Bengaluru-based neobank Fi Money is grappling with serious challenges as its core lending business has failed to gain traction leading to a cash crunch and mass layoffs.

Once seen as a promising digital banking player, Fi now faces a weakening runway, product cutbacks, and an uncertain future.

Multiple sources told Inc42 that Fi’s lending operations, once central to its revenue strategy, have been scaled back.

Despite claiming to have built its own NBFC infrastructure in a townhall in April 2024, Inc42 was unable to find any evidence of the company having an NBFC licence on the RBI portal. As per sources, the startup is still operating under a loan distribution model where it disburses loans on behalf of RBI-registered lenders. And scaling this up has become a challenge.

“At Fi Money, the past few quarters have been about making deliberate, strategic choices to strengthen our foundation and future,” cofounder and CEO Sujith Narayanan told Inc42.

He added: “As part of this process, we’ve phased out a few features that didn’t meet our benchmarks for engagement or monetisation. These decisions were rooted in data and user insights, reflecting our sharper focus on building a more sustainable and relevant product experience.”

Fi’s Big Burn And Shrinking Runway

Bengaluru-based Fi Money is a neobank founded in 2019 by Sumit Gwalani and Sujith Narayanan, who was earlier part of the Google Pay team in India.

The company raised its seed round from Peak XV Partners, Ribbit Capital as well as CRED founder Kunal Shah. Alpha Wave and Temasek also invested in subsequent rounds as Fi raised more than $75 Mn in the first two years of its existence.

It targetted younger Indians in the early days as a go-to-market strategy, even as competitors like Jupiter and Open targeting small businesses. The core offering was a Federal Bank-backed bank account with an app to track spending, set up automatic savings schemes, make UPI payments, pay bills, and invest in Indian and US stocks, mutual funds.

Fi also introduced personal loans gradually and soon this became its core revenue stream. By 2023, Fi had over 3 Mn users, largely........

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