Andhra Pradesh takes pole position in developing a fintech ecosystem
The 5M strategy of providing quality manpower, money, market access, mentoring and meetup events has worked well. Most of the office inventory in Vizag is occupied. Over 16 companies have already set shops and more will join soon, reports Abhishek Raval
N Chandrababu Naidu, wants to repeat the transformation he did to Hyderabad and Secunderabad, when he was the Chief Minister of the united Andhra Pradesh (AP). After the bifurcation of AP, which gave birth to Telangana, Naidu has set sights on Vizag and a few other cities to be the focus of AP’s transformation.
The entire office space in the fintech tower at the Rushikonda hills, in Vizag, which overlooks the bay of bengal has been sold. The demand has outstripped supply. The real estate developers were not sure about the business acquisition, which made AP to come up with an accommodative Designated Technology Parks policy (DTP) 2017-20. The policy has an arrangement to provide 50 percent subsidy to the IT companies, which will be borne by the AP state Govt. The real estate developers were hesitant in building more space because of doubts about rental payments. The Govt in response provides the rental guarantee for built up office space. Result: The AP Govt is looking for more areas to built office space due to further spike in demand.
The Aceurban infocity has signed an MoU to build a 3220 crore integrated innovation campus in Vizag, which will be a pull to global technology giants to build Centres of Excellence to develop new age technologies like cloud computing, AI, blockchain, IoT etc.
There are three companies which have signed projects with the AP Govt to develop residential complexes, office space and other social infrastructure on a Build Operate Transfer (BOT) basis.
The thought process of the AP state Govt to team up with multiple stakeholders to have a focussed fintech ecosystem in Vizag and a few other cities has worked.
The fintech ecosystem with a focus on Blockchain
Fintech Valley Vizag is a convergence of financial service companies, investors, academic institutions, startups, technology providers, which provides an ecosystem for the fintech industry, growing more than 26 percent annually. “We thought rather than the conventional way of encouraging the fintech opportunity, which is getting highly digitised, why not solve the problem by providing an environment, which has a place for all the stakeholders,” explains J A Chowdary, Special Chief Secretary & IT Advisor, Chief Minister – Govt. of AP. The fintech industry is growing at a fast pace and compared to other industries, it leads in the way it is getting technology enabled. Banks are turning into fintech companies.
Andhra Pradesh has partnered with ConsenSys. An MoU was signed in the last Blockchain summit organised in AP. ConsenSys is a blockchain technology company founded by Joseph Lubin who co-founded Ethereum, a decentralized cryptocurrency platform. The company will invest in setting up a Blockchain training academy. ConsenSys is also willing to contribute in applying blockchain in the e governance initiative of the AP government – e-pragati and also for managing land records.
The faculty will include the respective experts who have already implemented blockchain in other countries. The syllabus and the academy will be run by them. The manpower developed at the university will man the blockchain development centre in Fintech Valley Vizag.
AP signed an MoU with a silicon valley based $2 bn venture fund- Covalent fund. The Ram Yellamanchili led fund will invest $10 mn in establishing the India Stack for blockchain in AP. Currently, the blockchain platform is on open source, so in order for it to be secure, a greenfield blockchain platform is being designed. The company runs the platform on the Velugu protocol. According to a news report, Yellamanchili described Velugu as “the largest, open and cryptographically secure ledger of information on a blockchain protocol designed in compliance with the Indian regulatory framework,”
The MoU also mentions the setting up of a Blockchain university. There is a tremendous amount of shortage of talent in the area of blockchain. The demand for the usage of this technology has shot up suddenly and the paucity of skilled manpower will hurt widespread adoption.
A NASDAQ listed startup Black Cactus has bought a huge space in Fintech tower in Fintech valley. They have the expertise to use blockchain in the healthcare space. Another AI and analytics powered startup viz, Kisht, has bought space in the tower. The company offers interest free loans upto one lakh. The startup has acquired 5000 customers thus far. There are four startups from Bengaluru, who will soon buy space at the tower to set up their development centres, because they see attractive market opportunities and the tower to be a magnet for world’s best companies to set shops.
