Fin­techs trans­form­ing into ser­vice providers

Banking Frontiers - - Beyond Disruption -

While In­dian fin­techs are known to be com­ple­men­tary to the BFSI seg­ment, there are ma­tured ones, which have as­sumed the role of full-ser­vice providers. High­lights of the ac­tiv­i­ties of 4 fin­techs which have made a mark in the ecosys­tem:

In­dian fin­techs are trans­form­ing from their startup stage to com­pet­ing with in­cum­bents, especially in the fi­nan­cial ser­vices sec­tor, even while they seem to be com­ple­ment­ing the hopes and as­pi­ra­tions of the es­tab­lished en­ti­ties. The fi­nan­cial ser­vices ecosys­tem as it ex­ists to­day is that while fin­techs need not just cap­i­tal but cus­tomers as well, the es­tab­lished play­ers lack an en­vi­ron­ment of in­no­va­tion and they seem to stag­nate to a cer­tain ex­tent. It is in this back­ground that the two en­ti­ties can com­ple­ment each other.

Dig­i­tal fi­nance is fast grow­ing and it is one area where fin­techs have shown prom­ise and even started gain­ing cur­rency. There are quite a num­ber of these fin­techs, which have de­vel­oped so­lu­tions in ar­eas such as mi­cro­fi­nance, dig­i­tal pay­ments, on­line lend­ing, re­mit­tances and in niche ar­eas like ‘buy now-pay-later’ and un­se­cured loans for those not cov­ered by the con­ven­tional or­ga­ni­za­tions. P2P lend­ing and MSME fi­nanc­ing are key ar­eas where star­tups have brought in dis­rup­tion. The fin­techs have also brought in trans­parency and are cut­ting down costs on due diligence. Most of them are now as­sum­ing the dual role of en­abler and provider of fi­nan­cial ser­vices.

We are dis­cussing with pro­mot­ers/ founders of 4 fin­tech star­tups in the fi­nan­cial ser­vices do­main that have gained promi­nence through their unique busi­ness mod­els and re­sponses to the needs of the cus­tomers. These are LenDenClub, which is a highly suc­cess­ful P2P lend­ing plat­form, PayNearby, which of­fers an app to em­power ki­rana shops, re­tail stores and other mer­chants to make ex­tra in­come by pro­vid­ing Aad­haar based bank­ing and other dig­i­tal ser­vices, ePayLater, which is a dig­i­tal pay­ment plat­form that en­ables ‘Buy Now, Pay Later’ for fre­quent on­line

pur­chasers with an in­ter­est-free credit term, and NeoGrowth, which is an RBIreg­is­tered NBFC, of­fer­ing quick busi­ness loans, especially to SMEs - us­ing a unique tech­nol­ogy plat­form.


Bhavin Pat e l , c o - f o un­der & CEO, LenDenClub, likens bor­row­ing to bungee jump­ing: “Imag­ine that you are go­ing for bungee jump­ing. You are afraid what will hap­pen when you take the next step. The same thing hap­pens when you think of get­ting a loan. How­ever, at LenDenClub, we con­cen­trated on mak­ing pro­cesses simpler, but ef­fec­tive. This re­sulted in a loan ap­pli­ca­tion get­ting con­sid­ered in not more than 3-4 min­utes and that too from one’s mo­bile de­vice. Once we get the ap­pli­ca­tion, we ap­prove the loan within time rang­ing from min­utes to hours in com­par­i­son to days taken by banks. We do more strin­gent and log­i­cal ver­i­fi­ca­tion of the bor­rower. On the ba­sis of that we gen­er­ate our own credit score, ie LenDenClub score. This score helps lenders in de­cid­ing which loan s/he should in­vest in de­pend­ing on his/her risk-tak­ing ca­pa­bil­ity. In­vestors/lenders come on the plat­form to get ac­cess to the pool of ver­i­fied bor­row­ers. Lenders start in­vest­ment with just 3 clicks, which is eas­ier than any in­vest­ment in in­stru­ments like eq­uity, MF or in­sur­ance.”


Anand Ku­mar Ba­jaj, founder & CEO, PayNearby, de­scribes his plat­form as dig­i­tally con­nect­ing bank­ing, fi­nan­cial, in­sur­ance and many other ser­vices from mul­ti­ple providers through the re­tail­ers nearby to every­one. “This helps in dig­i­tiz­ing, sa­chetiz­ing, uni­ver­sal­iz­ing the fi­nan­cial ser­vices, in­clud­ing in­vest­ment, bor­row­ing among other ser­vices and helps a com­mon man to ac­cess his right­ful Direct Ben­e­fit Trans­fer also at a nearby shop rather than not be­ing able to ac­cess at all. We work in close part­ner­ship with banks and other providers as the back­bone and NPCI al­low­ing to lever­age its in­fra­struc­ture for mass re­tail pay­ments,” says he.


Piyush Khai­tan’s ven­ture NeoGrowth of­fers un­se­cured loans to mer­chants who ac­cept card or any other form of dig­i­tal pay­ments from cus­tomers. “We con­sider per­for­mance of the busi­ness rather than just the credit score of an in­di­vid­ual. Our pro­pri­etary risk score­cards built ba­sis deep an­a­lyt­ics and in­sights into cus­tomer be­hav­ior en­able us to as­sess the risk of non-per­for­mance of a loan

Bhavin Pa­tel speaks of how at LenDenClub lenders start in­vest­ment with 3 clicks, an eas­ier way com­pared to eq­uity or MF or in­sur­ance

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