A ‘Neobank’ is one which operates exclusively online i.e. a digital only version of banking. No branches. Electronic payments. Less human interaction and definitely less paper. When I think Neobank, I tend to think of consumers, apps and maybe a card.
So is it possible in the Agriculture sector?
I have two specific examples below which, together add up to something unique.
1️⃣ Oxbury Bank. They are a UK based digital Bank, exclusively focused on Agriculture. Their use of in house technology has allowed them to get closer to their own clients, but also opens up opportunities.
2️⃣ DGV are a vertical Neobank for Dairy in India. DGV have built on top of existing banking infrastructure, which they rent, but this allows them to focus solely on their mission - providing better financial products to the Dairy industry.
Let’s have a look in some more detail (beyond the apps, consumers and cards) to see some of the innovation they bring to the market.
🌳 Oxbury Bank - the first Neobank for Agriculture?
They have a banking licence with the FCA / Bank of England and serve the UK Agriculture market, but it has
- a remarkable background;
- a fascinating proposition;
- Fintech first outlook on the future.
Let’s have a look 👀
The Oxbury background obviously stretches beyond early 2021. Their founding team are a very unique trio.
- Nick Evans was a banker with Bank of Scotland before setting up F4F, a data integration business now part of Proagrica.
- James Farrar is the current CEO and helped set up Oxbury after leading ClearBank, a seminal Banking-as-a-Service provider globally. (Banking-as-a-Service or ‘BaaS’ allows fintech companies and banks to develop their digital propositions quickly on existing infrastructure, thereby avoiding everyone building the same stack).
- Finally, Tim Coates, who is an Oxfordshire based farmer and comes with a wealth of experience in Financial Regulation.
The Current Proposition is based around “putting more people into customer facing roles”, which it can invest in by reducing their back office overheads. Relationship banking is seen as a key part of the offering.
Their strong growth in the past 14 months has been down to innovation in not just their technology stack, but also savings and lending products.
For example, the Oxbury Forest Saver account is one which pays out interest in carbon reduction. So for example, if you earned £155 in interest, they will plant 100 trees for you, using their fixed cost of £1.55 per tree. These trees can then be used to offset your carbon liabilities as an individual or as a corporate. 💡
In the 2000’s funky product structuring almost collapsed the housing and banking systems. In the 2020’s, product creativity, as demonstrated here by Oxbury, is rebuilding the environment. This is a fascinating shift in the Fintech landscape.
So far so good, but the final thing to highlight is Oxbury’s positioning going forward, particularly around their technology.
They have worked to develop this in-house which is core to their current UK proposition, allowing them to put those people in customer facing roles. It is a standalone asset and maybe Oxbury could leverage this?
Speaking to Oxbury, it seems they are also intent on a similar strategy and are actively speaking to partners in markets with similar regulatory and legal frameworks (assumed to include the US, Canada, Australia and New Zealand). That is very encouraging as it promises one route to innovation in the emerging Agri Fintech space.
Oxbury, the UK focused Agriculture Bank, now starts to look a lot like a global Ag Banking-as-a-Service platform, which is extremely compelling.
🐄 DGV - The Dairy focused Neobank
Like Oxbury, they target a specific community, but this time go super niche in only one vertical - Dairy. In India. But that is obviously no small feat.
DGV was founded in 2019 by Ragavan Venkatesan who came from a financial infrastructure background after helping to build out both the National Payments Corporation of India and the Payments Business of IDFC First, a major Non Bank Financial Institution in India. Similar to the Oxbury team above, this understanding of infrastructure is key.
DGV have recently taken external investment, including from our friends at Omnivore, an investor in many of the major Agri Fintech companies in India.
The Dairy sector in India is highly attractive for an Agri Fintech play. It’s size is astronomical at $145bn on an annual basis 🤯 and the more regular cashflow lifecycle of dairy, makes it easier to experiment and iterate.
DGV’s specific proposition is to tackle the financial pain points around payments, tracking the financial assets and liabilities and then building specific financial products to solve some of the financial bottlenecks such as cattle loans and insurance.
This is an excellent case study of a financial service being built on top of existing software - both the banking software and enterprise software.
DGV partner with Federal Bank in India, who provide the technology stack and DGV access both this and the relevant data at the dairy cooperative level.
If Oxbury are the first Ag Banking-as-a-Service provider, then DGV are the first pure play embedded finance in Agriculture.
Sure - others are offering embedded finance products globally, but DGV only offer this and that is an important distinction. They are focused purely on the financial product.
Will we see more ?
While right now these both feel like unique offerings in the market, I can easily see specific offerings develop in specific ecosystems and DGV illustrate this extremely well in the dairy sector.
It will be interesting to see and hear more from Bushel, for example, about the Bushel Wallet product roadmap and also from Ambrook in relation to the financial ecosystem they are developing, which also includes card functionality. (Cards have been a traditional gateway to neobanking).
Similarly, in markets such as India or Indonesia there are numerous vertical specific players who are already facilitating vertical specific finance.
For now - kudos to both Oxbury and DGV. These are exactly the type of companies I love discovering and writing about and I hope you have enjoyed hearing about them. The best is still to come from both and from the sector as a whole.