How homegrown startups like Vivifi Finance and StepChange are solving new India’s problems

Despite the many financial strides India has taken, a huge percentage of Indians remain underserved when it comes to credit. According to a TransUnion study, more than 160 million consumers had insufficient access to credit in India at the end of 2021.

With new government policies and innovative financial technology companies emerging, the credit sector has observed around 8% compound annual growth rate between fiscal 2017 and 2022.

However, there is a long way to go. 

Alongside financial inclusion, the magnitude of one critical problem is rising every single day: climate change.

The Mumbai edition of TechSparks 2023 saw the founders of two startups solving new India’s problems take the stage. Saood Khan, Head of Engineering, StepChange, and Anil Pinapala, Founder, Vivifi Finance, shed light on problems and solutions at their discussion on ‘Products solving new India’s problems’.

Providing underserved customers access to credit

Talking about one of new India’s problems, the non-democratisation of India’s access to credit, Anil Pinapala, Founder, Vivifi Finance, said India has almost 600 to 700 million people who are productively employed, but “only about 100-200 million have a provident fund (PF) or an Employee State Insurance (ESI) account”.

“That is the first reason why a huge percentage of consumers in India do not have access to financial credit,” he said.

He added that if an individual’s income falls below Rs 30,000 per month, they still don’t get access to credit, even if they have a PF or ESI account – as it is not rewarding enough for large financial institutions to develop a credit product for those consumers. “So, we as a company, are focused on solving this challenge, catering to the underserved and unserved credit markets in India.”

But how is Vivifi Finance serving these customers?

Pinapala said the company has used technology to reach out to people who have been traditionally credit-starved and has innovated with product underwriting to “bring financial products that were typically not available for large swathes of the Indian population. We use technology and data to assess their creditworthiness”.

Vivifi leverages technology to predict a potential customer who is informally employed. The company uses data to build salary, expense, and cash flow profiles.

“Even though this consumer never had access to formal credit, they have taken credit from neighbourhood lenders and others. By tracking and analysing their transactions, we are able to build their credit profile and address their needs,” he said.

Vivifi is also solving this problem is by changing its product definition. On how its financial products differ from existing ones, Pinapala said, “Our products are EMI-free. We offer flexible monthly instalments. [People] can choose how much they want to pay, allowing them to withdraw money and repay us whenever they want. These products did not exist before we came into the market.”   

Helping companies achieve sustainability goals

Saood Khan, Head of Engineering, StepChange, said the world is facing a global warming crisis. “This temperature is rising alarmingly fast. So, as individuals and business leaders, it is our social/moral responsibility to solve that problem.”

Khan said StepChange’s core vision is to help corporates, large enterprises, and small and medium enterprises achieve their net zero goals.

“To help them achieve these goals in the most efficient and cost-effective way, we give businesses access to tools and platforms built around sustainability. Our first offering is a SaaS B2B platform that lets customers measure, analyse, track, and report their ESG efforts –from reducing carbon emissions to wastewater management,” he said.

StepChange collects a lot of information while calculating ESG metrics of organisations. The data it provides to companies is transactional and operational in nature, and is fed to a platform that is highly reliable and scalable.

“The final outcome is a set of data points and insights produced by data science models and [in line] with environmental science parameters. These insights help companies identify emission factors and reveal how they can fix them if they go off-track.” 

StepChange’s second offering is related to lifecycle assessment. For this, its team goes sector by sector for certain industries to understand the details of the lifecycle of a product. “For instance, if a smartphone manufacturer wants to do lifecycle assessment, there are various stages the product goes through before it reaches a customer – starting with raw material procurement, manufacturing, assembly, and distribution.” 

Each stage has different impacts on the environment. StepChange builds statistical models and insights, giving customers multiple options and recommendations to fix certain stages of their product’s lifecycle to “identify a gap in various stages of their business and then help them accordingly”.

Eyeing net-zero goals and financial inclusion

India has shared its long-term plans to reach net-zero emissions by 2070. “Although there is a 47-year gap starting now, it is achievable, especially if we push harder for renewable energy sources,” Khan said.

He added that we need to reduce our carbon footprint and the government has to play a bigger role in encouraging people to adopt electric vehicles or other means of sustainable transportation. 

Concluding the conversation, Pinapala said that India is a country with more than 500 million people who are younger than 20 years old – a number that is larger than the population of the United States. He added that young India is very energetic and differs from earlier generations. “They are always challenging the traditional value system, even from a financial perspective. So, young India is going to be a consumption-driven country, in which the consumption-driven middle-class will be the growth driver for our economy.”

Pinapala said companies like Vivifi, which are offering credit as a means to achieve financial goals and lifestyle goals, will play a huge part in enhancing the country’s economy. “India's true potential will only be achieved on the back of these consumption-minded young Indians who are not prisoners of the past.”