New “cross-border neobank” in India: moneyHOP
Most immigrants know how expensive sending money to their home countries can be, with all kinds of fees eating away at the supposed benefit of earning money abroad.
MoneyHOP, which describes itself as India’s first cross-border neobank, was born out of a similar hardship, when its founder and CEO, Mayank Goyal, discovered how much banks were charging him in interest and remittance fees while paying back his student loans in India from the UK.
“Beyond that, every time my friends and family would visit me in London, no matter what mechanism they used for currency exchange, be it cash, card or forex cards, it was an extremely paper-driven process,” Goyal tells FinTech Futures.
The process led to a lot of obscurity, Goyal says, with charges being added “depending on how ill-informed the consumer was”.
“Though I thought India was doing tremendously well, when it came to domestic remittances, I quickly understood that cross-border banking was still stuck in a rut,” he adds.
Based off his own experiences, Goyal worked out three fundamental features young Indians wanted when it came down to cross-border finances: convenience, instant gratification and transparency.
“Banks didn’t really bother too much about providing any of this customer experience to the end human, so I thought it was a good opportunity – a massive gap – and something I could work on, because I was driving data points from my personal experiences.”
MoneyHOP offers Indians the ability to send and spend money abroad via its app, and claims to provide real-time currency conversion at a “nearly zero percent” markup, meaning customers can easily switch between currencies on the go.
The start-up also provides access to a multi-currency bank account with a choice of 10 currencies, with plans to add more in the future. It has partnered with State Bank of Mauritius, India, which is an RBI regulated bank, to offer its banking services. The firm wants to enable Indian millennials to “be global and spend like a local”.
The neobank has applied for a UK electronic money institution licence with the Financial Conduct Authority (FCA), and hopes to begin onboarding UK-based customers by mid-2023.
But every start-up has its own set of obstacles.
For an Indian cross-border fintech firm, Goyal says one of the main obstacles is the Indian currency capital controls.
“We come from a relatively volatile economic background, and due to those reasons, the Indian government has been slightly sceptical of making the Indian rupee an official currency,” Goyal explains, “And rightly so.”
“But what becomes the issue is that we have to make the central government aware of every single dollar that any person buys.”
Secondly, Goyal believes India is moving “quite fast” when it comes to the fintech revolution, with many fintech companies expanding rapidly.
“During this phase when things are moving from A to B to C quite quickly, I think there naturally ends up being some amount of confusion in terms of what you can or cannot do, and how you navigate the system,” he says.
Navigating such a phase is a tightrope walk because the regulatory paradigm can potentially stifle innovation, Goyal says, and “if you become too innovative, you would end up breaching regulations”.
MoneyHOP launched beta testing for its mobile app in May last year, with about 25,000 users signing up for its remittance services. But while it’s now out of its testing phase, Goyal says the firm is in no hurry to push the product yet.
“We want to be absolutely watertight in terms of the technology, because it is a financial services product,” he says.
The neobanking start-up raised $1.25 million in seed funding from UK investors in September 2021, in addition to another undisclosed fundraise.
For its next phase of growth, Goyal says the aim is to land a UK licence. Further down the pipeline, the start-up is currently in talks to make an acquisition in India, and it also plans to double down on integrating India’s Unified Payments Interface (UPI) into the app.