Fintech Unicorn Zeta Rolls Out UPI-Integrated Credit

Zeta, a unicorn in banking technology, has launched a digital credit-as-a-service solution for banks. The product leverages the network to expedite the issuing of credit in India and is based on NPCI’s credit line on UPI scheme.

What Is Zeta?

Zeta is a banking technology company revolutionizing how the core banking systems work. “We are a modern cloud native stack that ensures that banks are able to operate at any scale for future and today as well, and making sure that we are able to cater to the increasing demands and the consumer centricity that the banks need to deliver at scale. That’s what Zita would do, or Zita does for the bank,” said Ramki Gaddipati, CEO APAC & Global CTO.

The company projects that by 2030, the scheme’s transaction volumes will surpass $1 trillion. With its solution, it hopes to take 50% of this market and assist banks in swiftly developing and introducing credit products.

What Is UPI’s Involvement with Zeta?

“Today we are talking to the bankers and the ecosystem about what is possible with credit line on UPI, the new product that the NPC ecosystem has announced. NPCI has announced and RBI has blessed in the last GFF,” explained Gaddipati. “Zita has been a very passionate technology company about enabling credit access to everybody, enabling banking for everybody. And we felt that, okay, this is a great, great possibility, that paradigm changing possibility that bank should and the ecosystem should realize, and that’s what we are trying to do through this event,” he added.Also,the pricing for Zeta’s new product would vary depending on the specific services required by each bank.

He added, “We saw UPI volumes put a strain on core banking systems. We anticipate similar volumes on Credit Line on UPI before long, and this calls for population-scale banking infrastructure capable of processing 100s of millions of credit accounts.”

Apprehensions while introducing a new tech into the banking space.

The banking space is known to be quite loyal to their systems and at times treat them as traditions almost.”We felt that change was inevitable. Okay, so all of the legacy systems will have to be replaced one day. They have to be retired because most of those systems were built even before I was born, and most of us were born. We have embraced technology way beyond what was ever imagined as possibility 40 years ago. And by virtue of which, each of us carries multiple computers on us and we consume so many digital services, including banking on it. But most of the bank systems are not ever conceived for this world. So we were very certain that banks would realize the need for change and will change,” said Gaddipati.

“The only question is that, do they have a credible alternative? Do they have a reliable alternative? That is the question. And I think we have been able to establish Zeta as one such player. They could trust, they could trust the entire business that their current systems, the core processing systems, do,” he added.

What is the future of banking?

“So I think UPI has so many ways to influence us, so many ways to make us see transactions, payments in a completely transparent, omnipresent way. Today UPI is still extremely mobile oriented. The 4.0 of UPI will say that it is formless.Authentication mechanisms will change. You could just authenticate on UPI in many ways in the coming days, and you should be able to embed UPI into many, many appliances. Many systems and interactions that we do will be seamlessly integrated into UPI, where you are identified, you are authenticated seamlessly in your journey of any commercial activity. It is just about a roadmap item.”

Zeta, which was founded in 2015 by Gaddipati and Bhavin Turakhia and provides financial institutions with an omni-stack platform for managing fraud and risk, processing and issuing debit and credit cards, and lending. Zeta’s cloud-native, next-generation core banking and payments platform powers its extensive services and technology stack, which enables banks to manage digital credit operations from originations to collections. This is known as its digital credit-as-a-service offering.

In contrast to a loss of INR 20.7 Cr in FY22, the company declared a profit after tax (PAT) of INR 21.94 Cr in the fiscal year 2022–2023 (FY23). The fintech unicorn based in Bengaluru had an increase in income from operations of about 33% to INR 816.20 Cr in FY23, up from INR 615.05 Cr in FY22.

Zeta became a unicorn in May 2021 after raising $340 million in total capital with a $250 million funding round headed by Masayoshi Son’s SoftBank. Among its supporters are well-known companies like Mastercard, Sodexo, and Softbank Vision Fund.