CASHe: Spearheading the Transformation of Digital Lending

Raman Kumar| CASHe
V. Raman Kumar | Chairman,CASHe

The average time taken by conventional banks to discuss corporate or small business lending is between three to five weeks. Also, the average time to get that capital or loan is nearly two to three months. Not soon from now these timelines, if not already, will seem as antiquated and unacceptable.

However, a few years back when everything was going digital, the opportunity and demand in the financial market for a new financial approach driven by technology were anticipated. Many financial service providers including banks had recognized this demand and are embracing the digital-lending system that will reduce the time taken to approve the loan.

Recognizing this opportunity at the earliest and entering the finance market with a new approach, CASHe started its journey intending to challenge the conventional loaning system. To better understand the current state of the financial system and how CASHe is changing the traditional cash lending approach, we interviewed, V. Raman Kumar, Chairman of the company. This conversation will provide you an insight into the company’s journey and how it is revolutionizing the fintech sector.

What is your vision behind your startup? Tell us how the idea came about.

When we started around 3 years back, we wanted to challenge the status quo of the digital lending business in India with the aid of technology that could seamlessly change the entire delivery system.

To create a unique business model, we looked at the prevailing credit business in India and abroad. The common thing we realized is that the idea of credit is invariably linked to the credit rating of the borrower.

The borrower usually will not qualify for a loan if the credit rating provided by the credit bureau does not give a qualifying number which automatically sets his approval as per the financial institution.

Next, we found out that most young working people requesting for a loan do not have a prior credit history. For someone new into the job market, there is hardly any credit history for them. This is when the big idea struck us. We needed a solution that gave a fresh perspective to the lending business.

The millennials were the segment that we focused on as I believed they have the common traits not just in India but across the world. Hence, CASHe was launched with a clear purpose to provide India’s urban working millennials with a path to better financial health with the aid of technology through their smartphones.

What does CASHe offer to its customers?

CASHe provides unsecured short-term personal loans from 7,000-300,000 for 2 months to 1-year duration to young salaried professionals in the age group of 22-38 years through a smart,

intelligent digital app. Its user-friendly digital interface enables faster loan applications and quicker loan disbursals.

Our mission is to provide next-generation Digital Banking solutions, especially to the under-banked. To do this, our unique technology was created to provide a friendly and fast service for the consumer. The entire user experience is a hundred percent app-based, user-friendly, flexible with multiple loan options, and digital. The 8-minute Turn-Around-Time for loan disbursal, directly from the mobile phone, is a unique feature of CASHe.

What makes CASHe even more unique is its proprietary credit evaluation framework, the Social Loan Quotient (SLQ), which uses a combination of Big Data Analytics and proprietary AI-based algorithms to evaluate traditional inputs and the user’s digital footprint to measure their creditworthiness.

Social Loan Quotient (SLQ) is both dynamic and forward-looking by design as it measures a borrower’s propensity to default based on their current behavioural information, as opposed to traditional credit scoring systems that deliver a score based only on historical financial behaviour.

Unlike conventional lending agencies who rely only on an applicant’s past financial transactions to deliver a credit score, CASHe’s approach to calculate a customer’s credit score is more revolutionary as it is linked to several data points that include borrowers online and offline data like his mobile and social media footprint, education, remuneration, career and also the financial history.

The scores are generated in real-time which enables the customer to know, within a few seconds, if he qualifies for a loan with CASHe or not. We are intensely focused on improving the financial worth of young urban professionals with our transparent and simple short-term financial products.

Over 30% of our customers are new to credit. We have disbursed loans worth 1700 crores since the launch of operations and we have a total app download of over 6 million on the app stores.

What were the challenges you came across during the inception of your startup?

Technology moves at an incredible speed and keeping up with the changes can be a challenge for start-ups. We understood this very well before we set off with our business. Secondly, finding and hiring the right talent for a new product/service category was a challenge in itself.

Building our industry-first proprietary technology algorithm platform, the SLQ involved a great amount of research, using big data and machine learning, and eventually build an engine that trains, learns, adapts, and predicts human behaviour was a monumental task and finally, winning the customer’s trust. It is one of the most important challenges that businesses have in general – and start-ups specifically.

Customers are the real force behind our success. We wanted to give a ‘wow’ experience to the first-time user with a product that fully met with their expectations. Their word-of-mouth power

and their presence on social media gave us an edge against our competitors and all the traditional lending businesses.

Is your company bootstrapped or have you received funding or do you plan on approaching investors?

During the time of invention, we had invested around $5 Million as the seed money. Later, we attracted the interest of large financial institutions through which we raised debt to the tune of around $20 million through debt and equity and we are actively looking to raise another $15 million in this financial year.

