Open Neobank: An Overview of India’s First Neobanking Unicorn

Open, once celebrated as India’s initial neobanking unicorn, is still working towards fulfilling its potential. The Bengaluru-based startup reported a revenue of less than Rs 50 crore in FY25, while its losses exceeded Rs 100 crore for the fiscal year ending March 2025.

In FY25, Open’s revenue from operations surged by 85% to Rs 46 crore, compared to Rs 24.8 crore in FY24, as indicated by its annual financial statements obtained from the Registrar of Companies (RoC). The company develops digital payment solutions that provide businesses with fully digital current accounts, along with an array of integrated tools for finance, accounting, and credit, collaborating with banking and lending partners.

Revenue Breakdown for Open

Open’s revenue in FY25 was primarily generated through subscription-based digital payment services and commission income on a pay-per-use model, contributing Rs 46 crore. Additionally, the firm recorded Rs 12.1 crore from interest on deposits (non-operating), due to a healthy cash and bank balance, raising its total revenue to Rs 58.1 crore for the fiscal year.

Operational Costs of Open Neobank

For the neobank platform, employee benefits accounted for 62.5% of total expenses, which reached Rs 100 crore in FY25, while software costs were noted at Rs 18.3 crore. Expenses related to legal/professional fees, advertising, commissions, travel, insurance, and other overheads brought total expenses to Rs 160 crore in FY25.

Financial Performance

The 85% revenue growth, coupled with a reduction in employee benefits, enabled Open to decrease its losses by 35.8% to Rs 108.8 crore in FY25, down from Rs 169.6 crore in FY24. The total accumulated losses for the Tiger Global-backed startup have now reached Rs 1,921 crore ($225 million) by FY25.

Improving Financial Metrics

Open’s expense-to-revenue ratio improved in the past year, although its Return on Capital Employed (ROCE) and EBITDA margin were recorded at -56.6% and -235.65%, respectively. By the end of the previous fiscal year (FY25), the company possessed total assets of Rs 210 crore, including cash and balances of Rs 202 crore.

Funding Challenges and Market Outlook

According to various sources from startup data intelligence platforms, Open has attracted over $190 million through various funding rounds, including a significant $50 million round led by IIFL and supported by Tiger Global, during which the company achieved its unicorn status in 2022.

Open’s fiscal numbers for FY25 reveal a challenging landscape for India’s neobanking sector. Despite achieving unicorn valuations and substantial funding, regulatory challenges regarding digital lending, First Loss Default Guarantee (FLDG) arrangements, and prepaid credit lines, combined with elevated employee costs and fierce competition from traditional banks, have made achieving profitability seem distant. Rapid user acquisition alone is no longer a reliable indicator of success for all neobanking platforms.

Future Strategies for Open

To stimulate growth, Open and similar neobanks must expand their service offerings beyond basic banking functionalities. Potential areas for expansion include lending for small and medium enterprises (SMEs), wealth management, insurance distribution, and the development of SaaS-based finance tools, utilising their existing customer relationships. Given the current regulatory environment and pressure from investors, growth in this sector appears challenging.