In 2015, three colleagues from a UK-based fintech firm were sent to India to create a tech loan product for the country’s 1.2 billion people. But, a few months after the work began, they were told to scrap everything. Lizzie Chapman, Priya Sharma, and Ashish Anantharaman had a better idea: quit their jobs, move to India, and complete the platform on their own. This is how ZestMoney came to be.
“We had spent a lot of time and energy working on it, and we learned a lot of interesting ideas while creating the tools for this project. So we thought about starting our own business to go further, ”said Anantharaman.
The trio had learned that there is a gulf between the millions of people who take out loans from financial institutions and the population who are denied the same opportunities – students, people who have started their first jobs and people with low incomes. “We want to bridge this gap using technology,” Anantharaman said. ZestMoney would offer microloans to people who had been rejected by banks when seeking capital.
The co-founders realized that they could include anyone, even users without a credit score or credit card, in lending and borrowing. “We strongly believe that anyone who is able to pay in Equal Monthly Installments (EMI) should be loaned money, not just those who have a credit card or have a credit score,” he said. .
ZestMoney issues loans for all needs including healthcare, education, travel, destination weddings or even online shopping. Users need to register on ZestMoney’s mobile app and complete the verification process by uploading scans of their photo ID, bank documents, PAN card (issued by Indian Service of India). income tax) and their photo. There is a downside: Anantharaman said enrollment through an app can be difficult because “India is so diverse that not all users have smartphones and not all smartphones are powerful phones.”
To make sure potential users aren’t put off by these issues, the company has taken steps to make the process as smooth as possible. In 2018, ZestMoney acquired Bengaluru-based startup PhotographAI, which developed tools for recognizing objects in images. Its platform uses artificial intelligence and optical character recognition software to produce prompts for users, ensuring their photographs are sufficiently illuminated so that the images can be used for verification. The software can also determine if a user’s name in the downloaded document scans is clearly visible and request new downloads if necessary. These steps set a benchmark in the quality of the data collected by the company.
Anantharaman believes that financial institutions must keep up with digital changes and compete with the fast service and user interface experience offered by new platforms. He pointed out that consumers, especially millennials, don’t want to spend days navigating the process of getting a loan. “They just want to make four or five entries on the mobile and be done. The demands and demands of millennials keep increasing. How we do it using technology is what fintech is. “
The company performs a strict background check to find out each candidate’s digital footprint, such as past online transactions, how long they take to pay their phone and utility bills, and credit records. . They use this data to assess whether the requester could pay the IMEs on time.
Once a user is authorized by ZestMoney, the company provides a credit limit to the user for purchases made on online platforms in industries such as edtech, e-commerce and travel.
To lend or not to lend
Currently, there are many companies in India that offer micro credit to users. The common challenge they face is debt collection. Anantharaman, however, swears by the power of technology to collect payments.
“Lending money is the easiest part of this business. The hardest part is getting the money back, ”he said. “It’s a big challenge for the majority of credit companies around the world. We put a lot of science and technology into our collection process. “
For starters, the company has a wide range of criteria in place to ensure that the person receiving the loan will not default. From users’ past payment behavior, ZestMoney can assess whether it will pay IMEs on time, or project the refund model if some transfers are late. In some cases, the company can also determine the reason for the delays. ZestMoney sends reminders to users based on their payment behavior, as well as a link to their regular payment channel to make the process as easy and quick as possible.
At the end of last year in December, ZestMoney raised $ 20 million in its ongoing Series B funding round led by Goldman Sachs, with participation from its existing investors such as Naspers Fintech, Quona Capital. and Flourish (the fintech investment arm of Omidyar Network). The company will use the money for research and development and to create more partnerships. It also raised $ 14 million in debt from Northern Arc Capital as part of the loan pool for its users.
After working with online channels for three years, ZestMoney launched pilot projects with offline merchants last year and partnered with a few large retail chains. Anantharaman said it’s a natural progression to partner with traditional retailers. The company is now working with companies operating point-of-sale machines already in use by retail chains and has integrated ZestMoney as a payment method.
“We want to be the first choice for users to buy products on an EMI, not only on online channels but also on offline channels. This is in line with our vision to involve everyone in the financial inclusion plan, ”he said. The only challenge for the business is to make sure that buying credit over the phone in a physical store is as fast as on an online platform.
The company claims to have seven million registered customers. He has already disbursed “thousands of crores” (over $ 140 million).
In addition to lending money to individuals, the company has also been running a pilot project with small and medium-sized businesses for the past three months. Anantharaman said the company is still collecting the results and will decide if this is a service to roll out in the near future.
“All of the experiments are in line with our overall vision of enabling everyone to get a loan without having to spend a lot of time,” he said.
This article is part of KrASIA’s “Startup Stories” series, where the authors of KrASIA interview founders of tech companies in South and Southeast Asia..