How banks are giving big push to India's start-up revolution

The new wave of entrepreneurship in India is generating contagious energy and impact in new age businesses, driving innovation and creativity. It is challenging the established organisations and bringing forward disruption by generating economic wealth and positive social impact. This stratospheric shift has seen India emerge as a cradle of innovation with a country ranking of 3rd amongst global start-up ecosystems, with more than 4,200 new-age companies, where over 72% of the founders are less than 35 years of age.

In this revolution, we are also witnessing the rise of women entrepreneurs with female founders and co-founders now constituting around 9% of the start-up ecosystem in 2015.

The Indian banking sector has been the biggest transformational agent of change behind this movement by fostering new businesses and inventions. As per the World Bank report 2016 on the 'Ease of Doing Business', India ranks 42nd on 'Getting Credit' compared to the overall country rank of 130 (out of 189 economies). Not only are the banks channelising small savings to kindle the spirit of entrepreneurship, they are also incorporating technology and lending their architectural infrastructure to make transactions seamless and cost effective.

Building on this technological endeavour, it is essential that this enabling ecosystem being developed in India encompasses various aspects.

Firstly, this new 'entrepreneurial' phase which is characterised by DICE – Design, Innovation and Creativity-led Entrepreneurship has seen the emergence of various 'sunrise' sectors, thereby requiring the banks to adopt the specialisation approach for evaluating these business models. Banks with a differentiated approach for 'knowledge banking' would be in a position to provide comprehensive sector specific and customised financial solutions to entrepreneurial start-ups.

Secondly, banks involved in capitalising on innovation & technology to develop comprehensive, cutting-edge product solutions tailored to meet the customised requirements of its corporate banking clients would help accentuate entrepreneurs into next orbital growth. One such innovative solution is the API banking platform which is helping the digitisation of B2B transactions by helping integrate client systems with banking systems in an extremely secure manner.

Thirdly, the 'F.I.V.E.' approach involving various life-stages of enterprises - Funding, Incubation, Vesting and Expansion has financial institutions at the fulcrum delivering catalytic change by harnessing the power of entrepreneurship. In this light, it is essential to look for a differentiated model for funding, which is able to create a profitable business based on strong revenue potential.

Fourthly, emerging online marketplaces like Amazon, Snapdeal, Flipkart and eBay have led to the development of new business models wherein banks are extending and integrating their technological platforms to reach thousands of entrepreneurs and sellers registered on the marketplace.

The recent policy announcement has seen important steps to build and promote a cohesive ecosystem for start-ups. Initiatives like the India Aspiration Fund (IAF), Self-Employment and Talent Utilisation (Setu), and Atal Innovation Mission (AIM), are just a few schemes which have laid the foundation to provide the necessary impetus for development. Schemes like the Pradhan Mantri MUDRA (Micro Units Development and Refinance Agency) Yojana, which provide funding to the non-corporate, non-farm sector income generating activities of micro and small enterprises, would also facilitate the reach to small entrepreneurs.

These new-age entrepreneurs who enthuse radical optimism in this paradigm of Vuca (Volatility, uncertainty, complexity and ambiguity) are the future engines of growth which are revolutionising the global economy and spurring a new era of sustainable development. YES Institute recently brought in experts from Israel – the original Start-up nation - to talk about Israeli Chutzpah. No other country experiences as much Vuca and yet uses it as an opportunity to work within the box to undertake new age R&D. As one expert pointed out, "Much depends on Black R&D or R&D that individuals undertake apart from their work to introduce game-changing projects for the organisation". With the right models, policy impetus, access to risk capital and the courage of conviction, these entrepreneurs are set to launch India as the next Start-up nation with the potential to catalyse and actualise India's transformational growth story.

The writer is MD & CEO, YES Bank and chairman, YES Institute