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Niyo, an Accel-backed neobanking startup, is shifting gears to become a travel tech platform?

The travel technology platform from Niyo will essentially cover every aspect of travel, allowing users to book travel experiences, concierge services, tour packages, travel insurance, and other services as well as apply for visas.

Niyo was established in 2015 by Vinay Bagri and Virender Bisht, who had previously worked for MakeMyTrip and banks including Standard Chartered and Kotak Mahindra Bank. To date, the firm has funded more than $170 million from Accel. among others, Lightrock.

In the next weeks, Niyo, a neobanking startup funded by investors including Accel and Lightrock, plans to introduce a travel technology platform, according to sources with knowledge of the plan. As it enters the travel sector, the business hopes to capitalise on the success of its global FX card.

At a time when fintech businesses all over have been adjusting to a dynamic regulatory environment, especially around digital lending, Niyo’s choice to foray into a new market comes at a critical moment. According to the Reserve Bank of India, all loan disbursals and repayments must now be carried out only between the borrower’s bank account and the regulated firm, without the involvement of a pass-through or pool account of the lending service provider (LSP) or any other third party. Prepaid payment instruments (PPIs) became ineffective as a result of the legislation, which also made some fintech companies change the way they operate.

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Customers are currently able to open their own savings bank accounts with the Accel-backed firm. In addition, it provides a number of other banking-related services and operates the investing site Niyo Money.

Vinay Bagri, who formerly worked for banks including Standard Chartered and Kotak Mahindra, and Virender Bisht, who had worked for MakeMyTrip, created Niyo in 2015.

The Bengaluru-based startup’s flagship product, the Niyo Global card, was introduced around 2018 and already has one million customers. The company has the confidence to expand further in the region because it anticipates its customer base to double every year.

One of the primary sources of income for the business is the Niyo Global FX card. It faces competition from the co-branded credit card from Axis Bank and Vistara, the First Wealth credit card from IDFC First Bank, the Elite credit card from State Bank of India, as well as various other credit cards provided by bigger companies in the market.

When asked why the company decided to establish a travel technology platform, one of the individuals mentioned above responded, “Niyo’s present offerings are core banking products, which are not that different from what other companies offer. Niyo could take action to acquire a competitive advantage, but how much can one set their savings account apart from the average one?

Through its collaboration with DCB Bank, Yes Bank, Equitas Bank, and other financial institutions, the company makes it easier to open savings bank accounts, disburses loans, and assists with wealth management services like creating mutual funds and similar tasks.

focusing on a limited segment

As a result, Niyo’s travel tech platform will effectively cover the entire spectrum of travel where customers can purchase visas, travel experiences, concierge services, tour packages, travel insurance, and similar things.

“The business will target passport holders. Niyo does not consider people without passports to be clients. Another source familiar with the business’s plans stated, “The company knows that if you have a passport, it suggests you’re going to travel abroad and that you have the money.

Only 96 million people, across all age groups, have an Indian passport, according to the most recent government data. Additionally, compared to the total number of passport holders, the millennial and Gen Z numbers are substantially lower, categories that Niyo will continue to focus on, giving the business a smaller clientele to serve.

The fact that heavyweights like MakeMyTrip, EaseMyTrip, Thomas Cook, and other companies are already vying for a larger share of the travel market only compounds Niyo’s difficulties.

However, Niyo’s objectives are unlikely to be thwarted by market rivalry. Internally, Niyo was projecting that once the travel technology platform takes off, its margins will more than double from where they are now. Given the healthy commissions Niyo anticipates to make from each transaction on the platform, its margins, which are currently in the 3–4% range, could rise to about 10% once travel-related services are live, according to a second person familiar with the company’s plans.

“One does not travel overseas unless they have the necessary funds, and if they do, they are easily monetisable. Therefore, Niyo won’t generate much money if a user travels to Goa, but if they go to Europe, their spending will be higher and Niyo would make more money, the source said, adding that the company’s ability to monetize does not seem to be a problem. Internally, Niyo gave itself five years to “excel” with the travel technology platform.

pivot in the distance?

The loans that the company has been making and the rewards system have aggressively become more travel-centric over the past year as Niyo readied its software stack for the travel tech platform. This basically suggests that, even though neobanking will remain the company’s main offering for the time being, a pivot to a fully fledged travel tech platform later on cannot yet be ruled out.

According to information on startup intelligence platform Tracxn, the company has so far raised approximately $170 million from investors including Accel, Lightrock, Prime Venture Partners, and many more.

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