Moneytap provides credit line on mobiles
It is like getting a loan sanctioned on the go. The app facilitates sanctioning of small ticket loans in minutes
Here’s an app that offers you a credit line. Moneytap is the first of its kind app that offers funds on demand with zero collateral for salaried and self-employed persons. There is no need for bank visits, phone calls and what is required is just 4 documents and 4 minutes to file the application. And the eligibility is assessed instantly and evaluation is done real-time. And the loan approval is available almost the next minute.
“A credit line for consumers with accessibility through an app is a new concept in India and we are excited about the opportunities it can bring to thousands of millions of Indians,” says Kunal Verma, co-founder of Moneytap, the startup that is headquartered in Bengaluru. “Moneytap is like a friend who gives you money when in need, be it marriage, birth, sudden death in family, school fees, hospital bills or sudden cash crunch during the month-end. Moneytap wants to make credit available for deserving and eligible candidates without the hassles of procedures and formalities,” he adds.
Verma says Moneytap’s mission is make credit accessible to those who deserve it. He maintains that the app is a truly powerful and disruptive financial instrument facilitated by the ubiquitous presence of smartphones and initiatives such as Aadhaar. The facility is provided as credit line for consumers, offered in partnership with leading banks and NBFCS. “Given India’s low credit card penetration and fast-growing smartphone population, Indiastack (UPI, Aadhaar) and other changes in the landscape, our goal is to reinvent qualification, disbursement and collection aspects of consumer credit using technology and smartphones. It’s a joint offering with financial institutions where we bring in digital customers through the app, qualify them, share risk (partially), help underwrite them cost-effectively and disburse the money in the form of a credit line, all on the app backed by cloud-based credit and transaction servers. Since the launch in September 2016, we have attracted over 400,000 users and launched the app in Kannada in Bengaluru,” says Verma.
He sees Moneytap as a facilitator, helping consumers to get credit easily and quickly through recognized banking institutions with the power of mobile technology. Middle income customers (salaried and self-employed) making `20,000 per month or more and facing frequent cash crunch for regular needs like education, medical, birth/death, etc, are not serviced by financial institutions without putting up collaterals. During pilots, the founders were told by potential customers they needed such a facility. And today, they can have access to credit with a single tap on the mobile phone. It is also introducing the concept of credit line in partnership with banks.
Verma explains credit line: “Credit line means a bank will issue a limit of up to `5 lakh without any collateral or charging any interest. Against this limit, using the Moneytap app, customers can borrow as little as `3000 or as much as `5 lakh and repay it as EMIS in 2 months to 3 years. The interest is paid only on the amount borrowed and the rates can be as low as 1.25% per month. The limit also gets automatically replenished as soon EMIS are paid back. Any salaried or self-employed professional can download this free Android app and in a few minutes, using a patent-pending chatbot interface, provide all the information typically required by the banks. The app securely connects with the banking systems to give them not only an instant approval but also a credit limit, depending on individual credit history.”
He explains that once a credit line is sanctioned with an upper limit, one can choose to withdraw specific sums from the credit line. This contrasts with obtaining a personal loan would force one to take the entire sum sanctioned even when the requirement is spread over a period. The interest would be charged only on the small amounts withdrawn and not on the entire sanctioned amount. This actually
Kunal Verma explains how Moneytap will exploit the ubiquitous presence of smartphones to offer credit line to those eligible for it
makes a whole world of difference to a person’s monthly cash flows and overall financial condition. The flexible borrowing options also come with the convenience of deciding payback periods for the separately borrowed amounts. Thus, for an amount of `5000 borrowed from the credit line, one could choose to repay in 2 months and pick a longer tenure for `50,000, say anywhere between 12 months. In contrast, a personal loan tenure would be fixed upfront with little or no flexibility in most cases. Another advantage is that as soon as EMIS are paid back, the credit line gets replenished automatically and one can continue the cycle of borrowing and repayments without needing to apply again.
Varma believes there is something niche about Moneytap. Says he: “Moneytap not only qualifies a customer but stays in his pocket to give a bite-sized loan whenever he needs it. Our data-backed research reflected that people are not comfortable going to banks for loans for minimal amounts - say from `3000 to `50,000 to `1 or 2 lakh. On the other hand, asking for money from family and friends always has an embarrassment factor. Thus, for even the simplest of credit needs, people are put under high scrutiny. This is where we thought that an innovative, people-friendly credit product would be a friend one could reach out to in times of need and get instant help.”
How is the creditworthiness of a borrower assessed? Verma says on average, it takes 8 minutes for a customer to qualify after opening the app. The approval is instant, on the app. After that, the KYC formalities are completed. And there are no charges levied at all.
There are of course some qualifying standards. Firstly, an individual needs to qualify the Moneytap eligibility criteria: 23 years and above in age, salaried individuals with minimum salary of `20,000 pm, credible KYC documents and residents of Delhi, NCR, Mumbai, Bangalore, Hyderabad, Chennai, Pune, Ahmedabad, Vadodara and Bharuch (will be launching in other cities soon).
“Our technology platform, along with those of our partner banks, does a series of checks on the application before the funds are made available to the customer. If at any stage the information furnished by the customer or the verification(s) initiated by us are found to be incomplete, fraudulent or unverifiable, then the application will be terminated. No fees will be charged. Our partner banks check the creditworthiness of the applicant based on their credit history. The application is approved/ disapproved basis all the steps. Once approved, the credit limit is set according to the credit history,” Verma explains further.
Moneytap gets a small portion of the transaction fee from the bank. It does not charge the customer. There is no fee for downloading the app and getting the approval. An amount of `499 + taxes is charged as an Annual Line Setup Fee to avail the Moneytap facility. “This amount allows us and our banking partners to ‘block’ the amount of money so that one can withdraw money 24 hours a day, 7 days a week. The fee also includes the initial home visits and processing of one’s KYC.
Moneytap’s full stack technology platform integrates deeply with its banking partners’ systems and covers the full customer journey and product lifecycle. Verma elaborates: “On one side, we have our mobile app for customers that is currently available on Android platform. The app itself has a proprietary, chat-based interactive design that provides an intuitive, conversational experience like chatting with a friend. Then, there is the backend, which encompasses the full credit lifecycle right from qualifying and selecting a customer to managing compliance requirements and transactions. The backend server infrastructure is largely AWS- based. There is deep API integration between frontend and backend and between Moneytap and our banking partners’ technology systems or designated third parties. This allows for information movement and workflow management in real-time. Additionally, we have an extensive analytics and data science infrastructure that allows us to make intelligent workflow decisions and build and enhance our algorithms for offering valuable services to our customers. We’ve also filed for a few patents around the technology that we’ve built.”
Moneytap intends to reach one million Indian customers in the next 3 years. It is currently present in 14 cities in India and to meet the goal, it aims to cover 50 cities by the end of 2017. “While we have a tie-up with RBL Bank at present, we will be partnering with a number of other banks in the coming months. We are already catering to the salaried and self-employed segment with earnings above `20,000 per month and the goal is to include those people earning between `20,000`15,000 and eventually reach out to the ones earning `15,000 – `10,000 as well. We just launched the app in Kannada and have plans to launch it in other regional languages soon,” says Verma.
Staff at Moneytap in a discussion session