[Product Roadmap] How CASHe used proprietary technology and credit writing systems to pay out Cr 2,500 in credits
A report from global wealth management firm Credit Suisse shows that Indian fintech startups raised $ 10 billion in funding over the past decade, while digital lenders raised $ 2.5 billion.
In addition, India saw growing credit needs – particularly for certain underserved segments.
Yogi Sadana and Raman BV decided to solve this problem and founded in 2016 CASHe, a digital lending startup that caters to the financial needs of professionals between the ages of 25 and 35.
“We wanted to question the status quo of the digital lending business in India and use technology to seamlessly change the entire delivery system. We looked at the prevailing lending business in India and abroad to develop a unique business model, ”says Yogi.
The founders realized that the idea of credit is inevitably linked to the creditworthiness of the borrower. A borrower is not eligible for a loan if the credit bureau rating at financial institutions is not passed.
The duo also found that most young professionals, especially those new to the job looking for a loan, had no prior loan history.
“That’s when the big idea came to us. We needed a solution that would give the lending business a new perspective. We focused on millennials because we felt they shared traits around the world.
“CASHe was created with the clear goal of providing India’s urban millennials with a path to better financial health.”, using technology through their smartphones, ”says Yogi.
What it does
In a smart digital world, the CASHe app should offer personal loans quickly and easily through “transparent and contemporary” processes.
The fintech startup has an automated and robust lending system and the self-developed AI-based algorithm evaluates the risk of a borrower based on the user’s social and mobile data traces.
The Model goes beyond traditional credit risk metrics and assesses the borrower’s “figure of merit” and his ability to repay. Therefore, CASHe gives loans to young professionals who are either near-prime or sub-prime borrowers with or without prior credit history.
“We operate in a digital world that exceeds the scalability of a high-touch model. We used a combination of AI and big data to build an engine that trains, learns, adapts, and predicts human behavior – otherwise a monumental task.
“The The cumulative loan payout for CASHe since its inception is Rs 2,500 billion. Our percentage increase in payouts is around 30 percent compared to the month, with an active total customer base of around three lakh, ”says Yogi.
From brainstorming to raising funds to getting the right people to develop the technology, it took the CashE team six months to begin rolling out their services. They started with 15 and 30 day loan products.
Yogi says the concept of easily drawing loans on a smartphone was relatively new in India about five years ago.
“We were encouraged by the response and saw a huge surge in the trend of getting a loan through a technology platform like CASHe. Developing that unique app idea is often the easiest part.
“Creating and developing our industry’s first proprietary technology algorithm with very little or no data was a challenge. The predictive engine was still in the works as it learned from every transaction. Introducing upgrades every week to keep the app best in class and stay one step ahead of everyone else in the market has helped us stay one step ahead of the competition. ”
The purpose of an MVP was to collect validated learning with minimal effort. The Build-Measure-Learn process helped launch the product with the flexibility to make changes based on user feedback and schedule future updates for better service.
Grow with data
The data collected helped the tech team roll out many features on the go and provide users with a better rental experience.
“We operated the MVP for around three months with a number of potential customers. The feedback we received was encouraging and the insights made for further improvements, and we rolled out the service across India in 2016, ”says Yogi.
The goal was Break through the Indian credit landscape and ensure real financial inclusion. CashE gives credit to those who otherwise cannot get credit through the traditional credit system. The lack of financial data and credit history makes them sub-optimal borrowers for traditional lenders.
Yogi says the current business model is fully scalable as it allows the team to offer value-added services. CASHe was the first fintech lender to debut on Google Pay, offering short-term loans to Google Pay customers.
Line of credit, BNPL and customer feedback
The team also has one Line of Credit Facilitythat provides funds to customers based on their eligibility. Customers can also use part of their funds as a Buy now, pay later Shop at online shopping sites and return in simple, inexpensive EMIs.
With long-term recurring revenue streams associated with all of these services, Yogi says CashE is one of the few fintech lenders to become profitable within two years of starting operations.
“We believe it is important not to be satisfied with just incremental product improvements. We need groundbreaking developments and innovations in business models in order to offer unique solutions, ”he adds.
CashE introduced short term lending for those who faced a financial crisis at the end of the month. “We have slowly but regularly expanded our product range in order to reach a larger mass of people so that they can benefit from our technologies and services.”
The constant product improvement was made possible by the establishment of a customer feedback loop.
Yogi says this gives them an edge over the competition, creates a high quality customer experience, and allows them to offer new services that users want.
“The results from the user feedback loop prompted us to expand our product range. We introduced higher quality loan products, reduced the time it takes to apply for a loan, and made the user experience less of a hassle, ”says Yogi.
The technology that helped consumers without a file
Low credit penetration, particularly low unsecured credit, is mainly due to the fact that traditional lenders see Indians as “thin file” or “no file” customers.
The SLQ program uses a combination of big data analysis and proprietary AI-based algorithms to assess inputs and the user’s digital footprint to measure their creditworthiness.
It measures a borrower’s propensity to repay – based on currently available information – in contrast to traditional credit scoring systems, which only provide a rating based on historical financial behavior.
This means that a person with no financial history can get a loan from CashE if the SLQ engine determines that they have a “reasonable propensity to repay”. “This is a unique selling point and we have successfully built a large customer base.”
Apart from the seamless New age experience in digital lending, the team also experimented with marketing tactics, promotions, web design decisions, and other tasks to get to work fast Convert leads and generate sales. Aggressive customer acquisition campaigns were carried out on social platforms, but electronic media such as television and radio were also examined.
“We tried to grow across as many metrics as possible, mostly with low-cost marketing, to get results.
“For example, we could grow quickly through a flood of paid advertising Growth Hacking Strategies included content marketing, a steep fee waiver as an incentive, social media, and similar tactics. Their main advantage was often creativity and we have successfully scaled the business by reaching as many applications as possible, ”says Yogi.
Challenges along the way
CashE’s AI-based credit scoring platform was developed entirely in-house.
“We selected our internal crack team of around 15 technology specialists to build the platform from scratch. We added later Specialists, including developers and data scientists, to help build and scale the platform“Says Yogi.
However, the team had a few challenges, starting with the fact that technology moves at incredible speeds and it can be difficult to keep up with. Finding and hiring the right talent for a new product / service category was also difficult.
Other challenges included planning the components that are part of the user experience for the best usability standards, identifying best security and privacy practices, and ensuring that the app technology and business approach are compliant.
The founders invested in cutting-edge technology to build and scale the platform. They evolved as a Roadmap for the future by determining the capabilities the platform would require to stay competitive and innovative. Cloud technology is therefore becoming a central part of their transformation efforts.
Market and future
In 2020 the Reserve Bank of India (RBI) issued notices to Non-Banking Finance Corporations (NBFCs) and banks additional information / compliances and a note for borrowers Warning of fraudulent platforms.
The Digital Lenders Association of India (DLAI) has also issued guidelines with a regulatory pipeline.
Fintech players like CashE continue to thrive by adhering to RBI guidelines. It competes with platforms like Early salary and PayMe India which follow a similar model.
“We want to be an agile organization. Our goal is to build a large financial model and reach every touchpoint in our customers’ financial lives with unique and differentiated products and services.
“Our goal is Increase customer acquisition by a factor of five and double our size in the next six months. We are becoming part of a dynamic financial ecosystem that drives new collaborations and develops unique business models to increase customer convenience and add more value to the company, ”says Yogi.