Fintech player slice announces merger with North East Small Finance Bank

Fintech unicorn slice and North East Small Finance Bank (NESFB) have announced a merger after having received a no objection certificate (NOC) from the Reserve Bank of India (RBI).

The companies say the merger will help them realise the shared goal of integrating “cutting-edge technology offerings”, with grassroots financial inclusion efforts.

Backed by investors like Tiger Global, Insight Partners, Advent International, Blume Ventures, and Gunosy Capital, consumer payments and credit company slice has cumulatively raised $290 million in its series A, B, and C rounds. NESFB, on the other hand, is the sole small financial bank in the northeastern region of India, boasting an extensive network of branches spanning across 9 states. NESFB offers financial services, including bank accounts, deposits, cards, loans, and mutual funds.

A joint statement says the merger proposal, which is yet to receive shareholders' consent and other regulatory approvals, will bring together “slice’s digital prowess and NESFB’s grassroots banking foundation”.

Rajan Bajaj, founder & CEO, slice, says the company will further strengthen its risk underwriting through the use of technology and data while keeping customers at the heart of its decisions. “We see this as an opportunity to build a highly inclusive and responsible bank.”

NESFB MD & CEO Rupali Kalita says the collaboration is bolstered by slice’s innovative technology and a keen emphasis on customer experience. “We will continue to fortify the bank governance, with continuous improvements in compliance, risk management, and leadership.”

NESFB says it’ll continue its dedicated service to North East India, merging technology with deep community understanding to offer top-tier financial services to the region. Following the merger, there will be an integration process, with both entities working to ensure a smooth transition.

Notably, the merger announcement by slice is a significant move as the RBI in June 2022 stopped prepaid instrument (wallet) providers like slice from offering credit lines, following which it switched to offering term loans.

India has solidified its position as the world's third-largest and one of the most swiftly progressing fintech markets. The transformation represents a monumental shift from the industry's early stages to a flourishing ecosystem, poised for enduring growth and sustainable profitability. The Indian fintech ecosystem is expected to grow more than 35% annually to clock over $190 billion revenue by 2030.

A report by Matrix Partners India and Boston Consulting Group (BCG) says the fintech profitability outlook has also improved significantly from 20-30% in 2022 to 40-60% in 2023. The report was unveiled at the Global Fintech Festival 2023 (GFF’23). The profitability outlook for Indian fintechs has improved substantially amid expectations that the revenue would rise to $190 billion by 2030 from $17 billion in 2022, predicts BCG.

As the fintech industry goes through a rough phase, the July-September quarter of 2023 (Q3 2023) saw a significant drop in funding, with a total of $1.5 billion raised, marking a 29% decrease from the previous quarter and a staggering 54% decline compared to the same period last year, according to market intelligence platform Tracxn's latest Geo Quarterly Report India Tech- Q3 2023.