A modern, digital loan for India with Kabeer Chaudhary
The story of Indian fintech is one of almost unimaginable speed and scale, and watching it from the front lines was Kabeer Chaudhary. So I sat down with him to talk about digitising loans and learning from banks and fintechs to deliver a project that works with loss rates that allow you to sleep peacefully at night.
You can find ClickMyLoan at https://clickmyloan.com/ or on LinkedIn at https://www.linkedin.com/company/clickmyloan/
You can find Kabeer at https://www.linkedin.com/in/kabeer-chaudhary-18bb7984/
Please seek me out on LinkedIn, too, where I'm open to all genuine new connections - https://www.linkedin.com/in/brendanlegrange - please also follow the show's page while you're there.
Meanwhile, my action-adventure novels are on Amazon, some versions even for free, and my work with ConfirmU and our gamified psychometric scores is discussed at https://confirmu.com/ and on episode 24 of this show https://www.howtolendmoneytostrangers.show/episodes/episode-24
And finally, I'm also co-creating a new podcast called hAIghtened senses which will look at the intersection between human senses and technology, especially AI-powered technology. You can already start to follow it wherever you're listening to this one - there's only a trailer there at the moment, but we've recorded some of the early episodes and it's going to be a fun ride!
Keep well, Brendan
The full written transcript, with timestamps, is below:
Kabeer Chaudhary 0:00
CickMyLoan was created in six months... with the help of the efforts that we gave in last 10 years.
And if I tell you working for banks and fintech made us ambidextrous, we are not aiming to become the unicorn, we are aiming for the billion dollar revenue company.
Brendan Le Grange 0:21
India is a market I hadn't worked in a lot until my current role, but one that has always fascinated me, just the rate of growth alone is enough to grab your attention, but I wanted to learn a little bit more. So I'm speaking to Kabeer Chaudhary, has been on the ground at the forefront of the modernization and digitization of personal lending there.
Kabeer Chaudhary, founder and CEO at ClickMyLoan, welcome to the show.
Kabeer Chaudhary 1:03
Hey, Brandon, how are you? Thanks a lot for having me on the show.
Brendan Le Grange 1:06
Kabeer, you've been a founder in the Indian FinTech space for over a decade now - and that decade has been a pretty exciting one for the market.
So I'd like to take advantage of that long experience you've got: would you mind giving me a quick lesson on what the Indian FinTech landscape looks like and how it's changed since 2012, when you got involved as a founder for the first time.
And maybe along the way, you can also explain what you were doing to help shape that growth we're talking about
Kabeer Chaudhary 1:38
So Brendan, law changes in last 10 years were monumental, and they have shaped Indian FinTech very well. So India is now home to 17 FinTech Unicom, which is third highest in the world. First is Us, second is UK, and third, of course, India.
Indian FinTech space is estimated at USD 110 billion and we'll reach to USD 400 billion by 2029, growing at a staggering CAGR of 30%. In January of 2024, the volume of bestel transaction reached 12 billion transactions a month, and it is expected to reach about 1 billion transaction every day by 2025. Also, the digital lending market was worth USD two 70 billion in 2022. And it is expected to reach a USD three 50 billion in 2030.
Marquee investors like Warren Buffet, Jack Ma, Masayoshi Son are aggressively investing in FinTech ecosystem and fintech startup. And the reason it has happened is just one: 10 years ago, the dream of every person after completing the Master's in finance, was to get a job and private equity or hedge fund or investment banking. Now, it is not the case, every person who graduates or comes out of masters wants to get into startup ecosystem, or want to start a new startup.
And this street was fueled by VC and private equity ecosystem.
Brendan Le Grange 3:15
And last 10 years, the Indian market is pretty unique, I suppose to some extent, the Chinese market is similar. But you know, if we look around the big tech players, say like Silicon Valley, if we look at the big names there, we've got Indian CEOs and Indian managers really high up building those skills that they can bring home and adapt for the local market. It's not a emerging market that was sort of developing on its own, it had the ability to tap right into the most cutting edge tech in the world, these incredible human resources.
So just so much energy and stuff happening there. And as I said, You've been in that startup space for a little over a decade now.
First with Banktree, which what was put you into sort of a central position, bird's eye view to to look at that consumer lending world.
So as you said, there's been a bit of a paradigm shift. How did you see the market change in terms of who was in there making loans who was borrowing, which products were working?
Kabeer Chaudhary 4:17
Well see, I believe, the technological changes really helped. The entire market in the FinTech grew to a staggering pace. And primarily on the lending space, I would say the development of regulatory bodies, which became really strict and the technological changes, which really helped us to analyse or perhaps to jump to underwriting decisions quickly. It's really helped entirely to move from where we were.
Along with that, I guess, government played a huge role by creating PSL priority sector lending, where government forced every lending institution to privatise their lending.
