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BENGALURU : Digital services have made great inroads into India with the triumvirate of mobile phones, Aadhaar and unified payments interface (UPI), which crossed 900 million transactions last month, according to the National Payments Corporation of India (NPCI). The Jan Dhan programme has led to a surge in bank accounts, bringing 370 million people into the system, according to the Reserve Bank of India (RBI).

And yet, India continues to lag in the reach of financial services, whether it is loans, investments or insurance. India’s household debt to GDP ratio of 12%, according to RBI data, is way below the global average of 60%. Similarly, its mutual fund assets to GDP ratio is a mere 11% compared to the global average of 62%, shows World Bank data.

Credit and investments will be key drivers of the country’s ambition to become a $5 trillion economy by 2025, which will require a doubling of GDP. Bringing the masses into formal financial services will be crucial if that has to happen. This is where Bengaluru-based fintech startup Setu aims to move the needle with financial products aimed to reach a broader population.

Setu’s founders Sahil Kini and Nikhil Kumar earlier worked together with Infosys co-founder Nandan Nilekani on the “India stack" of Aadhaar and UPI. “It changed the arc of my career, pointing me towards the scale of India’s problems and the need for public digital platforms to address them," says Kini. “It began with ID, but the plan was always to build layers on top of it, because once you establish who you are, you can transact digitally, pay for things, ask for credit, and so on."

Their fledgling venture, which raised a seed round of $3.5 million earlier this year, takes a similar platform approach to enable providers of financial services to reach consumers in new ways with novel products.

Collect is Setu’s first product. It’s a platform connecting billers with multiple payment channels through an application programming interface (API). Integration with Collect enables billers to collect dues, get credit alerts and push receipts to customers. It not only broadens the categories of billers that can collect recurring payments online, but also automates the process.

Increasing collections

Bharat Bill Pay, for instance, is expanding categories of billers on its platform from utilities to schools, insurance, taxes, mutual funds and subscription fees. Billers come onto Bharat Bill Pay through payment gateways like BillDesk. Setting it up and tracking payments can be cumbersome because of manual processes at the back end. “Setu has API-fied the entire process in Collect," says Kini. The API calls that underpin Collect also capture a richer data set from users, which helps financial services providers. An example is Mumbai-based startup Moneytor, which has a SaaS product for lenders and collection agencies to automate the process of debt recovery from defaulters. “It’s a tedious process to reconcile payments made through online gateways to non-banking financial companies," says Anubhav Singh, co-founder of Moneytor, an early adopter of Collect. Now the Setu API embedded in apps like Google Pay and PhonePe captures more information from the customer, such as the loan account number, which sets the context much better than the usual transaction ID. “When payment hits the bank account, reconciliation is immediate," says Singh.

A user can open a UPI-based app like Google Pay, search for the school fees category, find a child’s school, enter the child’s ID number, fetch the bill for a particular period, and settle it. Enabling this are APIs from Collect integrated in payment apps on one side and schools on the other side.

Hyderabad-based startup MyClassboard has a cloud-based enterprise resource planning (ERP) product that 1,500 schools are using to manage everything from admission to academics and fees. Integration with Collect now gives access to all MyClassboard schools on popular payment apps, which makes it more convenient for students and their parents to pay fees. It also makes collecting and tracking payments hassle-free for schools. “Since we’re integrated with Collect, we need not integrate with every payment aggregator separately," says Raveendra Choudary Adusumilli, co-founder, MyClassboard. “And as soon as a parent makes a payment from any of the apps, it is reflected on the MyClassboard dashboard in real time. You don’t have to log in to MyClassboard to make a payment, because everything is API-integrated."

Collect is just the first leg of Setu. Next will be payments on the fly powered by API, says co-founder Nikhil Kumar. For example, it can be integrated with restaurant billing software to generate a virtual payment address and print a QR code on the bill. When you scan that QR code to pay, access all the information in the bill, such as the dishes you ordered, would go to your Google Pay or PhonePe app. A Blue Dart delivery person could generate a QR code from his app in real time and get paid. “We want to build this payments API to enable thousands of use cases," says Kumar.

The next bridges

After bills and payments, Setu will turn to API banking. This would enable any app to give a savings bank account experience to its customers through API calls to banks for everything from account opening to money transfer and getting statements. That product is still in the works.

Kumar’s parents worked for a co-operative bank in Kolar district of Karnataka. His own career began with accounting software company Tally followed by Exotel, where he developed telecom APIs that enable features like routing and masking of calls between Uber drivers and riders. He worked for financial software company Intuit before helping with the launch of UPI and its outreach. He sees Setu as a natural progression of the same path—“a step function of changing the world."

Kini describes himself as a “fourth generation entrepreneur" from a Mangalorean business family. He started his career with McKinsey but knew he would become an entrepreneur. His first venture, an industrial IoT startup, arrived “before its time" and ran out of funds. He switched to the other side as a venture capital investor at Aspada which is backed by the Soros Fund. Volunteering to build India stack and seeing UPI go from nothing to 900 million transactions in three and a half years led to Setu. “We learned that public digital infrastructure is only as good as the ecosystem that uses it. It required a tremendous amount of collaboration between banks and NPCI and payment apps for it to work," he says.

Now Setu—which translates loosely to viaduct—is building bridges between financial services, fintech apps and their users with APIs that aim to touch a multitude of businesses and hundreds of millions of people. “That sense of scale and service is addictive," says Kini.

Sumit Chakraberty is a contributing editor with Mint. Write to him at

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