“According to a report by BCG released in July 2018, digital lending in India will become a $1 Tn market in the next five years. I believe that lending is the next big opportunity in India and a few profitable startups will emerge from that,” says Bipin Preet Singh, founder and CEO, MobiKwik, on being asked why digital lending has become the cornerstone of the Indian fintech industry today.
Technology has taken over our lives, broken old habits, and redefined the way individuals live today. One major area where it has cast its halo firmly is in digital payments and lending. As an increasing number of digital-savvy individuals open up to the idea of online transactions and seek digital credit, fintech companies and corporates are changing their business models to include digital lending offerings and tap into the growing market.
Inc42 caught up with Bipin Preet Singh, founder and CEO, MobiKwik recently to understand the journey of MobiKwik to becoming one of the leading digital financial services companies in India.
Here are some excerpts from the interview:
Inc42: Tell us about your journey to becoming a full-stack fintech company from India’s second largest consumer payments company
Bipin Preet Singh: The transformation has been an exciting journey, led by innovation and a zeal to make a difference in the financial ecosystem.
Our new avatar, called MobiKwik 3.0, is fast gaining traction. As of the end of the last financial year, we have a registered user base of more than 107 Mn users and a network of over 3 Mn merchants. We also grew by 300% and this year, we are aiming at 400% growth. We are adding over 3 Mn new users every month, well in line with our target of growing four-fold this financial year.
Of our various verticals, lending is the star performer this year. Our instant loan product — Boost — promises loan disbursal in 90 seconds and is a disruptive product in its space. We have already approved in excess of 250,000 loans and are on track to becoming India’s biggest digital lender.
MobiKwik also announced its foray into wealth management in October this year with the acquisition of Clearfunds, a new-age wealth management platform based out of Mumbai. This is a huge opportunity for us as the market is very under-penetrated. We are confident that our wealth management products will revolutionise the way India invests.
Inc42: Why lending? What are your offerings in this segment?
Bipin Preet Singh: While the consumer payments business has driven growth for us and will continue to do so, it is important to note that lending and credit, sync up beautifully with the payments side. They are natural extensions of each other. Also, organised lending is a huge unexplored opportunity in the country and it has the potential to catapult the growth of the Indian economy. As per industry statistics, less than 10% Indians have access to credit. If you dive deeper, you will realise that these are primarily people who have considerable financial worth, an existing credit score, or have been working for many years, but are not part of the traditional economy or the organised workforce.
We wanted to launch a product that addresses the gap and caters to these untapped Indians. Our primary lending product (Boost) is already a major differentiator. It is an instant credit disbursal product rather than an instant loan sanction product. It has been designed to address the credit requirements of the ‘new-to-credit’ (NTC) customers — individuals and small businesses that have not been part of the organised credit system in the country as yet. With this product, we are also reaching out to ‘thin-file customers’. These are customers who have some credit history, but the information available is far too little or not good enough for them to avail of a loan.
Boost is based on deep innovation and designed to address the gaps in credit access for these segments. Interestingly, we are not only disbursing loans in 90 seconds but also doing so in the customer’s MobiKwik wallet, the first ever in the industry. We were also the first payments company to launch lending on our platform.
We have other products like small-ticket and large-sized loans, including $69 (INR 5,000) Insta Cash product, term loan of $833 (INR 60,000), payable in 3-4 quarters, and also a credit line product. These will be delivered end-to-end by the MobiKwik app, including the entire communication, experience, and money disbursal.
Inc42: Does technology give you an edge over competitors in lending? If yes, how?
Bipin Preet Singh: In India, we are seeing a large number of new borrowers who have no credit history or credit score. The key to having a strong lending infrastructure is the ability to assess the borrower’s ability to pay back the loan — which is called credit worthiness. This is the reason we built a data science model or a scoring model for our users before we started our financial services business. The loan sanction decision is taken in less than 30 seconds, on the basis of an innovative risk scoring model called ‘Mobiscore’, developed by MobiKwik. The loan disbursal is done in the customer’s wallet in a matter of 90 seconds.
The real-time underwriting has been possible only because of artificial intelligence and data analytics capabilities used in the entire loan journey. There are close to 500 variables that are used to analyse and generate a Mobiscore, basis the customer’s spending patterns and other parameters that the app has access to. This is the first of its kind and will definitely disrupt the lending and financial services ecosystem in the country.
Inc42: Will lending be one of your key business drivers in the current financial year?