And every year they came up with a list for MSMEs or education loans. So this really helped last 10 years. Soon after my graduation, I did my Master's in finance started working in Bank of America and investment banking division, that comparative company analysis for almost two years.
After that I quit my job, I created a company called bank tree, where we were doing sales of financial products for top five banks in India. And just two years, we grew to 200 people. These are doing about 8,000 applications a month, and somewhere north of 95,000 applications a year.
During this time we started working for fintechs also executed sales for them. We did this for almost eight years. And these eight years really shaped us to who we are today.
Brendan Le Grange 5:48
Having the had that time of observing the market from from the centre point really seeing what consumers were liking and weren't liking what what was it that you saw in the market that said, Okay, I need to go out and build ClickMyLoan.
Kabeer Chaudhary 6:01
It was more of a choreographed dance. So working for banks and fintech made us ambidextrous. It gave us an understanding of the credit rule engine, the brains behind the operation, the thought process, and the why. And then eventually, we applied for lending licence and pivoted to fintech. And that's how click my loan is created in six months with the help of the efforts that we gave in last 10 years.
Brendan Le Grange 6:27
10 years to become an overnight success, as they say!
Talk to me about what ClickMyLoan is.
Kabeer Chaudhary 6:32
So I would say the expertise that we gained nearly a decade of experience in banking and fintech helped us significantly to stitch a unique loan product, which is a blend of both banks and fintech currently, banks in India, they are offering an average loan ticket size of $5,000. And their average tenure is about 28 months.
And the problem that banks face is huge CAC customer acquisition costs, and the FinTech side average ticket sizes about $250. An average tenure is six months, and their major problem is huge NPA.
So now we offer a loan between them around $100 ranging from $500 to $5,000. Our average tenure is about 12 months, our NPA is less than 2.5%.
And we can proudly say that we are the only phigital FinTech digital lenders in the country.
Brendan Le Grange 7:31
Yeah, talk to me about what that digital experience looks like for a consumer.
Kabeer Chaudhary 7:35
Let's suppose that at 1am in the morning a customer logs in our system. So the entire loan process can be summarised through the customer journey of eight stages while obtaining loan from us.
So stage one customer logs in with the OTP he enters his postal code, where we blacklist and whitelist the PIN codes or zip codes. Stage three he enters the UID which government of India has provided to every Indian which is similar like SSN of USA.
With this refetch all of us linked government documents, passport driving licence, everything with this UID. Since we are regulated lenders, we can fetch all those documents right away. Stage four, he enters his pan number. This particular number is linked with all the banks and income tax with us.
We fetch the bureau stage five, we take his consent to fetch his bank statement with the help of open banking and then we feed it to bank statement analyzer. And then the BSA spits out the decision in nanoseconds.
Stage five basic all these information system takes the decision. If the decision is yes, then stage seven customer accepts the loan and sets up an auto pay.
Stage eight disbursement happens at 1:15am in the morning,
Brendan Le Grange 8:59
Talk to me about what that might have looked like, say 10/ 15 years ago.
Kabeer Chaudhary 9:04
See in 2012, when we started with bank tree, every process was physical. We were supposed to physically visit customer collect his documents collect his signature, and then we used to stamp with OSP seen and verified.
And then we were not allowed to store those documents for more than 24 hours because that is not right since we were intermediary with banks.
And it usually took between seven to eight days just for the application from the start to end. To reach to a decision and loan disbursement would take somewhere about 15 days of normal loan, unsecured loan. I'm not talking about the secured loan secured loan would take much longer.
Brendan Le Grange 9:47
What is so impressive and why I think that Indian market should be looked at by everyone whether they're interested in lending there or not, is because of that change that we've seen happening where you've got: centralised biometric databases to verify identity with a government source, you've got open banking to look into the bank accounts, you've got immediate interbank payments.
So, India has built this ecosystem in a decade, that takes all these things that the rest of us are maybe putting in a little bit here a little bit there, completely overhauled it to a point where you mean taking weeks to minutes to make a loan, that is no more risky.
In fact, obviously, with access to credit bureaus and identities, verification and open banking, it's less risky than it would have been in the old days with bits of paper moving around, it's that sort of structural innovation, that one should be a goal for all of us, but to obviously has been one of the things that have empowered that growth in lending, because it must have dramatically reduced the cost to serve a loan, which obviously means we can serve smaller loans, we can serve loans beyond where any branch network would have ever reached, you obviously, always quite keen to, you know, to innovate to drive forward as an entrepreneur in the lending space.
So, as you look at the market, where it is today, has changed as it is, what do you see on the rise and what are the exciting things, I guess for click my loan that we should look for, but also that those of us outside the Indian market should be keeping an eye on?
Kabeer Chaudhary 11:27
So as I as I always say, Brendan, India is now the coolest party in town and if you are late, you might not get in.
I say to all these people who are outside India, that you should better get in, and the government regulation in the lending is just fabulous. You just can obtain licence and 24 hours and you can start lending the Japanese banks, the Chinese people, the Russian banks, they have entered Indian lending space, left, right and centre.
