Tajinder Virk on Finvasia's next moves in neobanking

Tajinder Virk, co-founder and CEO of Finvasia, discusses the Group’s expansion into the neobank space, highlighting how competition has moved from speed to solving specific use cases. He also opens up about navigating family dynamics at work and the role of luck – or blessings – in achieving success.

Tajinder Virk has spent more time in Cyprus than India this year, which is not exactly an anomaly for a man leading a global business. However, Cyprus is more than just another stop on his global itinerary, serving as a European base of operations for Finvasia, a Group he co-founded with his brother – Sarvjeet Virk – fifteen years ago. But there’s another reason behind spending long stretches under the unforgiving Mediterranean summer sun. The Central Bank of Cyprus is evaluating the Group’s Electronic Money Institution (EMI) licence application and there are bigger ambitions in play – to launch neobank OneVault in Europe. Sitting in his office in India, Virk explains the motivation behind the neobank. “If you ask those living pay cheque to pay cheque about their biggest challenge, they’ll say, ‘My money disappears the moment it enters my account. How can I ever save?’” This problem isn’t unique; it’s common worldwide. Neobanks, like the one Finvasia is developing, aim to solve it by creating tools that empower people to manage their money more effectively.

In the early days, just a decade ago, ‘neobanks’ – though now not exactly ‘neo’ – such as Revolut, with 45 million customers, and Wise, which processed US$105 billion in payments in 2023, made their mark by doing everything faster than the old guard. All the bells and whistles they added to their product somehow managed the impossible of making banking cool – an oxymoron if there ever was one. Nowadays, though, speed is not enough to compete in space, Virk explains. It is about solving specific use cases, like wealth management.

Building a Data-Driven Neobank

Much like in Moneyball, a biographical sports drama – and for some, a movie about maths – where data-driven strategies led to success for the 2002 underdogs, Oakland Athletics, neobanks are similarly designed to offer people strategic ways to manage their money, options that were once exclusive to the wealthy. For the past two years, Finvasia’s tech team has been building the neobank’s infrastructure, which was soft-launched in India under the Jumpp brand a few months ago. They integrated self-learning artificial intelligence to track spending and saving patterns down to the last espresso – and from which card. “We get every single detail,” Virk says and quickly adds, “Obviously, with your consent.” The AI is meant to know our finances better than your accountant, and with none of the sass – at least, not yet.

So, what insights have they gathered from all this data about people’s spending habits? Virk pauses for a moment, sifting through the examples that come to his mind. “People’s habits depend on their age group,” he says. “Younger people are far more reliant on monthly payments for their purchases.” He also mentions a striking fact shared by a colleague that many young buyers are financing their latest phone purchase while still paying off the previous one. However, he notes that young people’s mindless consumerism fades as their commitments change – starting a family, for instance. People also go through cycles of behaviour, spending more on birthdays, Christmas gifts, weddings and so on. While understanding consumer behaviour is critical, it’s only one part of the equation in the battle to help people manage their money better. “E-commerce is built around creating consumerism and guiding behaviour patterns toward spending rather than saving. So, there’s that tug of war,” Virk recognises. For him, neobanks are in the trenches of this battle, helping people gain clarity in an otherwise dizzying world of impulse buys and subscription plans.

Many struggle to appreciate how something small, like tucking away a modest sum in an index fund yielding 16%, can snowball into something significant. Finvasia’s neobank has many features built into it, including one which automates investments with small sums, say US$100; this is an integral part of solving the case of wealth management for the average person. “The power of compounding could be magnificent and it always feels small when starting but it can have very good outcomes on a longer horizon, like 10 years or more,” Virk notes. Jumpp offers every investment product allowed by the Reserve Bank of India and OneVault will follow suit in its respective regulatory jurisdiction. Vastly different regulatory regimes, Virk explains, are the reason for separating the brands. He also reveals that the Group is in the application process for an investment banking licence in parts of Asia while exploring the Middle East to add to the kitty of payment licences, giving it access to a fair share of the world market. And no matter the brand, the neobank will also offer lending services. By the end of 2024, Virk hopes that all the necessary licences will be in place for OneVault, and, if all goes well – fingers crossed – onboarding will begin by mid-2025.

While automation and wealth management are key features, the neobank battlefield is being fought on another front and, in a delicious twist of irony, it’s one inherited from traditional banks – personalisation. It used to be that a bank teller – who probably went to school with your sister – would ask after your mother’s surgery and pass along her best wishes. However, the few remaining physical branches sit at an awkward crossroads of outdated processes and clunky technology. This identity crisis left a gap wide open to exploit – and incumbents reacted to this by becoming fintech’s sworn enemy. For Virk, this was a big mistake. “There’s a reason we have five different fingers and all have different shapes; there’s room for everybody and if the different participants in financial services worked together, they could make it a lot easier for the end user,” he says. Even so, what has kept banks from competing in the space, particularly in bank-based Europe, where in Q3 2023, the EU banking sector held assets worth some €27.1 trillion? Virk argues that increased regulation has given compliance the keys to the kingdom. “I don’t want to be rude,” he says, “but the compliance people running banks are not business or technology people. They have never faced a client themselves.” Nonetheless, the algorithmic backbone of neobanks has brought back personalisation into banking services, this time by cutting through the noise of those bells and whistles, making the app on your phone a personal assistant in building and managing money.

“Most people do not understand banking because it’s complicated with jargon. How debit differs from credit, for example. Just tell me if money came in or money went out. We are trying to make it useful – we don’t want people to jump between 10 different types of services. It’s about offering financial services as a single package,” he explains.

