Fintechs transforming into service providers
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