You're in the market for a loan. As a consumer you have the option to go to online web aggregators, third-party vendors or banks and financial institutions. After working for different banks like HDFC, Citibank, and Yes Bank, Manavjeet Singh saw that these solutions did not actually bring the borrower and lender together.
Loan is a complex product where several parameters like eligibility criteria and availability play a critical role. Having a vantage view of the problem made Manavjeet see problems at both the banking and consumer fronts.
Working on the closure gaps
One of the biggest challenges banks face in loans disbursement is controlling customer acquisition costs. This is mainly because in India there is a large base of people who are yet to take loans, making customer acquisition an important aspect for banks.
Customers, understandably, worry about the turnaround time. Banks, on the other hand, concentrate on verifying files. So, when aggregators, who see customers as leads to be sold to banks, come in, disbursement of loans don't go the way they should.
"There are several aggregator platforms but there is no platform that helps lender and borrower to not only actually meet but also work on closure of the loan," adds Manavjeet. This led to the birth of Bestdealfinance, now known as Rubique. It is a lending platform that focusses on bringing the borrower and lender together and also on the final closure process, with the use of technology.
As there already are sites that focus on credit cards and personal loans, the team wanted to cover the whole gamut of loan and lending services, from personal loans and credit cards to SME and retail loans, with a focus on actual disbursement.
With his background and experience in the sector, Manavjeet found that it wasn't difficult to on-board the banks and financial institutions. However, being in the space of fintech, they found it difficult to on-board the technical talent and know-how.
As the basis of Rubique was to build a clean line process of connecting the banks and the individuals, technology was important. This is where Sandeep Nambiar, a family friend who was working in Nomura, Japan, joined in as the Co-founder.
However, the team realised that going purely online was not the solution, especially when disbursement and closure was the key. Manavjeet says in India online is still in its nascent stage, as touch-and-feel experience is important for finance in India. He adds that while one might run algorithms and get the basic details online, RBI requires the basic KYC (know-your-customer) signatures and documents.
Rubique works on an online and an assisted online model. So, while the process online is seamless—where a customer chooses a product, uploads the documents and other details—Rubique also has an intuitive call centre connected to the site. This means the customer care can get in touch with the client whenever there is a visible shift in behaviour online.
For example, if someone stops at the uploading stages or the choosing stages, the call centre gets in touch with the customer immediately and helps him or her in the process.
Citing an example of a truck loan financing done in Mumbai, Manavjeet says they hired 20 students for a week and did a basic survey on whether the truck owners would take on this option of an online and assisted online approach, and everyone was open to the idea.
"Just by giving options, we cannot help the customers. There are cases when the customer doesn't want to upload the documents; in these cases the customer care gets in touch with the consumer and helps them. With SMEs, the main challenge is how to make the documentation file for the banks. This is where we come in and help," he adds.
The technical aspects of fintech
Once you apply online for a loan, the matchmaking algorithm kicks in and options are given. The matching is done by not only bringing the bank criteria and eligibility into the picture but also customer needs and requirements. Rubique works on the basic principle that every borrower has a lender.
Once the process is initiated, Rubique also initiates the CIBIL or credit eligibility score criteria. If your score doesn't match the required criteria, the team ensures that the loans are disbursed through other financial institutions or NBF (Non-Banking Financial) companies, if not banks.
Since March, Rubique has received over 11,000 applications and has had close to 2,300 application approvals. It has disbursed loans worth Rs 150 crore till date. It has on-boarded 41 banks and NBFCs, including Ratnakar Bank to an ICICI. The tie-up processes are still on.
The team also integrates with the banks’ internal systems to help create a seamless process. By the end of the year, online integration will be done with 20 product integrations. The company was incorporated in October last year, but the actual loan disbursement and process began in March this year, after on-boarding 20 banks.
Not all banks are yet completely online and don’t have internal tech systems in place. Manavjeet adds that even with the new e-KYC policy in place, we still have a long way to go. “We are working closely with banks and other financial institutes to build a seamless online connectivity process,” he says.
What do the numbers say?
Rubique ties up with banks even if they do not have a strong online presence, as the focus is on disbursements. The team is simultaneously working to integrate the online processes, while helping the end-consumer get the loans.
The revenue generation for Rubique is from the banks. While the basis points vary according to the products, the average basis is from 70 to 150. By the end of this month the company will have revenue of close to Rs 3 crore, says Manavjeet.
In October this year, Rubique raised a funding of $3 million from Kalaari Capital. The team has now got the core team on board. Anadi Mishra, ex-VP Engineering Analytics, Myntra has joined as CTO and will be heading the tech hub in Bengaluru.
Anadi says that the next round of value creation in Indian economy is going to happen in the space of technology in finance. To innovate and build tech products in this space, analytics will play an important and integral role. He said that Myntra is a great place with a solid team, but building something from grounds up has its own charm.
"It is a subject matter very close to my heart. And an opportunity to work on this with smart, dedicated and passionate professionals geared up to break new grounds in this space can’t really be missed,” adds Anadi.
While building the tech side to ensure a seamless loan disbursement process, Rubique believes that the lending segment of the financial services market still has a long way to go. “We are aiming to blend domain expertise with technology in this space and work on a solution,” says Manavjeet.
In 2014, investments in the segment shot up to $12 billion from $3 billion the previous year. It is believed that various verticals of the banking system will be broken down and made simpler with the use of technology.
These include money transfers, account management, lending, and investments. The space is projected to grow at 48 per cent year-on-year. In Silicon Valley, the investments in the space shot up to 117 per cent and the total investments in Europe was at $1.48 billion.
While the numbers in India are yet to catch up, as the year comes to an end, we see a growth and visibility in the number of fintech startups in the country. Close to 60 per cent of Indians are unbanked and 90 per cent of small businesses have no links to formal financial institutions.
However, over 60 per cent of Indians own mobile phones and over 60 per cent will own a smartphone by 2019. This growth around smartphones is believed to have ushered in a new era in the financial sector in the country. How far the startups will go in creating an actual ‘disruption’ is yet to be seen.