What that means is today, you can actually distribute a loan product on a mobile phone — you don’t need to go to a branch. You don’t need someone to come to your home to fill paper documents.<\/p>\n
We have broken down India by household demographic. And we look at the income of families on a household basis. A lot of those people are not necessary income earning and cannot service a loan (take loans from financial institutions).<\/p><\/blockquote>\n
DC: So what are the problems you are solving and what is the opportunity you are going after?<\/strong><\/p>\nLizzie Chapman<\/strong>:<\/strong> We solve two massive problems. One is just the availability of this mass market customer. Secondly, we have made credit byte-sized. We’ve made it simple to get, and not cumbersome like personal loans and credit cards. The mass market does not need that.<\/p>\nPeople only want like a Rs 10,000 credit to buy that phone. Alternatively, a Rs 30,000 credit to do that course.<\/p>\n
That’s what banks have struggled to do. They actually need to deploy advanced technology to offer these smaller loans. It requires much automation, and you can’t have human and manual processing (when dealing with scale).<\/p>\n
Technology solves the ticket size and distribution problem. Technology will do the risk profiling of the customer.\u00a0<\/strong><\/p>\nDC: <\/strong>Who exactly are you targeting for your products? What is your addressable market?<\/strong><\/p>\nLizzie Chapman<\/strong>:<\/strong> We have broken down India by household demographic. And we look at the income of families on a household basis. A lot of those people are not necessary income earning and cannot service a loan (take loans from financial institutions). Their children are so young.<\/p>\nSo we look at it on a household basis, and not on an individual basis.<\/p>\n
We have identified that there are 200 million households who are not served today. But their income levels can service a small ticket loan. They are earning more than Rs 20,000 on a household basis. They can even serve a loan for Rs 2,000 a month, but they are not in the Rs 1.5 lakh income segment. Those are the people who are well served today by banks and financial institutions.<\/p>\n
A lot of the growth and demand is coming from non-metros. We started by working with e-commerce companies — because customers are in the metros. But that has changed a lot in the last 12 months. We see a massive increase in application volumes from non-metros; today about 70 per cent of all applications are coming from a non-metro.<\/p>\n
Non-metro customers are more cash flow positive than someone in a metro. Their cost of living is actually much lower, so their disposable income is higher.<\/p>\n
Many of our customers live in the metros but send money home to the smaller towns. So there are healthy cash levels in Tier-2, Tier-3 and beyond.<\/p>\n
On a big sale day, we can easily do 5,000 loans a day. That really speaks about the power of technology. If you were doing that in a traditional way with underwriting then every time there is a sale, you’d have to add more human beings for underwriting. It takes time and costs.<\/p><\/blockquote>\n
DC: How many loans are your dispersing per day? How do you manage scale? What should be the ratio of humans to technology?<\/strong>\u00a0<\/strong><\/p>\nLizzie Chapman<\/strong>:<\/strong> On a big sale day, we can easily do 5,000 loans a day. That really speaks about the power of technology. If you were doing that in a traditional way with underwriting then every time there is a sale, you’d have to add more human beings for underwriting. It takes time and costs. So it is much cheaper if you can automate that process.<\/p>\nWe started with many humans, but we built a model for automation. But it cannot be completely automated, and some data sources require human intervention.<\/p>\n
So we do have some humans underwriters. On the other hand, if you have too many human underwriters, it can get subjective due to biases.<\/p>\n
However, we believe that a digital approach to underwriting is really important.<\/p>\n
Even banks like ICICI have picked this up and have launched their digital loan products. They use the same technology as we’ve been developing.<\/p>\n
Your bank has a lot of data about your spending habits, so they can just put an algorithm on top of that, and they can work out what would be an appropriate loan amount for you.<\/p>\n
We have identified that there are 200 million households who are not served today. But their income levels can service a small ticket loan. They are earning more than Rs 20,000 on a household basis. They can even serve a loan for Rs 2,000 a month, but they are not in the Rs 1.5 lakh income segment.<\/p><\/blockquote>\n
DC: What is the typical size of the loan?<\/strong><\/p>\nLizzie Chapman<\/strong>:<\/strong> We can do loans from a few hundred rupees all the way up to Rs 2 lakh; but the sweet spot, where we see more demand is Rs 20,000. Also, Rs 15,000 to Rs 30,000 is perfect. With that, you can buy a smartphone, a cheap laptop, TV or AC. These are all too expensive to pay in one lump sum. Yet the amount is not big enough like the sum you\u2019d pay for a wedding. So definitely, within reach of many people.<\/p>\n","protected":false},"excerpt":{"rendered":"For most of us living in India\u2019s largest metros, it seems to be life on EMIs! We work hard to buy a house, a car, appliances or to save for marriage or our children\u2019s education. We are clearing our debt through EMIs, for the more substantial part of our lives. Even credit card payments are […]<\/p>\n","protected":false},"author":1,"featured_media":6909,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[2202,2181,94,2234,2171],"tags":[1670,1668,803,1669,1671,1485,1666,852,1667],"acf":[],"yoast_head":"\n
'Mass market in India is yet to experience EMI buying' - Digital Creed<\/title>\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\t \n\t \n\t \n \n \n \n \n \n\t \n\t \n\t \n