A market leader in the unsecured consumer loan market, IndiaLends is enabling the common man so he can live a better life and most importantly a life that he hopes for.
In an interview with Insights Success, Gaurav Chopra, the CEO & Co-founder of IndiaLends have shared some insightful views and highlighted the influences made by their company to be the most Emerging Tech Start-ups in India.
IS: Brief us about your company. Tell us about the inception story of the firm.
IndiaLends is a digital platform that provides a marketplace for financial products such as personal loans and lines of credit ranging from Rs. 10,000 to Rs. 50 Lacs, Credit Cards & Free Credit Reports. IndiaLends connects borrowers with financial institutional lenders such as banks and NBFCs. The platform simplifies the entire borrowing experience for the consumer right from helping with loan applications to disbursing loans within 48 hours of applying.
The platform processes a large number of data points for each borrower to help them get the right credit product at an affordable interest rate, while also helping financial institutions improve their risk scoring capabilities. IndiaLends uses proprietary algorithms to connect borrowers with right financial institutions. It also provides data analytics and risk scoring services along with a loan management platform to financial institutions. It has also helped automate workflows and risk assessments thereby making the loan disbursal process much more efficient.
India is an undeserved market with approval rates for consumer credit below 10%. In India organized lending is available only to a lucky few mainly those with high credit scores. The remaining borrowers are at the mercy of unorganized lenders and loan sharks and end up paying high interest rates. What also makes approaching traditional Banks or NBFCs for taking credit unappealing is the long-drawn process of reaching out to multiple lenders, the long application process, researching for the right information such as the right credit product, interest rates, documentations needed, etc. Additionally, unsecured loan categories remain significantly under-tapped due to the dependence of Lenders on robust credit risk assessment capabilities. This leads to financial institutes missing out on a large chunk of potential customer segment.
Through our products and services, we are trying to solve these issues by ensuring that borrowers have easy access to right credit options with best interest rates and in minimum time possible. For our lending partners we are sourcing accurate information about the applicants and helping them reduce the time and cost involved in acquiring right borrowers.
IS: Brief us about the Founder/CEO and what inspired him/her to start a tech based business.
Gaurav Chopra and Mayank Kachhawaha worked together in Capital One in London for about 10 years, this is when the idea of enabling borrowers to secure cheaper and quicker loans and helping lenders make better credit risk decisions was conceived. There was no looking back after that. Apart from the strong business acumen and knowledge garnered over the years, their strong academic pedigree of the London School of Business and IIT Madras is what helped our Founders sail through all the challenges that came their way in establishing the brand IndiaLends in the digital lending consumer space.
The core idea behind IndiaLends, was to enable the common man so he can live a better life and most importantly a life that he hopes for. Our prime focus is to help our customers get the best interest rate offers possible and aid our partners to source accurate information about the applicants. We aim to innovate the online lending space by providing borrowers with the right credit product in a matter of few clicks and almost instantly. Additionally, we are equally committed towards making the lending process as seamless and hassle-free experience as possible for our lending partners.
IS: Kindly make us aware about the various tech-enabled products or services your company is going to provide.
The primary parameter considered for lending is a person’s credit score. We are changing this by using data points such as past bank transactions, utility payments, etc. to build credit risk models that enables an instantaneous underwriting decision. We strongly believe that through the use of data, deep analytics and machine learning algorithms, we will be able to enable more borrowers to secure cheaper loans at a faster rate and also help the lenders make better credit risk decisions. What differentiates us from any bank or NBFC is that we scientifically match the right borrower profile with the most relevant lender and thereby reduce inefficiencies that lead to lower loan approvals, higher interest rates and sub-optimal loan amounts.
IS: State the challenges faced by the founder or the company as a whole while in the process of formation.
One of primary challenges we faced when we decided to enter the retail lending space in India was that majority of the loans were still being applied for and disbursed offline. Digital Lending was still a fairly new concept. One of the key tasks at hand was to create awareness amongst people about the ease and convenience of using a digital platform for their credit needs.
Another challenge was that we were not the first to enter the digital lending space in the country and compared to the existing companies in the space, we were fairly small. While these challenges existed, we also understand the potential growth of the retail lending space in India and how the adaptation of digitisation will impact the sector. We worked on the fundamental areas where we wanted to add value as a digital credit products marketplace and how would we provide a better and seamless experience to the customers. Time to time we reassess ourselves and constantly work towards improving our services and making our process more efficient.
IS: According to you, what are the notable factors to keep in mind while catering to the clients and dealing with techno-based products or services?
The points to be kept in mind when catering to a customer coming on your digital platform to avail credit products are that he wants to access instant funds through a seamless experience. He wants to avail a credit product with minimum paperwork and with minimum time needed for the entire process of submission of the application to the final disbursement.
