How SaaS startup Credgenics is helping banks, NBFCs, and fintechs recover their bad debts through AI/ML

Debt resolution can seem like a daunting task, especially in an economic crisis climate that has hit overnight. Much like the situation world over post the coronavirus pandemic.

Rishabh Goel and Anand Agrawal, IIT Delhi alumni, founded Credgenicsin 2018 along with legal expert, Mayank Khera, to solve India’s $200 billion+ bad debt problem.

The SaaS-based firm is touted to be India’s leading debt resolution platform that converts bad debts into good assets to help banks and NBFCs. 

The platform is an end-to-end, SaaS-based, collection management tool, which delivers customised strategies, and recommends optimal legal routes to facilitate faster resolution of stressed assets. This helps creditors efficiently improve their NPA (non-performing asset), geographic reach, and customer on-boarding.

Rishabh Goel, Co-founder and CEO, Credgenics, says, “While AI and machine learning (ML) have been around for a while and are applied in many areas, their power and ability to predict recovery chances based on multiple parameters, including defaulters’ personality information, demographics, language, EMI payments, and communication follow-up trends has never been leveraged or deployed in a structured manner.”

Backstory

Back in 2017, Rishabh was working with Blackrock, where his profile gave him a better understanding of the lending process, specifically from the collections angle.

“I noticed how manual and strenuous the process becomes where the recovery rates are low, the NPA is multiplying with each small, and big-ticket loan, adding up to delinquency. The pain point I noticed was in the data management, which was hardly being updated, and the process was not streamlined,” recalls Rishabh.

This inspired him to delve deeper into the subject, and after thorough research, he formed Credgenics.

What it solves?

Credgenics offers an on-demand dispute resolution and mediation service by becoming an intermediary between lawyers/mediators and borrowers. The 'plug and play' SaaS solution digitises the entire collections process on an easy-to-use interface, and provides an AI-powered personalised collections strategy, which optimises and automates action through text messages, call centres, field agencies, and legal notices. 

“The uniqueness of the product is around the lawyer-led mediation services, which results in better resolution efficiency, quicker collection, and a more empathetic experience for the borrower,” says Mayank.

The business model

The model revolves around the SaaS platform, which is a one-stop solution for banks, NBFCs, and fintech companies that are unable to recover loan amounts from their borrowers. 

In such a situation, the startup presents two options to their clients. 

First is the software platform alone. In this solution, the client can choose to use the software model only, and by using API integration, they can feed their data where the platform arranges and manages the data. This data is then used by the in-house calling or legal team to communicate with the borrowers.

The second option is to use both software and collection services. In this, the startup seeks the client’s data and integrates it using Credgenics’ API. The data at first is used by the startup’s telecommunication team. If the borrowers refuse to pay, then legal notices are sent and tracked by Credgenics.

“The communication channels that we use include telecommunication, SMS, online legal notices (which are duly tracked), and with every reach, the data is updated. We also have a team of empanelled lawyers pan-India who help us with mediation and litigation services in case the borrower account turns delinquent, or if the borrower seeks mediation due to a genuine reason behind the inability to pay,” mentions Mayank.

“During the COVID-19 crisis and the resultant job and market recession, we have even advised loan restructuring to our clients for sensitive cases. This prevents the client’s risk profile from suffering, and the borrower does not have to get entangled in mentally strenuous legal situations,” Mayank further adds.

Speaking about the charges, Rishabh explains, “We calculate a lump-sum amount for the software platform alone. However, if the client seeks the second proposal, which is software and services, then we take specific numbers of cases from the client, and then charge a certain percentage over the entire loan amount we recover from them.” 

The dream team

Rishabh, a first-time entrepreneur from IIT Delhi, has done his certifications in Financial Risk Management (FRM) and Chartered Financial Analysis (CFA), both of which empower his business acumen while enabling him to keep a track of the technological updates and improvisations required for the Credgenics platform. Before the idea of a SaaS-based platform came to him, he gained experience in the Banking sector and prevalent loan repayment processes while working with Deutsche Bank and Blackrock.

Co-founder Anand came with a sound background in computer science, having completed both BTech and MTech from IIT-Delhi. His work experience includes product technology and engineering. Before embarking on this SaaS-based journey, he gained experience as a Lead in the data science team of 1MG and also worked with Urban Company.  Anand is now the CTO of Credgenics. 

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A certified mediator and a fellow of the World Mediation Organisation, Berlin, legal expert Mayank has been associated with many social initiatives. As part of his dedication to giving back to society, he has regularly visited many jails, including Tihar, Jaipur, Amritsar, Ludhiana, and Jodhpur, among others to provide legal assistance to prisoners. 

For Credgenics, he is the legal brains who helps with litigations and legal notices, even in case of e-mediations and settlements.

Credgenics has hired from fintech and consulting firms. At present, it has a team size of 80+ members. Its legal team has six in-house lawyers, including Mayank, and collaborates with over 2,000 lawyers.

Challenges in getting here

“The toughest moment we, or for that matter, the entire lending industry faced was the moratorium that the Reserve Bank of India (RBI) imposed on us during the pandemic. However, through the pandemic, banks and fintech companies have been seeking our platform and services to streamline the data and collection process and ensuring a positive risk profile at the same time,” mentions Anand.

Funding

Credgenics completed a seed round led by Titan Capital and a few seasoned investors in May 2020. Six months later, the SaaS platform received Rs 27 crore ($3.5 million) in a pre-Series A round led by Accele Venture Partners, DMI Alternatives fund, with participation from existing investors Titan Capital, besides marquee angel investors like Kunal Shah (Founder, CRED), Dilip Khandelwal (MD and Global CIO, Deutsche Bank), Sumit Maniyar (Founder, Rupeek), Ramakanth Sharma (Co-founder, Livspace), Gaurav Agarwal (Co-founder, 1MG), Vivek (Founder, Bounce), Akhil Paul (MD, Caparo Group), Nitin Gupta (ex-founder, PayU), and Karthik (Ubiquity Capital).

“For now, there is no plan for another round of funding. Our focus is on growing operations and the current business by expanding in multiple lending products, apart from our collection angle alone,” says Anand.

Present traction numbers and growth plans

A surge in inbound queries could be seen during these unprecedented times for digital solutions, and they were 4X the normal collections as anticipated by several banks.

Since 2019, Credgenics could demonstrate a strong product-market fit with MoM growth of 80 to 100 percent in the last four months. Credgenics is working with 32 NBFCs/fintechs and seven banks, including Kotak Mahindra Bank, HDFC, ICICI Bank, Clix Capital, Shubh Loans, LoanTap, Udaan, etc., helping them streamline their recovery section with a blend of data-driven technology and legal solutions.

“We intend to focus on the SaaS-based product and provide smoother end-to-end collection software modules. Our belief is to strengthen the core first, and that is where all our focus is,” says Rishabh.

“After the Budget announcements on February 01, 2021, our industry is sure to see a boom in terms of asset reconstruction company (ARC), technological support, and R&D backing. The implementations of the same though will paint a clearer picture in the future,” he adds.

Credgenics considers CreditMate — collection agency aggregating platform, enabling collection strategies and simplifying account allocation, as one of its competitors. The startup also claims it does not have any direct competitors who can provide both collection and legal combined recovery suites on a single SaaS platform.