OpenTap is for blue-collar workers
OpenTap is an early stage AltFin company, serving the middle to low income groups and aiming to financially including blue collar workers. Senthil Natarajan, co-founder and CEO of the company, speaks about his vision and plans:
N. Mohan: What differentiates OpenTap from other market players in this domain?
Senthil Natarajan: OpenTap has a 3-point differentiator from other players in the market – the target population, the product and the business model.
Which segment of the population is your main target audience? Why?
The underserved blue-collar workers are our main target audience. This segment of the population is not only underbanked, they are underserved as well. Within this population, we find that the salary range varies vastly. At present, the upper / higher range unfortunately is the basic criterion for several players to determine eligibility and disburse loans. And oftentimes, when this section of the population applies for a loan, they get sidelined or rejected. This is precisely the population OpenTap is addressing. We have devised a methodology to analyze their creditworthiness and we are introducing them to the world of alternate finance – starting off with shortterm personal loans.
What is your organizational structure to cater to the needs of this target audience?
OpenTap has very audacious goals to become the one-stop-shop for this segment of the population for all their financial needs. The organization structure has been designed to cater exactly to that requirement. We follow a hub and spoke model – satellite offices in target markets with all the crucial support functions at the head office. We have also deployed technology to ensure that we as an organization work towards digitally including this population, which is currently vastly off-line. We believe financial inclusion will pave the way for digital inclusion.
How crucial is technology’s role in shaping P2P landscape in India?
I strongly believe technology will play a very critical role in shaping the alternate finance landscape in India. This is mainly to address the scale – because the population needing to be financially included is that large. While technology will address scale, it will also help increase turnaround times, reduce chances of error and make the entire process from application to collection user friendly and objective. All that said, technology will also hasten the pace of digital adoption / inclusion – which then will certainly open a whole new world of products and services to this target population.
How is risk mitigation taken care of? What about NPAs and their management?
OpenTap follows a unique strategy of pre-selecting a group of customers based on their employment to reduce risk. The first point of entry for them is a short-term personal loan, which helps the customer tide over a crisis or any other pressing requirement. The nature of the product and the reasoning reduce the risk of default and our track record definitely proves that point. We try to avoid NPAs and when they do occur, it is solved by education and peer pressure.
Do you consider the recent regulations as helpful for P2P players?
The seal of approval and the credibility it brings is useful for P2P players, no doubt. That said, the `10-lakh limit for lenders, if applied for institutional lenders also, is certainly an issue. As is the prevention of any cross selling. It doesn’t help end customers at all - unsecured personal loans is only one part of the story.
What will be the estimated size of the Indian P2P market in next 3 or 5 years?
As per a KPMG / NASSCOM report, the Indian P2P market would be anywhere between `4-5 billion by 2023.
How sustainable is your business model in the years to come? Who are the competitors and how evolved are the systems that can take on this competition?
Frankly, competition does not occupy too much of our mind space. When we are talking about financial inclusion, I believe the more companies there are in the market, the merrier. There is just so much to do. That said, there are several companies that address similar requirements that OpenTap does, but they are not exactly in the same bucket. So, OpenTap occupies a position that is uniquely ours – from a target segment and services perspective.
As far as our business model goes, it is not static. It will evolve and adapt with the market and the requirements of our customers over time. And mind you, only players who are able to adapt will survive to make an impact.
Senthil Natarajan has a simple solution to contain NPAs - avoid NPAs in the first place and when they do occur, solve it by education and peer pressure