Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

Transforming lending to democratized credit for the future

In current times, financing has moved on from being a privilege for the chosen masses and businesses to being available to everyone looking for it, as traditional banks, fintech, and financial institutions embrace financial inclusion at the micro-level and partner with SaaS companies to reach out to larger customer base digitally and responsibly.

It is important to create a product that looks accessible and adds to ease of use to narrow down the gap between financial institutions and customers seeking financial assistance. Ankur Handa, Co-Founder, and CPO, LENTRA discusses the need for democratizing credit and enabling hassle-free lending, rethinking BNPL, and making an indigenous platform for the global markets.

Democratizing credit to strengthen digital lending

Ankur Handa, Co-Founder, and CPO, LENTRA saidLENTRA stands for “Lending Transformed”. When we looked at the changing and evolving ecosystem, the customer behavior is changing, the market is changing. People are getting smarter and embracing digitization for their food and travel needs. So, likewise, the expectations are there in terms of lending.”

The world is changing, and customers today expect instant gratification. In terms of lending, it must be done carefully and responsibly. It is a business of not just giving the money but getting the money back too.

To align with these changing dynamics, we came up with a platform rather than an ecosystem that is helping the banks, fintech, and NBFCs in India to make responsible credit decisions. The complete platform cut across customer origination, KYC, platform onboarding, loan processing, and collection. We also do portfolios, up-sale, cross-sale, and various other things. For this, we have created a platform that is API-based and connected with 200+ data providers in India.

The soul and heart of our product is the Business Rules Engine (BRE) which enables trade-through processing and decision at the point of sale (POS). Gone are the days, when loan application processing used to take several days and weeks as well as run across numerous times. For a small-ticket loan (consumer products) we are going to a point where the loan application can be processed in under 10 minutes and the loan decision is done under 7 seconds. So, that’s the straight-through processing that we have built under our platform.

Today, we have got 7 significant entities and banks using our platform. At present, around 2 million loan applications are being processed on our platform. For some of the portfolio products, we are doing 96 percent straight-through and our reach is operating in around 86 percent of postcodes in India which are serviceable for lending offerings. We are living in a dynamic and disruptive landscape, where lending is very much discovering itself, he added.

 

The world is changing, and customers today expect instant gratification. In terms of lending, it must be done carefully and responsibly. It is a business of not just giving the money but getting the money back too.

Traditional BFSI players embracing the adoption of digital lending platforms

In today’s world, whether we like it or not, big corporations like Google, Zomato, Uber, and other service providers have shown us the way and enabled the adoption of technology. Technology has made inroads in India, now it comes from a utility standpoint, as to how we build essential services using technology that we are comfortable with, and how can we build lending solutions and banking solutions with the aspect of mobile-first.

Ankur Handa “We at LENTRA, are doing the embedded journey, where finance must be just one of the ways. The company is trying to make lending a seamless and hassle-free experience for the customers.  We are happy to do it with banks and fintech and see amazing rejuvenation across the board. It’s a collective tide going up.”

SMEs catching up with the digital lending

Ankur Handa said “Small and Medium-Sized Enterprises (SMEs) like any other country is going to be the driving force that will power India towards its $5 trillion economy goal. The beauty of SMEs is it is spread across the country. Given the geographical diversification we have in our country, SMEs reflect the true India. Products like OCAN are getting enabled with an open Application Programming Interface (API). We are the pioneers from the technology standpoint, where we are creating lending APIs that the banks can take to various OEMs and channels and embed those journeys.”

We believe, in the upcoming times, we will see sachet-size loans processed even for SMEs. People relate business loans with an amount which will be in a few lakhs, crores, but now that size is coming down. When you enable lending at this micro level, it just takes the game to a different trajectory. The no. of people who are going to join the bandwagon across the country is going to be massive, he added.

 

“The beauty of SMEs is it is spread across the country. Given the geographical diversification we have in our country, SMEs reflect the true India.”

Rethinking BNPL

“I have worked for Buy Now Pay Later (BNPL) product in the UK in the year 2001. So, it’s a cyclic thing. BNPL is in fashion again. It facilitates people with zero credit history to avail of tiny loans and helps them to build a credit history. Over the period, they can too go for bigger loans depending upon their credit history. Also, BNPL should not make people splurge irresponsibly, especially the millennials who might use this service to spend it on things they don’t require, which will in turn lead to the piling up of bad debts and NPAs’ which is not a good sign for banks. It’s a path we need to go on, but we need a balanced take on it.” said Ankur Handa.

Measures require to regulate digital lending

The regulator in India has been very progressive with its thinking which puts them ahead of time. It’s very pleasant to have rules to be brought in at the right time. Everyone in the game must adjust to the new rules. Not just the regulation, the Gol along with RBI is also encouraging financial inclusion in different ways. A lot of initiatives have been taken like OCAN, Jan Sahay, and ONDC and with all this coming through, it’s going to help everyone.

Game-changing technology for the future

Ankur Handa stated “LENTRA is a Software as a service (SaaS) provider. We believe in zero software-harder on customers’ premises. Our platform is cloud-native and API-first. We are building micro-systems for India and the world. We aim to be the pioneers in taking the lending platform which is made in India to provide services to customers globally.”

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members