Today there exists intense competition in India’s Fintech Sector as young and restless entrepreneurs join the Fintech bandwagon with pulsating quest. Their quest is to make most of the opportunities offered by the ongoing Fintech revolution while promoting financial inclusion across the country.
Now a new startup RevFin has joined this long drawn quest. RevFin aims to become the world’s most advanced digital platform, with major focus on underwriting and managing consumer loans. At the helm of this young startup is an ambitious entrepreneur Sameer Aggarwal. Aggarwal does not believe that RevFin has entered the fintech game a tad late. In fact, this ambitious entrepreneur believes that with billions of people still awaiting financial inclusion, the fintech sector still offers infinite opportunities.
RevFin, by the way, has got a good head start in catering to these opportunities as it recently raised undisclosed amount in seed funding from clutch of investors. These funds will be mainly used to increase RevFin’s loan book further and consolidate startup’s technology platform.
RevFin offers personal loans in the range of Rs 2000 to Rs 20 Lakhs in fraction of few minutes. The startup aims to increase its loan book to Rs 5,00 crore in next five years.
Techpluto spoke to Sameer Aggarwal, RevFin’s founder and CEO in an exclusive interview. In the interview, Aggarwal shed light on RevFin’s future plans as well as the possible impact on NPAs on NBFCs.
Q) Since there is already so much competition in the Fintech sector, what really motivated you to come into such a highly competitive industry?
Sameer Aggarwal: Financial inclusion is the main objective of the Fintech sector. Over 2 billion adults globally have no access to formal and affordable lending. Therefore, there is need to bring in more innovation and reach to the financial sector. The opportunities are infinite and it is the thing that motivates me. I see other players in the sector not as competitors, but as those complementing what we are doing.
Q) RevFin is giving special focus to personal loan category. What, according to you, makes this category so promising?
Sameer Aggarwal: Consumer credit in India is expected to increase 4X from c. USD300bn to USD1.2tr in the next 5-7 years. This growth is going to be driven by customer segments that are out of reach of traditional lenders. This creates a big opportunity for innovative technology led companies to create their mark in the space.
Q) The one USP that makes RevFin truly standout amongst all its competitors?
Sameer Aggarwal: Our lending platform is our biggest strength. Through the platform, we can approve loan applications that traditional lenders cannot. Our platform also engages customers in a unique way, driving up loyalty and repayments. From a commercial perspective, our platform increases lifetime value through lower NPAs and higher customer loyalty resulting in more referrals and repeats.
Q) Like several Fintech startups, RevFin is also using non-traditional methods like Psychometrics, Biometrics and Gamification for making credit decisions. You’re thought on how technology has changed the ballgame in the Fintech sector?
Sameer Aggarwal: The use of digital technology in financial services has many advantages. First, it puts the customer in control. This means a customer can avail of services at any time, from anywhere with complete freedom to choose the services they need.
Second, it makes services more inclusive. Everyone is equal in the digital world, irrespective of education, social status, language or geography. No one can stop you from entering an App! Third, it increases speed of transactions. In a digital medium, everyone is first in the queue. Fewer manual processes also reduce time significantly. Lastly, it makes services more consistent. Everyone receives the same service and experiences the same process.
Q) RevFin recently raised undisclosed amount as seed funding from clutch of angel investors. How does the company plans to use this capital infusion and when can we expect next round of funding?
Sameer Aggarwal: We are using the money raised in the seed round for two purposes – 1) to fund loans and 2) to build world class technology platform. We have initiated the process for the next round of funding, which we expect to close within the next 6 months.
Q) Revfin aims to build Rs 500 crore loan book in next five years? How challenging is this goal and what important steps does your company plan to take to achieve this goal?
Sameer Aggarwal: The real challenge in the lending industry is to recover the money back! Therefore, we are building a distribution network that will help us achieve the desired scale with relatively low risk. An example is loans linked to payroll, where the EMIs are deducted automatically from a customer’s payroll. For this we are tying up with several organizations who will provide loans to their staff through us.
Q) Recently there has been lot of murmurs about NPAs casting its shadow on NBFC industry?
Sameer Aggarwal: NBFCs are facing a short-term liquidity constraint, which I believe will get rectified by middle of next year. Most NBFCs have strong performance and I do not foresee increase in NPAs.
Q) How can Fintech companies, which are so dependent on non-traditional methods like AI & big data to sanction loans, can shield itself against NPAs?
Sameer Aggarwal: It is not how you do, but what you do that reduces NPAs. Use of AI and analytics provides an efficient way of doing things. But in order to keep NPAs under check, Fintech companies have to focus on very thorough underwriting and KYC checks. Since Fintechs rely on digital, with low or no physical touch points, they must also have a way of engaging their users and maintaining loyalty. At RevFin, we use gamification to achieve this.
Q) Do you think that the current industry rules and regulations are extremely friendly towards NBFC companies or the regulatory bodies need to do more on this front?
Sameer Aggarwal: As a general practice, regulation must be updated regularly to keep pace with the changing world. Post the financial crisis that started in 2008, regulation has become very intense and intrusive in many countries. This has led to consolidation in those markets as small entities could not lift the burden of the regulation anymore.
I do not see this happening in India, hence, I believe regulators have created a friendly environment. Having said that, it would be good to see some concessions for start-ups through sandboxes, an approach that many countries like the UK and Singapore are taking very seriously.
Q) The one Fintech company that you really admire?
Sameer Aggarwal: Kreditech