Startup Street: This Startup Claims It Can Stop ‘Nirav Modi-Style’ Bank Frauds
Here’s what went down this week on Startup Street.
This week on Startup Street, we have an 18-month old fintech startup which claims to have the ability to protect banks against financial frauds. India’s food delivery unicorn Zomato is entering into events. Also, days after being named as the top state for startups in India, Gujarat is opening up its startup ecosystem to the public sector.
This Startup’s Tech Is Running Hot With India’s Banks
Globsyn 3rd.Life, an 18-month old fintech startup, claims it can stop financial frauds that happen due to weakness in the linking between the domestic banking software and the Society for Worldwide Interbank Financial Telecommunication messaging system.
Based out of Kolkata, the startup has already bagged 14 clients including Yes Bank Ltd., Punjab & Sind Bank, United Bank, Karnataka Bank, Saraswat Bank and Bandhan Bank, Founder Romit Dasgupta told BloombergQuint.
The product—Notiva Prime—acts as a bridge between the domestic messaging system and the global SWIFT system, catching inconsistencies and alerting banks in real-time.
“After the Nirav Modi scam, the Reserve bank of India came out with guidelines that all exchanges would have to go through the core banking system. The problem was that messages which were inconsistent with global regulation or inaccurate otherwise, would be sent into the global SWIFT system. While those messages are stopped at that stage, SWIFT charges for incorrect messages,” Dasgupta said.
Notiva Prime checks all messages against the RBI and global guidelines which has reduced operational costs for banks by 30-40 percent, the startup claimed. It also gives real-time alerts in case of inconsistencies or attempts by third parties to hack into a banking system.
What is SWIFT?—The SWIFT network allows banks to communicate all transaction-related information with each other using specific messaging called “series”. There is, however, some overlap in functions of different series, leading to each bank using the messaging series they are comfortable with to communicate.
India’s banking system was rocked by Rs 14,000 crore fraud when Punjab National Bank, the country's second-largest state-owned bank, disclosed that it was defrauded by diamantaire Nirav Modi and his uncle Mehul Choksi, the promoter of Gitanjali Gems.
3rd.Life’s product has reached an accuracy rate of over 95 percent, Dasgupta revealed. “The last 12 months have been absolutely crazy.”
The 5 percent inaccuracies also arise due to variations in formatting. “It mostly means that the system read a correct message as incorrect and stopped it from going forward,” he said, adding that it only acts as a means of double-checking.
The startup, according to its founder, has already covered 10 percent of the Indian banking system even as taking the software live in banks is a challenge. “This is also why we are focusing on medium-sized banks where the decision-making process and implementation is faster.”
The startup said it is going to focus on these implementations till the first quarter of the coming financial year, post which it will begin expanding into the neighbouring countries of Bangladesh and Sri Lanka. Internally funded by its parent company Globsyn, 3rd.Life expects to turn profitable in the next 12-18 months, Dasgupta said.
Zomato Eyes Events Space With Zomaland
Online restaurant guide and food delivery firm Zomato is all set to step into the events space with its new offering called “Zomaland”.
The first batch of events will take place in Delhi on Jan. 18-20, followed by Pune on Feb. 8-10 and Bengaluru on Mar. 1-3, the startup said in a statement. Passes for the events are expected to be available soon on the Zomato application.
India’s carnival space is currently dominated by OML Ltd.’s NH7 Bacardi Weekender festivals which take place in cities like Pune, Bengaluru, Shillong, Kolkata and Pondichery. Other big names include Sunburn festival and VH1’s Supersonic. These, however, are music festivals.
“Although we are starting with three cities, we will extend the joy to many more cities around the world as we move ahead,” said Chaitanya Mathur, global head, Zomato Live.
Gujarat Opens Up Its Startup Ecosystem To The Public Sector
After ranking as the top state for startups in India, the Gujarat government launched a scheme under which it will incentivise tech startups which provide solutions to sector- specific problems identified by authorities.
"The scheme endeavours to identify sector-specific problems unique to the public sector in the state and to facilitate deployment of solutions which have been specifically crafted for such needs," Chief Secretary JN Singh said, as reported by PTI.
A startup could receive funding of up to Rs 50 lakh over three years under this scheme, he said, adding that it will not only encourage and help startups but also open up the public sector to the startup ecosystem. “For the state, it will allow low-cost testing for such innovations before the government commits for commercial solution.”
The scheme, Technology Demonstration and Pilot Deployment, will be implemented by the Gujarat Council on Science and Technology.
The Gujarat government had earlier announced its science, technology and innovation policy. It has created a dedicated “innovation fund” of Rs 50 crore under the STI policy. The new scheme will also be financed under the same fund.