The Chief Minister of AP, Chandrababu Naidu has launched a project, AP Blockchain 2019. The objective is to wrap and ring fence all the digital assets of the state and the information related to the 50 mn population using blockchain. Currently the CM is using the real time governance centre in order to track the implementation of the Govt schemes and do grievance redressal of the citizens. Most of the data has been digitised, which will be further put on a blockchain to ensure data security.
In order to take targeted and correct policy decisions, AP has reached an advanced stage of collecting citizen data through the Prajasadhikara survey or the smart pulse survey. It involves Govt functionaries visiting every home with a tablet and collecting exhaustive data of the citizen- socio economic data, which includes health related information too. The ethereum blockchain can prove to be an effective platform to keep the data secure. The plan is to complete the project by 2019.
Every financial service institution wants to invest and grow in the following four areas: Cyber security, Robotic Process Automation (RPA), Artificial Intelligence & Machine Learning and Analytics. The Fintech Valley Vizag is addressing these areas through the 5M strategy.
5M strategy for Fintech Valley Vizag
|Manpower||For Entry level|
|A new digital University, one of its kind in India – International Institute of Digital Technology (IIDT). The first batch has got 100 percent placement. Given the tremendous results, many senior employees from Amazon, Cognizant etc have joined IIDT; Although, the institute is primarily meant for freshers.|
|For Research Level|
|New York based Broadridge Financial’s CoE for blockchain in Fintech Valley Vizag to fill the gap of bringing in research related expertise
An Israeli startup company Forty Two Labs has set up a research lab for cyber security at the Fintech valley
Fintech Valley to soon partner with Indian Statistical Institute’s R. C. Bose Centre for Cryptology and Security to establish a crypto technology lab
|Money||To issue a 500 crore fund to attract startups from across the globe. With a Seed fund of 100 crore.
$1 mn Global fintech challenge award after shortlisting startups by organising challenges in 9 cities globally, which will culminate at the Demo day in the Fintech Valley Vizag’s annual festival in Sept every year
|Market Access||AP Govt has partnered with 20 blue chip companies, who will share their problem statement, which we will run as a fintech challenge across the Globe. 117 concrete use cases have already been created|
|Mentoring||AP government to arrange for prominent business leaders to mentor startups|
|Meetup events||Startups in the early stage with less money cannot afford to
attend big events. AP invites them at their multi city events
Partnerships with Corporates
The fintech accelerator at the valley has many partners who provide a three month cohort to the fintech companies, who are given problem statements by the partners along with appropriate funding. The first batch of cohorts got completed recently. Two companies were awarded with extensive funding and the rest of them were offered business opportunities in AP.
“Looking at the success of cohorts model, many corporates are joining us,“ says Chowdary. The next cohort will be driven by Bajaj Finserve, while the first cohort was hosted by ICICI Bank and Mahindra Finance. Bajaj Finserve, inside the group has four startups, who will also be a part of the cohort.
Franklin Templeton has bought a fourty acre space in the valley to build a development centre for designing new age technology based financial products. The Chief Minister has signed an MoU with Ashok Vemuri, CEO of Conduent, a $6 billion, MNC BPO company, for setting up a 5,000-seater facility in the valley. More than 30 fintech institutions, big and small have showed interest in buying space at the Fintech Valley Vizag. Some of them have already committed while the rest are in various stages of the purchase process. More than 30 companies have shown interest in making investments. Paytm, Visa, Mastercard, Franklin Templeton, Broadridge Financial Solutions, Black Cactus have already committed investments.
Singapore based ten fintech companies will soon kick off operations at the valley according to the MoU signed with the Monetary Authority of Singapore. They see a huge opportunity in India with respect to the market access provided by AP.