How digital loan startup Kissht was able to record Rs 200 Cr income in FY21 despite the pandemic

Digital lending platform Kissht was founded by Krishnan Vishwanathan and Ranvir Singh in 2015 to serve the newly credited and low income Indian population.

After working in PSUs, private sector banks, large NBFCs, and McKinsey & Co, the co-founders saw the challenges these institutions face in serving the low-income segment. At the same time, they also realized the immense opportunity that the segment offered if data and technology could be harnessed to serve them.

The team initially developed a fintech platform to provide purchase finance and personal loans to its customers, which is integrated with both online and offline merchants.

Krishnan Vishwanathan

“By using a 100% digital platform designed to scale, leveraging big data and machine learning algorithms to solve the underwriting problem, and developing a bespoke CRM platform that aims to engage and to educate our customers on personalized product offerings. at their disposal we have demonstrated five years of successful lending, ”says Krishnan.

Today, the company has grown at a breakneck pace, clock of Rs 200 crore of income in fiscal year 21 despite the current crisis.

“We paid more Rs 6,000 crore in loans since its inception, registering nearly 100% year-on-year growth. We have served over two million unique customers since our inception. Our plans for FY22 are to generate Rs 350 crore in revenue, profit over Rs 40 crore and serve two million additional customers, ”Krishnan said.

How has the product evolved?

In the early days, Kisht offered a Discovery Marketplace where clients could take out personal loans at several participating NBFCs. Then, after receiving the NBFC license, the startup built its own credit rails platform with both a loan origination system (LOS) and a loan management system (LMS).

“Our goal has always been to develop all modules in-house in order to have complete flexibility in customizing the products we offer and to evolve the infrastructure to instantly meet customer needs,” says Krishnan.

Over the years, the team has also created a separate website and mobile app to meet various customer needs.

Some of its offerings include a retail application, which offers instant purchase loans for smartphones and consumer durables at more than 5,000 hyper-local retail stores. A franchisee application to benefit from a personal loan in underserved user segments in level I and II cities, and a online purchase loan – a white label web solution offered to e-merchants.

There is also client application, where the startup offers a digital EMI card with zero percent funding on their ecommerce loans. It also offers to sell personal loans up to Rs 2 lakh for 24 months. And, to meet the growing needs of users, Kissht also offers a revolving line of credit of up to Rs 30,000 and BNPL for their online purchases.

According to the co-founders, the user journey has remained simplistic with an absolute emphasis on minimum inputs and maximum gratification.

The user signs up with a mobile phone number or social media credentials, fills in their basic KYC information, and uploads minimal documentation. UW proprietary logic and Kisht digi-score determine the credit limit and available offers. The customer chooses an offer and then gets instant cash out.

Image Source: ShutterStock

Bring product innovation

When COVID-19 hit, the team realized that many of their customers were being impacted economically. It would be hard to expect them to pay on time in such a situation.

Kissht – like any other purchase finance lender – found that the opportunities offered by offline merchants and brands had been hit due to multiple bottlenecks, reduced repayment capacity, and declining payment habits. discretionary customer spending.

Krishnan says: “After having duly analyzed the situation on the ground during the first and second waves, we showed extreme agility in redefine the priority of our application to other credit products such as personal loan, short-term line of credit, and buy now pay later (BNPL) that effectively served clients’ day-to-day needs.

“As a result, we have limited offline merchant funding and in-app online brand funding for only a few brands in certain geographies. We have seen strong growth even during the pandemic, as the whole team has put in tremendous effort to roll out new products in such a short period of time. “

Kissht has also focused on maintaining engagement with clients, proactively offering them a moratorium and helping them manage their financial needs without undue pressure.

“During COVID-19, we offered free medical coverage for COVID-related illnesses – showing our commitment to the well-being of our customers. Even today, we are working with our clients and helping them restructure their loans so that they can repay the loan without constraint, ”says Krishnan.

Building team strength during COVID-19

However, like everyone else in the industry, COVID-19 has been difficult for Kisht. “The main goal for us was to ensure the health and well-being of our employees. To ensure this, we instituted work-from-home protocols not only during the mandatory lockdown period, but even to this day, ”Krishnan said.

To ensure maximum efficiency, office tools developed for mobiles, protocols were put in place that balance the personal needs of employees while ensuring healthy interaction, and there were debates and discussions on the tasks of the staff. ‘business.

“With the help of company HR, we have set up a helpline for our employees for any emergency health needs related to COVID. We hope to work with private healthcare to ensure the fastest vaccination for all of our employees as soon as possible, ”Krishnan said. However, he adds that despite the challenges, there are a lot of positives the team took away from it.

“The downtime has allowed the business to focus on innovation, including the new line of credit product that we have developed for our independent clients. Additionally, as the company has seen COVID-19 related credit costs and the resulting foreclosure increase, it is also a learning curve for us as our risk models have evolved further during these times, ”said Krishnan.

Funding

The startup’s revenue model is straightforward. Kissht grants the client a loan and charges interest that covers its cost of capital, all expenses it has as an organization and the risk costs associated with expected losses.

“We charge a nominal fee to set up the loan for the client. Our interest rates vary from 14% to 24% per annum, while our processing fees vary from 2 to 5%. We focus on LTV clients by offering them several credit products tailored to their needs – personal, medical, facultative or even small business. Besides loans, we also offer credit related health insurance and other services like credit counseling etc. We charge a nominal facilitation fee for these products if customers opt for the same, ”says Krishnan.

So far, Kissht has raised three rounds of equity financing from five investors, for a total of Rs 270 crore. He also raised more than Rs 600 crore in debt from over 25 debt investors, which includes leading banks such as Kotak Bank, AU Bank, Jana Bank, large NBFCs such as Northern Arc Capital, MAS Financial and many premier fortune funds plan.

The segment

The consumer lending space is an area that has been hit hard by the pandemic. Problems with lending rates, coercive loan collection methods and non-consensual use of data are just a few examples.

In 2020, the Reserve Bank of India (RBI) issued notifications to non-bank financial corporations (NBFCs) and banks requiring additional disclosures / compliances, and a notice to borrowers warning them about fraud platforms. the Indian Association of Digital Lenders (DLAI) also issued guidelines with a regulatory pipeline on this front.

“Mobile payments has been one of the most resilient industries as it has seen significant organic adoption amid growing concerns about COVID-19 along with other digital / non-digital payment methods. COVID-19 has been detrimental to the digital lending industry as loan disbursements have taken a big hit (down by around 90 percent). However, there are a few green shoots, ”says a report from a RedSeer analyst.

The analyst also said – Due to the impact of COVID-19, GNPA for digital lenders is expected to increase approximately 2 times by FY21, but will still be better positioned compared to traditional lenders

Some of the other startups in the segment include Capital Float, EarlySalary, CashE, and PayMe India.

Future plans

Krishnan says, “As the macroeconomics improve and consumer discretionary consumption begins to increase, we are already at an advanced stage of re-igniting growth and partnership with several major offline merchants and other online brands in Canada. during the next quarter. ”

He says they see Kissht as the leading financial lending institution serving the financial services needs of the lower mass market segment that is not yet in credit.

“We hope to be a premier institution in this segment by guaranteeing hassle-free loans with minimal documentation. Over the next five years, we hope to serve 100 million customers, spend over Rs 10,000 crore per year and have $ 1 billion in assets under management, ”Krishnan said.


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