As the founder, what is your opinion on the current landscape of startup culture in India?

In recent years, startups have been receiving increased attention in many parts of the world. In India, the number of startups has increased fast and it has garnered more support from all dimensions.

India is often described as “the poster child of emerging markets” for its vast commercial potential for startups. In a country with a population of nearly 1.3 billion people, even niche products can have significant market potential. Their numbers are on the rise and they are now being widely recognized as important engines for growth and to generate jobs.

Through innovation and scalable technology, startups can generate impactful solutions, and thereby act as vehicles for socio-economic development and transformation. With the addition of more than 1,300 startups in the year 2019, India continues to reinforce its position as the third largest startup ecosystem in the world. The start-up landscape in the country is becoming the epitome of innovation, with companies bringing out solutions that are aimed at solving locally relevant issues.

There is a huge need for innovative solutions, particularly those that alleviate poverty and benefit a large number of people. Given the scale of India and its resource constraints, low-cost, high-impact solutions are required. Technology startups play a crucial role in accomplishing this, because of their potential for scalability and exponential growth.

However, to stimulate innovation, government and corporates need to focus on increasing their role as prominent stakeholders playing the part of venture capitalists and providing the appropriate market access, funding, and guidance to seed-stage start-ups.

The Indian start-up ecosystem has come a long way in providing a level playing field for innovators to flourish by strengthening capabilities and fostering co-creation. The next wave of growth will be at the junction of convergence of technologies, where different sectors will embrace digital to re-define their operations.

According to you, how important is it to be updated with technology as per your industry sector?

Companies across the fintech sector are employing various technologies to mine the data available from various sources to improve the customer experience. In India, technology has

been the foundation of fintech’s rapid growth. With major platforms been developed in the past few years – GST, Aadhaar, and UPI, it could be built only due to the latest technologies available. It is due to the use of innovative technologies, we could see GST’s implementation and Aadhaar’s biometric, face recognition is implemented.

UPI is built using large distributed software systems. Fintech players have largely benefited by these platforms to develop solutions that make finance more accessible for the end-users compared to traditional banks.

With around 550 million internet users in India, 95% of these users access the internet through a mobile platform and use it for various transactions online. I am sure these numbers are expected to rise, and it is at the advantage of Fintech companies to continue to reach out to this segment over traditional banks or financial institutions.

The digital lending sector also has seen a lot of activity with more than 350 companies reaching out to customers in tier 3 or 4 cities or remote areas who have less access to formal financial institutions. Online lenders are offering instant loans for less than Rs. 1000 to Lakhs of rupees. Due to this, there has been an increase in demand for credit from people from these regions through digital apps being provided by fintech lenders.

With abundant data and key access to technology now readily available, the differentiator for fintech companies will be to determine what data to collect from their customers to analyze and offer suitable products and services. I believe, for many fintech lenders, their USPs will be the credit underwriting risk model they develop and use to process loans for their customers.

Using data drawn from multiple sources like SMS, social media, eCommerce platforms, credit bureaus, point of sale data – it is now possible to build various loan products suited to an individual’s need. Companies across the fintech sector are employing various technologies and ML & AI and Big Data Analytics to mine the data available from various sources to enhance the customer experience.

While data does allow personalization, it is important to be within the regulatory framework to ensure privacy norms are met. Data collection and security need to have more robust processes and having a central repository might become important for the fintech sector.

Neo banking with digital accounts being opened instantly will see more traction in the coming years. Once the open banking APIs reach a level of maturity, it has the potential to change the way people view banking services.

How do you strategize on scaling your company in the future?

We have made huge strides by bringing in financial inclusion to the underserved working population in the country. We have been successful in creating a demand for people who were let off by the traditional lenders. Being one of the early starters in this line of business, we were able to create a much-desired demand for the product we offer thereby helping us create inroads in the alternative lending market in India.

Our current business model is fully scalable as it enables us to offer value-added services to our customers. We have been successful in providing a host of services like an EMI card and insurance products along with our regular loan products.

However, the potential to grow the business is exponential as today, there are more than 400 million working adults accounting for a third of India’s population. But over 40% of adults are underserved by financial institutions. Of these, almost 130 million are salaried professionals and 32 million are urban salaried millennials. With such a young population and so many unbanked or underserved working adults, we see this as a great opportunity to expand our reach to these untapped audiences.

We will also consider lending to the MSME segment as it offers us a great opportunity to lend to small businesses. We are currently strengthening our foothold in Sri Lanka as we will soon be starting our operations there. And finally, our long-term goal is to be a digital bank in about 5 years. The success we have witnessed in our current digital lending business will naturally be a great step forward for us to step into digital banking. We are very bullish on our future!

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