We are a round away from our IPO, says KreditBee CEO

Fintech platform KreditBee is inching closer to a public listing. Madhusudan Ekambaram, Co-founder and CEO, KreditBee, says that the credit platform is probably one round away from an initial public offering (IPO). 

In January this year, the fintech raised $100 million in an extended Series D funding led by Advent International. KreditBee is utilising the capital to serve the over 400 million middle-income population in the country. 

“Currently, we are looking at product diversification. We are looking to offer gold loans and loans against property. Once that part of the puzzle is solved, we will look at an IPO,” says Madhusudan.

Taking the road less travelled, Madhusudan wants to cater to middle India with a slew of lending offerings. He says that diversification into segments, such as gold loans, is based on customer demand. 

“On a personal loan, lenders can only take a certain level of exposure without any guarantees. Customers want slightly bigger loan amounts, around Rs 5 lakh to Rs 7 lakh. Traditional lenders don’t want to take this exposure for a long tenure, hence we are stepping in,” he says. 

Currently, the average personal loan ticket sizes are around Rs 40,000 to Rs 50,000, with no underlying guarantees. KreditBee offers personal loans to salaried as well as self-employed borrowers. 

Banking on aspirations

KrazyBee, the precursor to KreditBee, started as a student credit offering in 2016. The platform offered small-ticket loans to students for purchasing laptops, upgrading personal computers, and buying smartphones, among others. Seeing the demand over the next two years, Madhusudan and his team launched KreditBee in 2018 to expand to the mass-market segment. 

Today, KrazyBee is a non-deposit taking non-banking financial company (NBFC) and is one of the digital lending partners of KreditBee. Here, KreditBee acts as a facilitator of the loans, wherein all loan applications are approved and sanctioned by the Reserve Bank of India registered banks and NBFCs. 

Madhusudan believes that top-of-the-pyramid customers have a lot of options and an array of products across the industry, but there are only a few, if any, fintech solutions for aspirational customers. 

“My target segment is mid-India and non-metro cities, beyond the top 15 cities. We use digital underwriting to get them into the formal credit structure,” he says. 

Madhusudan explains middle India is looking for loans to upgrade their standard of living. The possibilities of how middle India could use this debt are endless. Some buy bigger TVs or get new appliances such as washing machines and air conditioners. While others use it to remodel their home and replace upholstery and home furnishing. 

Emergency needs, too, are different.

According to Madhusudan, an emergency loan in mid-India might be taken to celebrate the first birthday of a girl child, including buying gold jewellery for her. This is in stark contrast to metro cities, where emergency personal loans are usually sought for medical exigencies. 

Streamlining data flow 

Lending can be a challenging business, purely because it is based on a principle of trust. Madhusudan says that KreditBee uses data analytics and alternative data sources as estimators for cash flows. For instance, using the payment wallet of an individual, the platform can estimate their cash flows and their creditworthiness. 

“Ever since our launch, over 1 million customers have a bankable credit bureau score,” he adds.

KreditBee also works with credit bureaus and engages in conversations with these entities to help build a holistic data collection process. 

Madhusudan's work, however, is far from over.

“We get 50,000 loan applications every day but only pass through 1 in 10. We cannot process several applications due to insufficient data and that is where a lot more needs to be done,” he says. 

Madhusudan also has an NBFC, KrazyBee, that is an added support to cater to the underserved and underbanked population. So, is a bank licence the next big dream?

“Getting a banking licence is a natural progression and depends on how the business is built,” he shares. 

For now, Madhusudan is busy serving the grossly underserved middle India and giving wings to their aspirations.