And it is just the beginning.
And also the size of population also has played a huge and pivotal role. Indian loan market, not just a digital market, it's somewhere in the north of $2 trillion. And it's gonna grow even more.
Brendan Le Grange 12:13
Just as the scale and the sort of economic history of the country being there are these massive pockets, millions of people you can serve. If you've got it, well, both products you hadn't hadn't realised it was quite so fast, just get up and going.
It wasn't long ago that the exact opposite was what we would expect, like lots of hurdles to get over. Lots of paperwork, lots of processes that needed manual touch. And those have all gone. So as you say there's there's some openings still there, but they won't be there for long because it's not really a secret is it? Talk to me a bit about the sort of finish the the ClickMyLoan story, in terms of market reception, where are you operating where you picking up your customers from.
Kabeer Chaudhary 12:59
Sales is, again, is like a choreographed dance for us. Sales is the only thing that we have no problem with. So we are acquiring customers digitally. We are acquiring customers physically, we are acquiring customers through cold callings. Through recently, we have our haudings on the metro - Delhi most busiest metro station where we are getting leads.
So salesis it's perhaps the least of our concern.
Brendan Le Grange 13:25
So on the back end, then you've already sort of touched on some of those tools where maybe we can spend a little bit of time expanding on what's there. What tools do you have available in terms of data and analytics to be able to screen those customers?
Kabeer Chaudhary 13:39
Over these 10 years, I have understood it's a very simple business. Default happens for only two reasons: one is lack of money, the other one is lack of intent.
There is no third reason.
And the tools that we use to find out the lack of money is of course the bank statement where we see fixed obligation versus income ratio. And just to just to check the lack of intent. We have bureaus. So if we talk about 10 years ago, or perhaps 15 years ago, these tools were readily available. Now through digitization, they just come handy.
These tools were also available back then, even though perhaps in 2006 2007 people when they were applying loan in India, bureaus were still active bank statements were still there. And banks were offering credit to those who have both of these things. If you do not have credit history, they will just not afraid. what technology has done in last 10 to 15 years that it has been available made available to us via API.
And with this new technology, we fetch them with nano second and we make decision based on our whole engine and talk about the customers we are currently handling about 3000 to 3000 customers a day with the approval rate of about 20% This is currently what we are doing and
Brendan Le Grange 15:00
As you said, like remarkably low loss rates. So we're not saying 30% loss rates and 90% APR. And we're just here hoping for the best you can really manage your risk down as you've been able to show.
So yeah, they're pretty exciting and impressive busines you've built there, Kabeer. If somebody's listening wants to learn more about the ClickMyLoan business, where's a good place for them to go to speak to you? Or to learn more about the business? What are the places online that they should go and visit?
Kabeer Chaudhary 15:31
They can reach to me directly at kabeer @ clickmyloan.com
The website is https://clickmyloan.com/
And I'll be more than happy to respond to any query or any question or if at all, you want to enter into Indian market, I'll be more than happy to help any way that you may request or require.
Brendan Le Grange 15:48
Yeah, and I'll put the links into the show notes as well. I found you on LinkedIn, very friendly and easy to find there. Yeah, a remarkable story to follow can be as you sort of think about the future of any big projects or big stories, we should be looking out for coming out of clickmyloan?
Kabeer Chaudhary 16:06
So we are not aiming to become the unicorn we are aiming for the billion dollar revenue company!
Since we market ourselves as the only digital lender. Since we keep on saying that. And the the experience that we carry comes from the 10 years of working with banks and fintech and that's how we have such a beautiful product with the less of the NPA, I would see billion dollar revenue would not be very far.
Being marketed as the only phigital lender, I see 2030 will be speaking again. And I would be telling you please pick up my podcast from from 2024 when asked me there!
Brendan Le Grange 16:48
I look forward to that, I'll put a reminder in my calendar. And we'll we'll catch up again, I think it's certainly possible. And I love to hear that taken 10 years of learning. We've been in the middle of this industry, not just at one lender, but with these arms, reaching into all these different lenders that gave you a wonderful opportunity to learn we've taken that we've packaged it into a fantastic product. And that's what we do. We take our fantastic product to the market. So I wish you the best of luck with that. And definitely we'll we'll follow back when you hit that targeting and get you back on the show.
Kabeer Chaudhary 17:20
Thank you, Brandon.
Brendan Le Grange 17:21
And thank you all for listening.
Please do look for and follow the show on your favourite podcast platform and share the updates widely on LinkedIn where lending nerds are found in our largest concentration. Plus, send me a connection request while you're there.
This show is written and recorded by myself Brendan le Grange in Brighton, England and edited by Fina Charleson of FC Productions.
Show music is by Iam_wake, and you can find show notes and written transcripts at www.HowtoLendMoneytoStrangers.show and I'll see you again next Thursday.