The Korea Herald is publishing a series of interviews on promising startups in the financial technology industry. This is the 20th installment. -- Ed.

Since taking office in 2014, Indian Prime Minister Narendra Modi has sought to level the playing field for offshore and domestic companies in financial services, declaring an end to bureaucratic “red tape.”

For example, Indian financial authorities lowered regulatory hurdles in late 2016 that were set particularly for foreign business entities in applying for prepaid payment instruments business. PPI includes mobile wallets that allow those without a bank account to make electronic financial transactions, using information stored in mobile phones not limited to smartphones.

One of the beneficiaries of the change, along with Amazon, was South Korean startup Balancehero, which operates an app called True Balance. 

In India where some 456 million people are estimated to use mobile phones as of end-2017, the app for mobile prepaid billing management and mobile top-up payments had already topped 50 million downloads through Android’s Google Play as of September 2017. Three months later, the app launched its mobile wallet service.

For Balancehero, founded in July 2014, the PPI license was a watershed moment to transform into a financial technology startup, CEO Lee Cheol-won told The Korea Herald at his Seoul office.

“We are repositioning ourselves from a utility service provider to a fintech company,” said the 46-year-old, referring to its expanded services beyond simply collecting and managing the balance of mobile prepaid plans. “We have tapped into people with lack of access to fintech services.”

As of end-July, Balancehero was one of the 49 e-wallet operators in India with a PPI license, according to the Reserve Bank of India. Balancehero’s license, effective from July 2017, will expire in September 2019.

Capitalizing on the license, the firm’s app True Balance has extended services for easier financial transactions such as payments, microfinance and domestic money transfer service in India.

Calling India the “only market” that Korean startups should consider jumping into, Lee claimed that the Korean government can pump prime Korean businesses in India.

“I was given the cold shoulder numerous times when I reached out to companies and investors in Korea for investments,” said Lee, whose startup has accumulated 45 billion won ($39.9 million) investment including a combined 25 billion won Series B2 investment in April.

“They either said they lacked information about the Indian market or argued that companies entering the country were not suitable for the fund’s purpose.”

During the interview, Lee recalled a diner meeting of heads of small and medium enterprises with President Moon Jae-in in January. There, he said he suggested creating a state-sponsored venture fund devoted to Korean companies or startups doing business in India, a proposal that is yet to see progress.

“If venture capitalists or funds find Indian market unfamiliar, then the nation can play a role instead to help companies blaze trails in India,” he said. “India is in need of foreign capital and is opening its doors to foreign companies by easing regulations.”

Balancehero’s main task has been to overcome what is called a “last-mile issue” for bank customers. Based on the “last mile” concept in public transport, the issue is a similar problem in banking infrastructure: End-users in rural areas across India often lack access to banks and so it is difficult for them to complete transactions.

“In Korea, people have few ‘last mile’ issues, because people live in apartment buildings and bank branches are comparatively accessible, so Koreans barely understand the situation of a person does not have a bank account,” he said.

“This is in contrast to India where a majority of people live in rural areas and lack a bank branch network, so it is not very easy for many Indians to go to a branch, create a bank account or make money transfers.”

He added Balancehero targets those who have trouble processing financial transaction online using intermediaries like bank accounts.

“For example, Paytm targets those who have smartphones and are capable of online payments through bank or card network,” he said, referring to the leading e-wallet service operator in India. “Their strategy is to include those with purchasing power in their ecosystem.”

“On the other hand, we target ordinary Indians and we want to offer fintech service to them as well.”

The startup has offices in Gurugram, India, and Seoul, with a combined 80 employees.

Lee said he has set sights on Series C investment next year, while envisioning an additional business license from the RBI as a non-banking financial company.

“I don’t think Balancehero’s business is full-fledged yet,” Lee said. “India is still such a huge market for us.”

By Son Ji-hyoung 
(consnow@heraldcorp.com)