Here's how ex-Flipkart CTO Ravi Garikipati's fintech startup aims to enable financial inclusion at the bottom of the pyramid

In 2017, former Flipkart CTO Ravi Garikipati was responsible for the ecommerce group’s financial technology initiatives. He went on to seed many financial initiatives on the ecommerce platform, including Flipkart’s Buy Now Pay Later scheme, cardless EMI, and a unique mobile protection insurance product.

These products focused on pushing affordability and consumption, and led Ravi to think about the “bottom of the pyramid”. He began to think of ways on how technology could assist in financial inclusion.

After almost four years at Flipkart (three as its CTO), Ravi decided to hang up his boots at the ecommerce major. The “what next” question had a couple of answers: joining a venture capital fund or starting one of his own to invest and mentor deep tech initiatives. But, the idea of starting something in the financial inclusion space kept cropping up.

And, in April 2019, Ravi applied for an NBFC licence to start Davinta Financial Services, a technology-focused umbrella NBFC for the underserved, including the rural, urban, and micro entrepreneur segments.

“For the longest time, financial services for the next billion have been non-existent in our country; when available, they have been an arms' length engagement. We realised early on that this segment, more than anyone else, needs financial services that are inclusive. We built our technology to do exactly that at the scale of millions of customers,” Ravi says.

While conceptualising his Bengaluru-based startup, Ravi got in touch with long-time friend and serial entrepreneur Raj Vattikuti.

Based out of Michigan, Raj’s first company Covansys was acquired by Computer Sciences Corporation for $1.3 billion.  He has been involved in philanthropic work in India on “alleviating poverty and increasing quality of life at the bottom of the pyramid”, and also founded the Poverty Alleviation Initiative. 

Ravi’s technology prowess and Raj’s acumen for understanding the needs of the bottom of the pyramid seemed to be the perfect pairing to serve the underserved.

Providing for the ‘bottom of the pyramid’ 

A technology-focused NBFC for the underserved, Davinta Finserv focuses on three segments: rural, urban, and micro entrepreneurs.

However, unlike most other models today, Ravi explains that Davinta differentiates itself by providing loans not for consumption, but to create a sustainable financial ecosystem by increasing livelihood opportunities for the borrower. 

In rural areas, Davinta does this by fleshing out livelihood opportunities; it partners with NGOs working on-ground to help create income-generating opportunities. Once there is a clear plan, the startup provides loans to borrowers to increase their income. 

The startup also partners with brand retailers to provide direct sourcing from its borrower ecosystem. One example is organic milk retailer Akshaykalpa, which sources from dairy farmers who have availed working capital from Davinta. 

Ravi says that creating this ecosystem ensures higher earnings for farmers.

“We opened up opportunities for enterprising individuals across our customer segments to become last-mile distributors for our services. Apart from the fact that such individuals know customers best and add the much-needed last-mile human touch to our otherwise technology-driven operations, they also allow us to operate on a highly asset-light model and consequently benefit operating margins,” Ravi explains. 

The NBFC at present operates in districts of Assam and Karnataka, covering close to 500 villages. Borrowers include farmers providing dairy, poultry, and fishery options, and craftsmen.

On an average, Davinta provides loans with an average ticket size ranging from Rs 45,000 to Rs 75,000 with a tenure of 12 months, and claims to disburse loans to borrowers same day.    

Both founders have invested $20 million of their own personal seed capital to fund the venture. 

Using technology to underwrite

The technology platform does most of the heavy-lifting in terms of underwriting potential borrowers, but Ravi doesn’t deny that manual intervention is required, and offers a second layer of checks.

Davinta has a setup of partners on the ground and a network of 100 branches that help in disbursing loans through the loan servicing platform on their tablets. The partners do a KYC and bank account verification of the user, while performing basic checks, before submitting the loan application.

“Davinta, which caters to both rural and urban populations, has built a unique underwriting model based on an artificial intelligence engine that in ‘near’ real time creates specific customer profiles based on a proprietary list of variables.” 

Apart from data from the Credit Bureau, partner network and declarative information (from the borrower), the platform also takes information from its NGO partners to understand the macro environment, before processing loans. 

“Our technology platform today goes beyond initial customer evaluations and service delivery, and actively monitors both the macro environment and customer’s post-transaction behaviour to suggest risk-mitigating actions that we may need to take from time to time,” Ravi says.

Davinta, which started operations in April last year, has till now provided loans to 11,000 individuals and built a loan book of Rs 50 crore. 

When asked about defaults, Ravi says the platform has so far been fortunate and has zero percent NPAs. 

“We have seen behaviours where borrowers might have submitted their repayment two to three days past their deadline, but that is far from NPAs. These could be because the borrower would have failed to physically come and deposit the dues. However, we are looking to incentivise repayments through UPI to avoid the dependency on physically traveling to our franchises,” he says.

Exploring newer ecosystems

Borrowers from rural India form most of Davinta’s customer base, but the startup is also looking to explore other ecosystems. It plans to introduce pay-day loans for blue-collar workers by the end of this quarter, which will essentially be a cash advance against earned salaries. The platform will underwrite these loans against the salary and the employer will have the right to withhold the monthly installment from the worker’s salary, in case of a default.  

Davinta also aims to provide loans to micro entrepreneurs or micro SMEs in the region. But despite tapping newer ecosystems, Ravi says the rural segment will still contribute to 75 percent of the overall lending on the platform.  

Davinta is working to scale operations across Maharashtra and UP in the coming months, and enhance coverage. In UP, the founders say they will take a partnership approach with an agritech platform for distribution.   

It also plans to work with insurance companies to create new insurance products for this segment later. For now, the focus is on lending. 

Other startups providing financial services to the bottom of the pyramid include Chennai-based Kaleidofin, which was started by former IFMR executives Sucharita Mukherjee and Puneet Gupta. 

Aiming to provide goal-based financial solutions to customers in the underbanked segments, Kaleidofin is backed by the likes of Oikocredit, Omidyar Network India, and Bharat Inclusion Seed Fund, among others. The startup picked up Rs 36 crore in equity funding in December.

Value chain financing startup Samunnati provides financial and non-financial solutions to farmers and entities engaged in agriculture.

But Davinta is sure that its offering will help it stand out. By the end of this year, the fintech startup plans to take its loan book size to Rs 350 crore and raise debt funding to fuel its lending operations.

Davinta, which is currently lending out of its own books, will take a hybrid model (including debt and equity) to lend, Ravi says.   

(Edited by Teja Lele Desai)

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