Healthcare and Finance: Converging Worlds

Interestingly, Virk sees a similar pattern emerging in healthcare, another key vertical of Finvasia, with the two domains converging, albeit in different ways. A person’s genetic makeup, for example, can render some medication ineffective, like the 25-30% of people with a gene that reduces their response to clopidogrel, a common blood-clot prevention drug. This has given rise to the science of pharmacogenomics, studying how DNA variations can affect drug responses. In 2021, the Group invested in Canadian-based Gini Health, which specialises in DNA testing to combat diseases, and has onboarded Dr. Anil Bhansali, a heavyweight ranked 5th in Stanford University’s list of the top 2% most influential scientists in 2022. Soon, Virk claims, precision will become the standard in medicine and, in a way, finance is on a similar path. As Finvasia continues to evolve across sectors, it’s important to understand that the foundation of the company remains firmly tied to the family that built it.

In 2009, having navigated the high-octane world of Wall Street, the Virk brothers returned to India to build a wealth management firm for hedge funds and family offices. But like any ambitious plan, this one evolved too and, seven years later, they launched Shoonya, a commission-free retail broker- age, marking the switch from institutional to retail investing. “We were paying so much to brokers that we felt we’d save a lot of money if we just bought our own tickets,” he says, recounting the rather unplanned thinking behind Shoonya’s launch. To make Shoonya work, they figured out how to e-KYC clients in two minutes where the industry norm was weeks and in a way that left regulators positively surprised. “This was definitely an interesting time when we saw that we’d got something in our hands,” he notes. In 2019, the Group set its sights westward, acquiring Limassol-based CySEC regulated multi asset broker Fxview and, two years later, it picked up one of the oldest social trading platforms, ZuluTrade, cementing its presence in Europe. But amidst all the AI-fuelled, brokerage and neobanking buzz, Finvasia remains, at its core, a family affair.

Managing Family Dynamics in Business

Tajinder and Sarvjeet’s father, a former bureaucrat and an avid real estate investor with nearly five decades of success, serves as an advisor to the Group. The brothers inherited his substantial real estate portfolio, which continues to be one of the strengths of Finvasia’s balance sheet, keeping the business self-funded and profitable. “As a family, we don’t believe in buying, building and selling; the business generates rental income,” Virk explains. The family ties, though, run deeper – Virk’s wife, Reet, is the Global Head of HR, and his sister-in-law, Ramneek Ghotra, is an Executive Director.

Keeping business separate from family life isn’t always easy and Virk jokes that the secret to avoiding work arguments spilling over to family dinners is not to have arguments in the first place. On a more practical note, the brothers have virtually divided the Group’s brands into their respective areas of passion, and they’ve agreed to give each other veto over decisions in their respective domains. So far, this strategy’s been a winning formula. As a family they believe in “Everything for everyone and nothing for anyone”.

Today, Finvasia has more than 20 offices in 10 countries employing a 600-strong white collar team. However, bringing such a wide-reaching network under one culture where innovation is paramount has been tough. “One of the biggest challenges,” Virk says, “is that these values come top to bottom and I cannot be in all these countries myself.” So, local Managing Directors carry the weight of conveying those values but egos and hierarchies complicate things. To address this, Finvasia has centralised HR under a single Global Head, allowing any employee to bypass local management to voice concerns. But it’s not always easy to deal with veterans and sometimes strong-headed leaders, for example the “arrogant bankers,” as Virk puts it? The answer was close to home. Virk’s wife, who led HR at a large firm before their marriage, took on the task. “We needed someone with teeth, someone visibly connected to the founder’s office,” Virk says. The transition was rocky but job satisfaction has improved significantly in recent years. Virk proudly notes an anecdote about a head-hunter mentioning that Finvasia is among the hardest firms to recruit from. “We are not picture perfect,” he concedes. “We have and will have issues but we try to maintain a cohesive culture and keep the independence of human resources.”

A Personal Connection to Healthcare

One of the projects in Finvasia’s healthcare arm that is particularly close to Virk’s heart is the diabetes reversal facility Finvasia Health. His personal connection to the cause stems from his mother. She has been a diabetic for over thirty years and he often felt that her doctors didn’t do her justice, were always in a rush, tweaking dosages without understanding her needs and the only solution provided was more meds. Determined to find a better approach, Finvasia Health was designed to move away from the dose-upping approach. The facility produced striking results in its first year, as patients with high HbA1c levels (over 10%, meaning very poor) saw them drop significantly, with more than 80% of patients reporting normal. “It didn’t feel like we were doing anything revolutionary,” Virk says. “We just took what was out there in peer-reviewed research, fast-tracked it and implemented it. But the results spoke volumes.” Today, the facility treats nearly 10,000 patients.

Finvasia recently filed its first patent for using food extracts to treat skin fungal infections, with clinical trials underway, and has seven herb based medicines approved by India’s Food Safety and Standards Authority. “Every now and then,” Virk muses, “you solve something significant, something people have just accepted as a given. That doesn’t happen every day. But when it happens, it feels like you’re doing something worthwhile. Money, after all, is just a by-product. The real question is: are you solving a genuine problem or are you just another copycat?”

Success and Blessings

Does luck play a part in coming to these rare solutions? “I believe everyone in the world works hard, even the guy pushing a cart at the supermarket. But being blessed has a very large part to play.” Sensing that a cultural barrier might have blocked the meaning of his words, Virk adds, “I’m not sure how to define being blessed. It could be because you are trying to do the right thing. I don’t think it’s luck, though. Luck does not come unless you work hard.”

(Photo by TASPHO)

This Special Feature first appeared in the October edition of GOLD magazine. Click here to view it.