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Established in 2015 as a fintech, Zeta transformed into a banking tech company within five years. The transition coincided with the regulatory restrictions imposed on HDFC Bank in December 2020 governing new digital businesses and issue of new cards.
The restrictions had emboldened HDFC Bank to shed its risk-averse technology approach and actively overhaul its systems, for which it partnered with several technology companies, including Zeta. From back-end technology platforms to front-end digital experiences and surround systems that enable banks to operate an entire product suite — whether loans, deposits, credit cards, debit cards, or prepaid accounts, among others — Zeta offers them all.
The collaboration between Zeta and HDFC Bank paved way for a long-term partnership that revolved around strengthening the bank’s technology infrastructure and cloud services, and launching an upgraded mobile banking app, PayZapp 2.0.
Today, the bank has one of the biggest cloud footprints in the industry, particularly its core banking product.
“We have 6-10 lenders live across the globe right now. In India, for the last few years, we’ve mainly worked with HDFC Bank. There are a few small banks with which we’ve had small contracts,” says Zeta CEO and co-founder Bhavin Turakhia.
Recently the company was involved with the launch of HDFC Bank’s Pixel credit card in two variations — Pixel Go and Pixel Play. Zeta built a new core solution to enable a digital-native card product on a cloud-native stack, facilitating greater customer engagement, information collection, and hyper-personalisation of offerings.
“The product was launched and extensively used in a close loop for over eight months before it was made public in May 2024,” CTO and co-founder Ramki Gaddipati says.
Credit through UPI
“Credit card stack can no longer be viewed as an accounting system for banks. It has to be imagined as a platform for connecting merchants and users, and enabling realisation of value in every transaction. Our core model is for transactional credit and this has been used for credit cards and credit line on UPI [Unified Payments Interface] as well,” Gaddipati says.
The ‘credit line on UPI’ — built on the same digital-native stack as the Pixel card — is meant to pioneer ‘digital credit as a service’.
First announced in September 2023, the company’s ‘credit line on UPI’ initiative offers banks not just the platform but also end-to-end service in launching the product and exploring use cases such as personal loans, buy-now-pay-later offers, and point-of-sale loans. This includes transaction processing, connecting to a UPI network, account processing, billing, fees, interest, charges, statementing, reporting, analytics, mobile apps for small business, web apps, and interfaces for call centre agents.
The company’s management believes that the emergence of the UPI network allows for integrating transactional credit into the system rather than building credit products on top of legacy stacks, like most other fintechs do. The company is positioning itself against the likes of Oracle and Financle as a provider of software-as-a-service (SaaS) for core banking solution (CBS) with a “new way of thinking” that views UPI as a ‘credit superhighway’ rather than a single product.
“Zeta is being recognised for bringing in native thinking of ‘UPI credit’ or ‘UPI rails in credit’ and not retrofitting what is already there. We are re-imagining everything in terms of UPI or ‘scan and pay’, the value proposition that the model provides, and how a client could extract value from every transaction,” Gaddipati says.
Guardrails awaited
The final ‘credit line on UPI’ product will come to market later, since the National Payments Corporation of India (NPCI) has not yet finalised the product’s commercial contours and model. While banks are exploring ways to structure the product, the investments needed, and the potential use cases, the final design is dependent on NPCI’s approval, given the scale and volumes of UPI transactions, as also the merchant discount rate (MDR) or interchange fee involved.
In the meantime, Zeta has been working with NPCI and banks to understand their pain points and needs, to build the technology and services required to ease the adoption. “We want to reduce the learning curve and the training needs of banks,” Gaddipati says, adding that the objective is to have a ready product that banks can roll out within weeks after the NPCI finalises the guardrails.
“We’re talking to all the top 39 banks that are authorised to issue credit line on UPI. We believe this is going to be a $1-trillion per year opportunity by 2030 and Zeta will have 50 per cent or higher market share... that’s our goal,” Turakhia says, adding that the initial focus will be on retail and lending to micro, small and medium enterprises via UPI.
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