How this profit-making traditional financial services marketplace evolved into a phygital model
When it comes to finance, prudence is probably the best mantra for success. Perhaps the same principle can also be applied when one thinks of adopting new technology in any business. Change can be a slow process, so for existing companies, it is often worth asking if new technology will seamlessly integrate itself into the business model.
(MMM), a marketplace for loans, mortgages and credit cards, is a 30-year-old financial services company led by Founder Raj Khosla. It has gradually evolved into a phygital model, with a strong presence in the offline and online worlds.
Raj, Founder and MD, says, “I do not view technology as an end. It is a means to an end and all our constituents need to absorb it.”
MMM was incepted in 1989 by Raj as a single-person company with just one product - two-wheeler loans for a foreign bank that had then launched operations in India. It slowly expanded its product portfolio to other categories like home loans, credit cards, personal loans, and more.
MyMoneyMantra Founder and MD Raj Khosla
Today, MMM has more than 100 financial institutions, both banks and NBFCs, on its platform, serving millions of customers across 200 locations in the country with an employee base of nearly 3,000.
Raj says, “Customers come to us looking for the best deal depending on their needs, and banks want the right credit profile. We serve the interests of both.”
Tech as an enabler
In the meanwhile, Raj was keenly observing the evolution of technology, and how it was bringing change to businesses, but he was in no hurry. Trained as a chartered accountant, and having worked with leading consulting firms, he decided he would rather exercise caution with adopting technology, preferring the wait-and-watch approach.
According to Raj, he has witnessed four cycles of economic boom and bust with the conversation remaining the same: are we going to survive or flourish?
To bring that change where a predominantly offline business model moved towards a supportive digital presence required numerous iterations.
For Raj, his instincts whispered that the speed at which technology was being adopted was not really necessary for a society like India, where digital adoption and technology penetration were different compared to other geographies.
“I figured out a technology model for our business where the stack needs to expand and contract. The goal was how we want to engage with our customers,” says Raj.
He explains this with a simple example. A bank will be keen to disburse home loans where many of the verifications can be done digitally, but ultimately they would like to see the documents in a physical manner.
Also, for the customers, this process depended on their comfort level with technology. Residents in cities would probably go through the entire process online, but the same cannot be said about those in smaller towns and rural areas, who would much rather prefer human interaction before availing any loan..
Information is power
Today, MMM has built a data bank of information of about 42 million customers. Financial institutions can use this data to run their algorithms and pick out their target audience depending on customer requirement.
“This has been a gradual process and took time. Today MMM is a successful physical-cum-digital company, and we did it in stages,” says Raj.
The transition also meant upskilling the workforce at MMM and enabling them to be tech-savvy so that they could better engage with customers.
The company has developed the entire technology stack inhouse by hiring skilled talent including in areas such as digital marketing, and other allied functions.
As Raj says, “Only generating leads for the banks is not enough; there has to be conversion. At MMM, we enable it.”
Funding and growth
The steps taken by MMM caught the eye of the investor community. It raised a funding of $15 million in private equity from Dutch investment firm IFSD BV for a minority stake in 2019.
Raj says, “All the experimentation with technology that we wanted to do was from our internal resources. This investment is a validation of our success.”
As things stand today, MMM has originated more than $5 billion worth of financial services products through its platform. Raj says the company has been profitable since inception, and is clocking a 25-30 percent Compounded Annual Growth rate (CAGR).
The financial services marketplace has got serious competition from new-age companies like Paisabazaar,, , , and a host of other fintech startups.
MMM closed the financial year ending March 2020 with a revenue of $24 million. According to Raj, the company is likely to close FY21 at twice this number.
As a marketplace, MMM does not charge the customer; it charges financial institutions for the services delivered.
However, it has not always been smooth sailing. In 2020, the company did witness some real questions of survival in the months of April and May, as business came to a near standstill due to the pandemic-induced lockdown.
Two months after the lockdown, customers started coming back to MMM as they had various needs. Given this company’s relationship over the years with both the borrowers and lenders, it bounced back strongly.
Raj is now very optimistic about what lies ahead for MMM.
“We will be 4x the size in terms of revenue in 2024, if we go by how we have grown since April 2020,” he says.
From over 30 years ago, from the time he walked into a bank to fill out numerous forms, wait in the queue, and deposit Rs 1,000 in cash to open a business account, Raj has traversed a long journey to get his financial company where it is today, blending the traditional and digital way of working.
“Valuation is a by-product for any business. Our job is to keep the customer and banks happy,” Raj says.