PayPal & Unitus Seed Fund's Startup Mixer: Innovation in Lending

PayPal and Unitus Seed Fund organized their first edition of Fin-Tech Startup Mixer in Chennai on Saturday, September 12. The aim of the event was to bring together technology enthusiasts, especially the startup community and discuss the changing financial industry landscape through technological innovation with a specific focus on lending.

The event was kick-started with a panel discussion on Changing India’s lending landscape through Fin-Tech innovations.

The panelists for this discussion apart from the moderator (Sathish Vaidyanathan) from Paypal were:

Puneet Gupta, CFO, IFMR Holdings

Sneha Rajan, Senior Associate, Unitus Seed Fund

Shiva Adithya, Manager, LTP

The discussion went on for close to 90 minutes with enthusiastic participation from over 35 participants.

Puneet shed light on how IFMR had built excellent back-end analytics algorithms to assess the payback capability of a particular customer. He also spoke about how, in the past eight years, the algorithm had evolved every year and how they were able to commit to the mission of financial inclusion (where once they enter a particular district, they try to cover data on at least 80% of the population). According to Puneet, they were able to turn their officers into excellent data collectors, which helped in understanding the consumer in totality. This, and the efficient algorithms developed, was the backbone for IFMR to lend close to Rs. 8,000 crores in the last year and with an average default rate of ~2% (2-2.5% for SME lending, less than 1% for individual lending).

Sneha provided insights on the how they see the overall segments, markets and the investments. She explained how the payments industry is now extremely competitive and why there is a gradual shift into the lending space, the opportunity it provides and the largely untapped market. She also spoke about some of the interesting innovations that were happening in the P2P and B2B lending space. In addition, she also spoke about the challenges that a lender faces, the methods that could be used (Aadhar and others) to boost the confidence of the overall lending community.

Shiva spoke about how new-age startups like Capital Float, NeoGrowth and Lendingkart are changing the SME lending space in India. He explained how the P2P/B2C lending companies like IndiaLends, Instakash, Faircent, i-lend, etc. are looking at disrupting the unorganized and unsecured consumer lending space. He also discussed how data from various sources—apart from credit history and bank statements—are being extremely important and is being assessed by new technology companies. He gave a brief analysis of global lending innovation and how China’s P2P lending market was comparable to India’s, where there is a need for offline agents/loan disbursals as opposed to the US/UK model of completely lending online. He also spoke about how banks are watching this space closely as it allows them to develop models that lower the cost of financing.

The panel discussion was followed by two startup pitches.

1. TetraPay: Chennai-based startup TetraPay aims to be the payment aggregator processing frictionless digital wallet payments. They plan to aggregate the various wallet payment options that merchants and consumers have and provide a single interface for a hassle-free payment.

2. Walleto: With a specific focus on tier-2 cities, Coimbatore-based startup Walleto aims to be the mobile wallet payment option that can be used at real-world merchants like retail stores, restaurants, pharmacies etc.

Note - Please also read a blog written by Sathish about the panel discussion.