As India’s digital economy grows, fintech startups have been making money lending in its various forms an easier exercise. In an attempt to ease the flow of funds in various sectors of the economy, numerous startups are simplifying digital lending. A customer’s credit reliability is tested based on Aadhaar details and real-time algorithms. The alternative lending facilities include loans for individuals, Small and Medium Enterprises (SMEs), e-commerce sellers etc.

Amongst those startups who have been simplifying digital lending are Rubique, InCred, ZestMoney, Qbera, Loan Singh etc. To use these financial lending platforms, a customer has to visit their websites and apply for the desired loan. After filing all the details, including KYC, Aadhaar card details etc, a customer can get a loan in about 24 working hours.

Rubique, one of the financial lending startups based in Mumbai and started in 2014, has been catering to people’s financial needs with its real-time processing and online approval by direct integration with financial institutions’ systems. Working as a medium for a customer and financial institutions, data analytics performed on hundreds of data points on Rubique’s platform assess the creditworthiness of the customers (loan origination qualification), bringing predictability by giving them eligible offers to choose from. Rubique offers a marketplace for the customer to get choices (eligible) and also an end-to-end fulfilment support just like any lender.

Using real-time processing is also part and parcel for Zest Money, based in Bangalore since 2015, whose USP is its simple digital process, fast approval time and flexible products, with the benefit of multiple options to pay EMIs. It also boasts of having one of the highest Net Promoter Scores in the industry. It is a platform model working with underlying lenders (a bank and a couple of NBFCs), using their capital to extend loans.

In 2016, Loan Singh entered the lending market in Goa, and caters to the digital experience of financing across various stages of the loan lifecycle—be it application origination, underwriting, fulfilment, or repayment—for both borrowers and lending partners. Using cutting-edge technology and proprietary credit underwriting algorithms, based on alternative data sources, Loan Singh enables frictionless lending to creditworthy and underserved borrower segments. It mainly provides personal loans (for salaried individuals), Professional Certification Loans (for students pursuing skill development and certification programmes), and Small Ticket Unsecured Personal and Consumer Loans (through third-party associations). 

Others like InCred, founded in January 2017 and based out of Mumbai, focus on giving credit to those customers who have traditionally been underserved by large banks and NBFCs. However, its robust technology platform and algorithmic credit deciding frameworks enable it to work with shorter turnaround times and disburse loans quickly. InCred offers a wide portfolio of products, including consumer loans, education loans, affordable housing loans and SME loans.

With the “Digital India” initiative boosting growth exponentially, today ordinary citizens are very comfortable applying for financial products, making payments, and managing their financial lives digitally. ”

One of the other platforms which believes in catering to those beyond the preferred loan-takers of A or A+ category for banks is Qbera. Founded in February 2017 in Bangalore, Qbera caters to the financial needs of individuals with incomes less than Rs 6 lakh per annum, employees working for companies unlisted with banks, and people who are new to credit in addition to those who live in PGs or bachelor accommodations. And keeping up with the industry’s trends, Qbera disburses loans in 24 working hours through cutting-edge processing and underwriting mechanism.

These platforms mostly credit their success and entry into the market to the Centre’s “Digital India” initiative. Prithvi Chandrasekhar, Head of Risk & Analytics, InCred, told The Sunday Guardian: “Digital India has helped us significantly, both by promoting elements of a digital ecosystem and catalysing a mindset shift. India’s digital ecosystem provides us with critical infrastructure, like Aadhaar-based ID, telephone numbers linked to Aadhaar, bank accounts linked to PAN and Aadhaar, credit bureau data, eKYC, NACH payment processing, etc. Today, it is hard to imagine operating a lending business without all this infrastructure, most of which did not exist a few years ago.”

Aditya Kumar, Founder and CEO of Qbera, said: “Due to digital penetration, banks/NBFCs are keener to partner with digital lenders for online acquisition of unsecured leads and paperless processing of an application. Furthermore, with digital data points, the risk factor has reduced significantly in the unsecured lending space.” 

Sheetal Mayekar, Strategic & Commercial Intelligence, Rubique, told The Sunday Guardian, “Specifically for Rubique, the conservative mindset of large banks towards opening up their system towards API integration has changed and now, we have over 80 financial institutions on board.”

With the “Digital India” initiative boosting growth exponentially, today ordinary citizens are very comfortable applying for financial products, making payments, and managing their financial lives digitally. However, despite this, the biggest challenge for online lenders remains the lack of data and diversified information.

Lizzie Chapman, Co-Founder & CEO, Zest Money, told The Sunday Guardian in an e-mail, “Consumer lending—and especially digital—is a very challenging business. Many companies—traditional and new age—all over the world have lost money. The biggest challenges in India are around authentication/KYC of the customers (although Aadhaar has helped greatly), digital collections and payments (also improving very fast).”

Aditya Kumar of Qbera said: “Most of the challenges faced by us in the Indian lending context are related to fragmented information and unavailability of data. We have put systems in place to take an automated and systematic decision on every application, but in a majority of cases, manual intervention is required due to absence/unreliability of data.”

Prithvi Chandrasekhar from InCred said, “We clearly think that the opportunities in India are greater than the challenges, which is why we have ambitious plans for growth in India. A big uncertainty is related to the macro-economy. The difference between a 5-6% growth rate and a 8-9% growth rate over the next five years will make a big difference to us.”

Sheetal Mayekar from Rubique told The Sunday Guardian, “The challenge was to get financial institutions onboard. The initial months since our foundation were focused on tie-ups with a maximum number of financial institutions. With the risk-averse mindset of consumers, we knew we had to work on distribution strategy, too, to ensure that we take the solution to a larger base. Hence, we decided to work with influencers in the industry who play a critical role in the decision-making process of the customers and have empowered them with our platform through mobile apps and access to our data platform SPOT.”

Speaking to The Sunday Guardian, Devie Mohan, ranked as the 6th most influential voice in the FinTech industry globally, said, “Fintech startups have revolutionised the way lending works by making significant transformations in the borrowings and credit scoring methods. Today, the amount of money you borrow, on average, has come down from Rs 10,000 to Rs 1,000. The availability of as-you-go, micro amounts of loans are enabling the wider population to have access to emergency capital in ways that have never happened in the past. The peer network that people in India traditionally relied on, the immediate community and neighbourhood, have now expanded into the online peer-to-peer lending world, which is in keeping with the high digital savviness of the population in India. New credit scoring methods and data intelligence technologies have made lending possible to new segments of the population. People who struggled to obtain loans in the past, like students, labourers, people with temporary jobs, entrepreneurs with no credit history, etc. can now obtain loans without having to jump hurdles with banks or loan companies. Using fintechs for immediate money management needs has become a necessity rather than a nice-to-have sentiment, which will have long-term positive impacts on India’s journey to a cashless economy. However, it remains to be seen how many of those ‘newly bred’ fintech customers stay on to generate meaningful digital literacy.”

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