per cent to over 1.1 lakh, compared to a 5.2 per cent increase during the corresponding nine-month period in 2019 (latest data available with the Ministry of Corporate Affairs (MCA)). This makes India a hugely exciting growth market for any global FinTech.

As per a recent survey conducted by LocalCircles, about 60 per cent of small businesses in India are likely to scale down, shut down, or sell themselves by the end of this year. It also says that 41 per cent of SMEs are out of funds or have less than a month of funds left to survive, while 49 per cent are planning to reduce their employee compensation and benefit costs by July to be able to keep going. While these are especially challenging times, one of the most important issues faced by small businesses is access to credit and a steady flow of cash. As financial institutions, we need to wade our way through these challenges in order to facilitate digital lending. One of the most crucial steps in enabling SMEs is to digitise. This is exactly where fintechs can help with easy access to products like bank accounts, credit cards, managing cash flows, etc.

These days western start-up companies are expanding in Indian market, what scope they see here?

India is a hugely exciting market. It is large, quickly digitising and has an accommodating regulatory market. Businesses like Tide have certainly spotted that the Indian economy is ripe for digital innovation to allow new digital businesses to not only thrive, but to grow exponentially.

India also has a large pool of highly educated and talented people, meaning that businesses from outside of India have access to a high calibre of people to adapt and grow the business to suit the needs of the market.

Why has Tide selected India as the first market for international expansion?

Tide, the UK's leading digital business banking challenger, announced in early 2021 that it has selected India as its first international market. Having gained significant traction in the UK (over 6 per cent market share) and developed the right approach and mix of services to meet the diverse and changing needs of small businesses, Tide believes it is the right time to expand internationally.

Following a comprehensive research process conducted by Tide when assessing new markets, India emerged as a clear front-runner for numerous reasons. The sheer size of the market made India very attractive, with over 60 million SMEs, it is a market in which Tide can achieve significant scale.

However, there are many other factors that made India a clear winner besides its size. Firstly, the government's digitisation efforts and high smartphone penetration were key factors. This push towards digitisation has led to large scale digital adoption among consumers as well as SMEs; these digitally-savvy SMEs are vital to the Indian economy, but are underserved by the banks, creating exciting opportunities for fintechs. In addition, the recent and continuing government efforts to formalise and digitise the economy have opened up a need for a new and exciting business banking offering.

The existing Fintech ecosystem also makes India extremely attractive, with numerous innovative and advanced players to collaborate with and learn from there are opportunities for Tide to offer a comprehensive, smart, platform. And finally, the fact that entrepreneurialism is central to India's culture is very exciting for Tide. We are passionate about entrepreneurs and so this aspect of the Indian culture is aligned to Tide's values.

What will Tide offer in the Indian market and how will Tide support the country's post-pandemic economic recovery?

As the country emerges from the pandemic, SMEs are going to be crucial to the economic recovery and they will need all the support they can get in order to get back on their feet. Fintech has a key role to play here, with digitisation being a key factor in the post-Covid recovery, organisations like Tide will be there to help SMEs to streamline their financial admin and focus on building and growing their businesses. As its first international market, Tide aims to provide innovative financial and administrative services for quickly digitising SMEs in India. Apart from supporting the organised SME sector in India, Tide will also focus on serving the unregistered and unorganised sector, helping bring these SMEs into the mainstream and unleash their true potential.

Tide plans to acquire 25,000 members in the next financial year and scale up to two million members in the next five years. Tide is committed to serving the 63-million and growing Indian SME sector and will help unleash the true potential of Indian small businesses.

To be specific, when fully launched, Tide will offer a full range of payments services, including UPI, but will also offer tools to help business owners save time on admin tasks such as expenses and invoicing, as well as offering SME credit.

What is the vision ahead for Tide? How much strength you have in India?

As well as aiming to acquire over two million members over the next five years, Tide will also create over 1,000 jobs and invest more than Rs 1,000 crore in India. These jobs will be across a wide variety of roles, including product development, software development, marketing, risk & compliance and member support. Hiring has already begun and the company will be hiring both freshers and laterals across levels. So far, we have over 250 employees in India.

How much investment has Tide has done in the Indian market? Will the Series-C funding round be utilised for the Indian operations?

Tide plans to invest more than £100 million (Rs 1,000 crore) in India next five years. The funding Tide raised in its recent Series C round will be used to grow both the Indian and UK businesses, with Tide also reinvesting revenue into the Indian market. The new funding will support further investments in product and help the operations in Indian expansion.

Tell us about the Tide team and how are you building a dynamic team?

We started our Global Development Centre in April 2020 and already have over 250 employees. Over the next year the India team is expected to grow to 350+ employees.