Bipin Preet Singh: We expect that MobiKwik would have disbursed loans of nearly $300 Mn (INR 2,198.25 Cr) by 2020 from an estimated $100 Mn (INR 720 Cr) by March 2019. Lending is definitely seeing huge traction. We have already provided over 250,000 loans. This business is growing at over 15% month-on-month. I believe lending will be the key growth driver for MobiKwik as we strive to achieve profitability by the year 2020.
Inc42: How is MobiKwik different from other players in the lending space?
Bipin Preet Singh: Low customer acquisition cost, inbuilt scoring model, and quick disbursal are our key differentiators. We are the first digital lender to ensure disbursal of the loan amount in a matter of 90 seconds. We are offering instant loans of up to $833 (INR 60,000) payable over a period of 9-12 months.
Inc42: What can we expect from MobiKwik in the wealth management domain?
Bipin Preet Singh: MobiKwik is in the process of launching its wealth management service on its app. We announced 100% acquisition of Clearfunds, a leading online wealth management platform based out of Mumbai, in October 2018. MobiKwik is committed to scaling up the wealth management business and will be investing $15 Mn (INR 110 Cr) over the next one year.
Our objective of venturing into wealth management is to enable more and more Indians to invest and let their money work for them. We want to offer powerful wealth management products that are simple, easy to use, less time consuming, and can enable Indians to start small but start early. We believe this is the mantra for creating a huge pool of savings.
MobiKwik users will now be able to start their investment journey with as little as $ 1.4 (INR 100). We have also launched digital gold on our platform. We have tied up with ‘SafeGold’, a digital platform that allows customers to buy, sell, and receive vaulted gold. MobiKwik customers can now purchase gold for as low as $ .014 (INR 1) and can sell it any time post completion of 24 hours of purchase. We sold 7 Kg of gold in the first 15 days, in the limited release of the version, without any promotions. We are extremely bullish on gold as a category and we have set a target of selling 1 tonne of gold in FY 19-20.
Inc42: Why did you decide to acquire Clearfunds?
Bipin Preet Singh: We decided to go ahead with Clearfunds for a variety of reasons. These include a fantastic team and a superior technology know-how. Clearfunds uses sophisticated computer algorithms to build, monitor, and rebalance diversified mutual fund investment portfolios suited to an investor’s stated goals, time horizon, and risk tolerance. Clearfunds already has $45 Mn (INR 315 Cr ) worth of assets under advisory (AUA) and its platform enables clients to access over 3,000 direct mutual fund schemes across all 36 asset management companies (AMCs) and four registrar and transfer agents (RTAs). We are aiming to increase this to $250 Mn (INR 1,800 Cr) in the next one year, which is over a 5X growth.
There were two key reasons for us to go ahead with the acquisition of Clearfunds vis-à-vis any other player. First, they have the best-in-class data analytics and sophisticated algorithms, which provides a world-class experience to investors and gives the company a clear edge over the competition. The second reason was the extremely experienced team that had a thorough understanding of the industry.
Inc42: What are your plans for the insurance segment and for Mobikwik ahead?
Bipin Preet Singh: MobiKwik focuses big on innovation and insurance will be no different. We have announced the launch of digital insurance and will be offering curated, sachet-sized insurance products for our users. These products will be targeted at the real India, which cannot afford to pay huge insurance premiums. MobiKwik has been one of the flag-bearers of the consumer payments industry for the past few years. Today, we are doing exceptionally well in credit. Also, we are seeing good response in the gold category. We are in the process of launching wealth management and digital insurance.
We are targeting at becoming India’s largest digital financial services platform. Growth has been consistent for us, over the years, both in terms of GTV and users/ merchants. We grew 300% in the last fiscal, while drastically cutting down on our burn rate and losses.
Our loyal user base is very high and we are witnessing new customer additions — to the tune of 3 Mn new users every month. The real India needs a change in the way financial products reach them and we are committed to making a huge impact.
Inc42: India does not have a high penetration rate for mutual funds and insurance. How will the entry of digital wallets help change this?
Bipin Preet Singh: A majority of the Indian population cannot afford to pay high insurance premiums or commit to investing huge amounts in mutual funds. MobiKwik’s aim is to design products that cater to the real India. The real India needs a change in the way financial products reach them. We are selling insurance with an annual premium of $0.3 (INR 20) which gives an $1,400 (INR 1 lakh) cover for accidental death and permanent total disability. Likewise, for investments in mutual funds, the minimum investment amount was $140 (INR 10,000) some time back, which was later brought down to $70 (INR 5,000). We are letting people start their investment journey for as low as $1.4 (INR 100). We want to inculcate a habit of financial planning amongst the youth and the unexplored. We believe fintech has the power to do that.