How digital lending startup Kissht was able to clock Rs 200 Cr revenue in FY21 despite the pandemic

Digital lending platform Kissht was founded by Krishnan Vishwanathan and Ranvir Singh in 2015 to serve the new-to-credit and lower-income population of India. 

After working in PSUs, private sector banks, large NBFCs, and McKinsey & Co, the co-founders had seen the challenges faced by these institutions to serve the lower-income segment. At the same time, they also realised the immense opportunity the segment offered if data and tech could be leveraged to serve them. 

The team initially came up with a financial technology platform to provide purchase financing and personal loans to its customers, which is integrated with online and offline merchants.

“By using a 100 percent digital platform that is built to scale, by leveraging big data and machine learning algorithms to solve the problem of underwriting, and developing a custom-built CRM platform that aims to engage and educate our customers on the customised product offerings available to them, we have demonstrated five-years of successful lending,” says Krishnan.

Today, the company has grown at a tremendous pace, clocking Rs 200 crore revenue in FY21 despite the ongoing crisis. 

“We disbursed over Rs 6,000 crore of loans since inception, clocking a growth of almost 100 percent YoY. We have served over two million unique customers since our inception. Our plans for FY22 is to generate Rs 350 crore of revenue, profits upwards of Rs 40 crore, and serve additional two million customers,” says Krishnan.

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How the product evolved? 

In the initial days, Kissht offered a discovery marketplace for customers to avail of personal loans across several participating NBFCs. Then, after receiving the NBFC licence, the startup built its own credit rails platform with both a loan origination system (LOS) and loan management system (LMS). 

“It was always our focus to develop all modules in-house to have complete flexibility in the customisation of products we offer and scaling up the infrastructure to meet the needs of customers instantly,” says Krishnan.

Over the years, the team also created a separate website and mobile app to meet the diverse needs of customers. 

Some of its offerings include a retail app, which offers a walk-in-walk-out instant purchase loan for smartphones and consumer durables across 5,000+ hyperlocal retail stores. A franchisee app to avail personal loan across underserved user segments in Tier I and II cities, and an online purchase loan — a white-label web solution offered to ecommerce retailers. 

There is also a customer app, where the startup is offering a digital EMI card with zero percent finance on their ecommerce loans. It also offers to cross-sell personal loans of up to Rs 2 lakh for 24 months. And, to meet the developing user needs, Kissht is also offering a revolving line of credit of up to Rs 30,000 and BNPL for their online purchases. 

According to the co-founders, the user journey has been kept simplistic with an absolute focus on minimal inputs and maximum gratification. 

The user signs up with a mobile number or social media credentials, fill up their basic KYC information, and upload minimal documents. The proprietary UW logic and Kissht digi-score decides the credit limit and available offers. The customer chooses an offer and then gets instant disbursement. 

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Bringing product innovation 

When COVID-19 hit, the team realised that many of its customers were economically impacted. To expect them to pay on time in such a situation would be difficult. 

Kissht — like any other purchase finance lender — found that the opportunities through offline merchants and brands had been hit due to multiple lockdowns, reduced repayment capacity, and a dip in discretionary spending patterns among customers.

Krishnan says, “After duly analysing the situation on the ground during both the first and second wave, we showed extreme agility by reprioritising our app focus towards other credit products such as personal loan, short-term credit line, and buy now pay later (BNPL) that met the prevalent customer needs effectively.” 

“Consequently, we limited the offline merchant financing and online brand financing in-app for only a few brands in select geographies. We clocked strong growth even during the pandemic because the entire team spent massive efforts in rolling out new products in such a short span of time.”

Kissht also shifted its focus towards remaining engaged with customers, proactively offering moratorium, and helping them navigate their financial needs without undue pressure. 

“During COVID-19, we offered a free medical cover for COVID-related ailment – showing our commitment to our customer’s well-being. Even today, we are working with our customers and helping restructure their loans in a way that enables them to pay back the loan without duress,” says Krishnan. 

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Building team strength during COVID-19

However, like every other player in the industry, COVID-19 has been tough for Kissht. “The primary objective for us was to ensure health and welfare for our employees. To ensure that, we instituted work-from-home protocols not just during the mandatory lockdown period, but even to this day,” says Krishnan.

To ensure maximum efficiency, the developed office tools for mobiles, protocols were put in place that balanced the personal needs of the employees while ensuring healthy interaction, and there were debates and discussions on company tasks. 

“With the help of the company HR, we instituted a helpline for our employees for any emergency health needs related to COVID. We hope to work with private healthcare to ensure the fastest vaccination for all our employees at the earliest opportunity,” says Krishnan. However, he adds that despite the challenges, there are a lot of positives the team has taken from this. 

“The downtime has allowed the company to focus on innovation – including the new credit-line product we developed for our self-employed customers. Moreover, while the company has seen credit costs linked to COVID-19 and the resultant lockdown go up, it is also a learning for us as our risk models have evolved further during these times,” says Krishnan. 

Funding

The startup’s revenue model is simple. Kissht extends a loan to the customer and charges an interest that covers its cost of capital, any expenses that it has as an organisation, and risk costs related to any expected losses. 

“We charge a nominal fee to set up the loan for the customer. Our interest rates vary from 14 percent to 24 percent per annum, while our processing fee varies from 2 to 5 percent. We focus on the LTV of customers by offering them several credit products suitable for their needs – personal, medical, discretionary, or even small business. Apart from loans, we also offer credit-linked health insurance and other services such as credit counselling, etc. We charge a small facilitation fee for these products if the customers opt for the same,” explains Krishnan. 

So far, Kissht has raised three rounds of equity funding from five investors, amounting to a total of Rs 270 crore. It has also raised over Rs 600 crore debt from over 25 debt investors, which include leading banks such as Kotak Bank, AU Bank, Jana Bank, large NBFCs such as Northern Arc Capital, MAS Financial, and many leading wealth funds. 

The segment

The consumer lending space is an area that has been severely hit by the pandemic. Issues concerning lending rates, coercive methods in recovering loans, and non-consensual use of data are just a few instances.

In 2020, the Reserve Bank of India (RBI) issued notifications to Non-Banking Finance Corporations (NBFCs) and banks mandating additional disclosures/compliances, and an advisory to borrowers warning them against fraud platforms. The Digital Lenders Association of India (DLAI) has also issued guidelines with a regulatory pipeline on this front. 

“Mobile payments have been one of the more resilient sectors, as it witnessed significant organic adoption amidst growing COVID-19 concerns with other digital/non-digital modes of payments. COVID-19 has been detrimental for the digital lending sector as loan disbursals have taken a significant hit (approximately 90 percent dip). However, there are some green shoots,” says an analyst’s report from RedSeer. 

The analyst also said - Due to the impact of COVID-19, GNPA for digital lenders are expected to increase by about 2x by FY21 but will still be better placed compared to traditional lenders

Some of the other startups in the segment include Capital Float, EarlySalary, CashE, and PayMe India. 

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Future plans 

Krishnan says, “As the macro-economy is improving and consumer discretionary consumption starts growing, we are already in advanced stages to re-ignite growth and partnership with several leading offline merchants and other online brands in the coming quarter.” 

He says they see Kissht as the leading lending financial institution servicing the financial services needs of the new-to-credit, lower mass market segment. 

“We hope to be an institution of first-choice in this segment by ensuring hassle-free lending with minimal documentation. In the next five years, we hope to serve 100 million customers, disburse over Rs 10,000 crore annually, and have an AUM of $1 billion,” says Krishnan.