In an era where fintech is reshaping the landscape of financial services, banking technology companies are seizing the opportunity to expand their reach. Notably, HDFC Bank and M2P Fintech have made significant strides; the latter has developed the core banking system for Unity Small Finance Bank. These companies are now focusing on broadening their clientele across North America, West Asia, Africa, and other South Asian markets, capitalizing on the global shift towards digital payments and technology-based lending solutions. Zeta, co-founded by Bhavin Turakhia, is actively collaborating with numerous leading financial institutions in India to enhance credit offerings and launch digital-native credit products, notably utilizing the National Payment Corporation of India’s (NPCI) Credit Lines on the Unified Payments Interface (UPI). The firm is also in discussions with large banks in the United States, indicating its ambition to expand further. M2P Fintech is concurrently making notable advances. Operating in 30 countries, the company has initiated plans to further escalate its international business. Recently, M2P Fintech successfully secured a $100 million funding round led by Helios Investment Partners, a venture firm focused on Africa, and achieved a valuation between $800 million and $900 million. Participation from several Asian and Indian banks in this funding round underscores growing confidence in M2P Fintech’s vision and offerings. Madhusudanan R, the Chief Executive Officer of M2P Fintech, stated, “We will utilize these funds to expand our operations in Africa and West Asia, keeping a lookout for acquisition opportunities in complementary software services.” The company reported an annual revenue run rate (ARR) of $70 million for FY24 and aims for approximately $100 million in ARR in the current fiscal year, with aspirations for a public listing within two to three years. The accelerating partnership between banks and fintechs, particularly in India, is a significant boon for firms like M2P Fintech and Zeta. Financial institutions are increasingly collaborating with fintech companies to enhance core payments and banking software, reflecting a broader willingness to integrate advanced technological solutions into their infrastructure. Notably, companies within this sector such as FSS, Pine Labs, and Juspay are also establishing teams abroad and recruiting senior professionals to secure lucrative opportunities in these emerging markets. According to industry observers, these partnerships are not only essential for showing consistent revenue growth but also pivotal as companies prepare for potential public offerings. With a favorable regulatory environment, fintech software providers are finding it increasingly advantageous to collaborate with banks, thus distancing themselves from sole reliance on fintech companies. M2P Fintech’s software solutions are being employed by numerous major banks for their pay-later offerings, demonstrating a clear shift towards adopting cloud-based solutions among institutions that traditionally favored conventional software developers. Moving forward, it is evident that selling software to banks remains a complex and lengthy endeavor; however, the resulting agreements are often stable and lucrative, providing companies with the opportunity to generate sustained revenue for extended periods. As articulated by Harsh Gupta, a partner at Flourish Ventures, “B2B sales are undoubtedly complex; nonetheless, these are long-term, sticky contracts that ensure consistent revenue.” Flourish Ventures also participated in M2P Fintech’s recent funding round, reflecting the increased investor interest in the fintech space. In conclusion, as banking technology companies like M2P Fintech and Zeta continue to navigate the evolving fintech ecosystem, their ability to foster strategic partnerships and capitalize on emerging markets is likely to determine their long-term success in an increasingly digital financial landscape.
Original Source: m.economictimes.com
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