Indian Lending Industry Roundup

Headquartered in Pune, EarlySalary is a lending platform that allows young Indians to obtain loans in hassle free manner. The company has collectively raised $19.7 million so far and is backed by the likes of IDG Ventures India, Dewan Housing Finance Corp and Ashok Agarwal.

Akshay Mehrotra is a renowned name in the Indian FinTech circles. Prior to founding EarlySalary in 2015, Akshay has held management positions at Big Bazaar, and Bajaj Allianz Life Insurance. He has also co-founded the FinTech Association for Consumer Empowerment, a nonprofit that work with all stakeholders including the consumers, regulators, policymakers to proactively evolve consumer-centric practices in the Indian Fin-Tech digital lending space. The Startup City team caught up with Akshay to gauge his views regarding the Indian lending industry.

1. What is the business strategy and new initiatives adopted by lending platforms in the current scenario?

Over the past decade, consumer lending and catering to credit needs, this space is growing at a higher pace inIndia. By FY 2024, it is expected that unsecured loans linked to consumption is set to become worth 21 trillion INR. EarlySalary is one of the leading digital salary advance and credit-based loan disbursing mobile-app that has gone on to become India’s largest consumer lending platform for salaried individuals. Our product suite has been developed to help credit needs of salaried professionals.

Our strategy has been focused on three pillars:
• Focus on a singular customer segment, the salaried professional in the country; build deep relationship with customers and offer a full product suite tothem
• Develop a new highly scalable, tech-enabled and fully-automated credit scoring system and risk management system for superior customer profiling and build scalability
• Delivering innovative solutions and customer centric experience
This has resulted in following business success:
• National impact with over 10M app based customer base
• Disbursed over Rs.2700cr with a monthly run rate of over Rs.150Cr
• Hyper automation 4 x growth in under 18 months with only 10% increase in manpower
• 100% human touch free customer onboarding and lending practices – highly scalable, OPEX per customer of sub $5 and building a very unit economic positive business.

2. What are the change in borrowing patterns and shift in priorities, in regards to credit lending?

Consumption and specially consumer financial demand has seem some large shift; we see three major shifts:
• Move to essential purchases rather than luxury; we see people opting for basic smart phone rather than most high end purchases
• Financial worry and uncertainty leading to cash hoarding; last 5 months people held back full payments, paid minimum on cards, held back larger saving to create cash cushions but this is resulting in negative cash flows and customers
• Demand for longer tenure from customers
As EarlySalary is full-stack lenders and offers credit for every need of salaried customer we are seeing demand for 3 segments:
• Salary advance from 3 to 6 months
• Personal Loans from 12months to 2months
• Skill updating on EMI and EMI product purchase on Flipkart and Amazon

3. Market outlook of the lending sector, during and post COVID-19 situation.

Post COVID-19, financial lenders and banks will take time to kick start lending in a full-fledged way and many of the traditional players are still recovering by moratorium impact, and dip in collections capabilities.This is giving anopportunity to new age FinTech players to cater and attend the need of consumers, as the digital practices have helped to recover faster. According to me, consumption of lending will bounce back with Diwali around the corner and there is immense potential in Indian economy to get credit and consumption back to track. As we expect to recover from the economic set back by March, 2021 we should also look on the profit and loss across lenders and growth in terms of both supplyand demand to get back on pace.

4. What extra mile lending companies are going to provide customers with better solution?

True contactless or zero touch facilities, fully automated lending solutions and multiple product options for all customer needs, these solutions are becoming the next wave andalso emerging out in the ecosystem. Digital lenders are focusing on these solutions to help their customers and offer full-stack digital personal loans ranging from 3 months to 36months, end to end digital onboarding including video KYC, digital repayment process on Mobile App enabled with digital cards, and financing with consumer loans for product purchase, skill upgradation & education and EMI finance for medical or emergency expenses.

5. What do you think about the future aspiration of lending platforms to reach out to their target customers and help in overall growth of economy?

As the category ofdigital lenders have gone beyond just serving the tech-savvy metro customers, FinTechconsumer lenders have also reached to the length and breadth of the country. They are now reaching out to the underserved consumers across strata of people and helping themto build consumption and fuel aspiration across the space. Even the top FinTech companies would have lend to 50Lac plus consumers with-in a short span of 3-4 years of starting, which means the industry is almost doubling the customer base each year and growingto serve more consumers.

Also, the other segments we are catering toranges from blue andgrey collar customers who were unable to borrow, young IT professionals who needed skill upgradation for a better future, individuals who wants to settle into a new town and wants to start his/her career, and able to serve across the board from short term credit needs to catering larger financial needs going from 3 months to 3 years of loans. We as a FinTech company want to become the single point of lending platform for any individual’s financial needs.