Decoding Fintech Startup axio’s Growth Playbook For Serving 6 Mn Users And Beyond

The rapid rise and quick adoption of fintech startups in recent times have pushed financial inclusion across Bharat in a way that mainstream banks and legacy financial institutions (FIs) could not achieve in years. Powered by emerging technologies and out-of-box product concepts, fintechs have brought huge swathes of the underserved Indian population under the purview of the formal financial system.

An EY study puts India’s fintech adoption rate at 87% compared to the global average of 64%. The growing per capita income and increasing internet penetration also augur well for the growth of the fintech industry which is estimated to surpass $2.1 Tn by 2030, growing at a CAGR of 18%.

However, it was a dismal scenario even a couple of years ago. According to the 2021 Findex report by the World Bank, around 22% of Indians had no access to financial services in the country. Fintechs primarily target this customer segment, bringing easy-to-access, multiplatform banking (neobanking, mobile banking and more), payments, lending and insurance services to millions of unbanked and underbanked Indians.

However, tapping this underserved segment remains a serious challenge as customers are fragmented and often lack financial awareness.

“The best customer is not someone coming to you looking for a loan. It is someone for whom the loan is contextually relevant at that point of time,” said Sashank Rishyasringa, cofounder and MD of the Bengaluru-based consumer finance startup axio (formerly Capital Float), during a fireside chat with Gaurav Ranjan, VP of Prime Venture Partners.

Hosted in Bengaluru in February 2023, the chat was part of the ongoing The Growth Mindset event, a founders’ meetup organised by Inc42 and Netcore.

What Rishyasringa meant was that a fintech startup should not wait for potential customers to come looking for its services. Instead, its solutions should be embedded across sites for discovery and customer acquisition. In simple terms, customers should be able to find fintech players on non-fintech platforms – say, an online marketplace – and the products concerned should pop up at the time of transaction for users to explore and leverage.

Watch axio’s Sashank Rishyasringa in a dialogue with Gaurav Ranjan from Prime Venture Partners as the former talks about the fintech’s growth playbook for servicing more than 6 Mn users, customer acquisition and retention strategies and other pertinent topics.

Founded in 2013 by Gaurav Hinduja and Rishyasringa, Capital Float rebranded as axio in July 2022 and unified all its offerings under a single platform. The brand operates under its parent company CapFloat Financial Services, an RBI-registered NBFC and offers a host of services, including personal loans and consumer loans to enable shoppers to make purchases on ecommerce platforms.

So far, the fintech player has served 6 Mn customers with credit needs, and Rishyasringa says that the brand spends very little on customer acquisition.

“The first thousand customers came from various channels that incurred acquisition costs. But the challenge in lending is that you don’t want just any customer; you want a specific kind of customer [who matches your criteria],” he said during the fireside chat.

That’s why the fintech brand started exploring embedded finance and focussed on retention and experience above everything else.

“Traditionally, lendingtechs rely on loan disbursement metrics to quantify their growth. But when we decided to make customers the core of all business decisions, there was a fundamental change in the organisation’s mindset,” said Rishyasringa.

Asked about the metrics axio used, the cofounder said, “we looked into cohort analysis and started to map out the consumer behaviour. We looked at GMV (gross merchandise value) retention, revenue retention and default rates.” He added that after three years of watching these cohorts, the fintech brand was ultimately able to figure out the lifetime value of its customers.

One way to ensure repeat rates is constant value additions for existing customers. In the lendingtech space, this means bigger credit lines or personal loans, thus unlocking new benefits for loyal customers every time they use the service.

While axio has created a customer retention playbook, Rishyasringa believes spending on customer acquisition is essential for high growth. However, he cautioned that paid acquisitions should be made in a controlled environment.

“Ringfencing is important to ensure less cash burn. You can do so by putting a cap on your budget [for customer acquisition],” he said.