So, focus on technological innovation and commitment towards data security, and efforts to make the entire process of taking a loan a simplified journey is imperative. From providing free and credible credit reports, to verifying the details about the applicant’s income sources, bank statements, ID proofs etc should be done through an automated process online. For a better customer experience curate and recommend best and relevant credit options that they are eligible for.
IS: Educate us about your vision to the future in terms of growth and expansion.
We see IndiaLends becoming a market leader in the unsecured consumer loan market. We are uniquely positioned to tap the huge opportunity available by using technological advancements, specifically by reducing loan origination cost, better risk assessment capabilities by using alternate data captured during the customer’s digital journey, low customer acquisition cost, and faster loan processing because of a completely digital process. Additionally, our differentiated solution gives us a competitive advantage and we will continue to develop and focus on technological innovations to further this. Currently present and prevalent in 55 markets, we plan to expand to nearly 120 new cities by 2020. Additionally, we intend to launch new products and services that will make our offering even more wholesome. Some of the products that we are looking to launch in the near future are Line of credit, E-commerce Loan, etc.
IS: What would be your advice to the budding entrepreneurs hoping to get into this tech-enabled field?
My advice to all the budding entrepreneurs starting out their own venture will be:
Ask yourself a question- what problem are you trying to solve through your product/service and how will you solve it a different and better manner than others in the market.
Hire the right people for the right job and empower them to make independent decisions, this will go a long way in making your company successful.
Be patient and persistent. Starting your company maybe easy but to keep the show running will need a lot of hard work, patience and resilience. fight your way through setbacks and challenges. Starting something of your own isn’t just about the passion for the idea, it’s also about enduring the pain of setbacks and failures, and getting up each time.
IS: What are the technological innovations you wish to see happening in India at the earliest?
For the Indian Fintech space to evolve further, it’s important that emerging technologies are adopted by companies in the Fintech space. To remain relevant and to ensure smooth and secure transactions of large volumes, to mitigate risk, companies need to build and integrate newer technologies on a real-time basis to serve customers better.
Emerging technologies such as blockchain and smart contracts help companies enhance the security of consumer data and make the digital lending process more transparent. Cognitive Science and behaviour analysis are important tech innovation as they will help companies enhance customer’s experience on their platforms and also make it easier to showcase them products that are best suited to their needs and lifestyle. Robotic Process Automation technology is changing the lending space as it provides an efficient and fast way of analysing the effectiveness and efficiency of any process. Another disruptive technology is Artificial Intelligence (AI), this tech will completely remove the need for manual intervention form the lending industry. Comparison of data, verification process, credit assessment, approval of loan and disbursal process will be done is lesser time and with reduced chances of errors.
IS: As a tech-startup, what is the current situation in the company’s workplace environment and are there any developments taking place?
Our focus for the coming few years will be:
- Tapping into lesser chartered territory such as tier 2, tier 3 cities in the country: The penetration of unsecured credit offerings to the Tier 2 Tier 3 cities of India has been abysmally low. Majority of the credit products offered by Banks and NBFCs are catered to the metros and semi-metros. Since unsecured credit products are not backed by any assets or collaterals, there is a greater risk associated with providing loans or other credit products to such a segment. IndiaLends is catering to this underserved market by exploring unconventional credit risk assessments models that uses unique data points such as past bank transactions, utility payments, monthly rent payments, mobile phone payment patterns, subscriptions such gym memberships etc. for instantaneous underwriting decisions.
- Making credit lending more inclusive: by expanding the customer base to include not just urban salaried individuals with good credit scores but also the low salaried customers, poor credit profile customers, blue-collared customers, etc. residing in smaller cities and towns. Currently, these customer categories remain significantly under-tapped due to the dependence of Lenders on robust credit risk assessment capabilities. This leads to financial institutes (Banks and NBFCs) missing out on a large chunk of customer segments. In order to help them tap into this customer segment, we have integrated unconventional credit risk assessment models that use unique data points such as past bank transactions, utility payments, monthly rent payments, mobile phone payment patterns, subscriptions such gym memberships, etc. for instantaneous underwriting decisions. This allows Lenders to widen their customer segments without incurring the high cost of technology up-gradation, infrastructure cost, marketing costs, etc.
- Providing credit to the self-employed segment of the country: The self-employed segment in the country still lacks access to ample formal credit, making financial inclusion a key issue for this segment. The overall disbursal rate for self-employed individuals in India stands at 30%. The main barriers preventing small-scale entrepreneurs in the country from accessing bank credit are lack of steady income source, no credit history, and informal nature of business. Through our innovative lending models leveraging alternate data points for credit risk assessment and underwriting, we are addressing this issue. We have enabled small entrepreneurs in the country, be it budding start-up entrepreneurs or the Kirana shop owners to get easy access to credit options with best interest rates with the ease of a click in minimum time. In Q1 2019 alone IndiaLends disbursed over 2000 personal loans to self-employed individuals, a number which is expected to grow further in the coming years.
