For Indian startups, perhaps 2017 has been a year when they were really recognised as a sector that can give innovation, new life and new worry to traditional firms. Government of India also took them seriously and announced policy framework and incentive to encourage them. However, there is no startups who is making money, one would have thought initially. So, we talked to several startups that came into existence over the last five year and tried to understand their journey and expectation from the year 2018.
For some startups, especially for Fintech firms like Paytm, 2017 has been an incredible year as they were most ready to reap the benefits of disastrous demonetisation policy announced by Prime Minister Narendra Modi which forced the people to rely on mobile wallet firms for making payment for even their tea. Further, implementation of GST has push an environment wherein individuals and SMEs are looking to go digital. Many startups believe that 2018 will be an incremental year for Indian startups as the bogus hype is likely to subside and pragmatic view about startups and their roles would be more visible.
According to Rohit Lohia Co-Founder and COO of CoinTribe, 2018 is going to see a growing interest in Fintech startups led by increased interest in the segment from budding entrepreneurs as well as seasoned financial services professionals. He is of the view that while in the payments space the winners have been clearly marked out; on the lending side, the rapidly mushrooming number of fintech startups will continue to create an in-decision among investors on ‘who to back?'. Among this indecision, the shakeout of me-too models who jumped in to cash in on increasing investor interest will be faster too as some of them run out of cash. However, mature big-boys really solving problems will emerge stronger from this shakeout with feet on the ground to build strong sustainable businesses.
Lohia says that 2018 will see scaling up of players in the lending space especially in small business lending. He believed that P2P is unlikely to grow big, constrained by the regulatory limits on investments through the platforms effectively ruling out HNIs. He is also hopeful that 2018 might see regulatory activity around co-lending and FLDG based lending structures. There may be initiatives to deepen the securitization market facilitated by lending marketplaces. “While payments and lending will continue to get the most attention in Fintech space, 2018 might also see some players break-out in the AI, Blockchain or robo-advisory space,” says Lohia.
For Mumbai based startup Rubique, 2017 has been a good year and now the company intends to expand to 100 cities in India. According to its MD and CEO, Manav Jeet, 2017 has been an incredible year for the fintech sector, as the aftermath of demonetisation and the implementation of GST created a positive policy environment for more individuals and SMEs to go digital. India became the second fastest economy globally in terms of fintech adoption, as consumers and the ecosystem began to realise the merit and worth of digitally-led financial services distribution. He said that in 2018 his company will invest large sums in the creation of Data Lab centers and will hire Data Scientists to create efficient processes to drive growth and strategy.
On the other hand, for peer to peer (p2p) lending platform – OMLP2P – that brings investors and borrowers together for a seamless and transparent loan disbursal experience, the year 2017 was a mile stone year because on October 4, 2017, RBI came out with the guidelines for the P2P industry, which paved the way for the P2P players to get themselves registered as “ NBFC- P2P” with RBI.
According to Surendra Kumar Jalan, Founder and CEO of OHMY Technologies Private which owns OMLP2P, the guidelines of RBI was well thought and favourable for the growth of industry. He said, “These guidelines will help the borrowers and lenders to borrow and lend at most competitive and transparent manner. Equity investors waiting for the clarification will be now seeing P2P industry as one of the sought after industry to invest. This will also help to control and check the unorganised money lenders, benefitting the borrowers to borrow at most competitive rate and in a highly transparent manner.”
Sanjay Sharma, MD and CEO, Aye Finance is of the view that 2017 witnessed two major things. First, fintech players proved their massive potential to serve the under-served populations through their innovative acquisition and servicing models. Second, sensing the disruption being brought about by the fintech players, established financial institutions saw merit in collaborating with these players.
According to Sharma, in the coming year there will be more collaboration between banks and fintech players. He explains that with peaked interest levels in emerging technologies like artificial intelligence, machine learning, smart workflows, open banking, 2018 will witness their adoption in controlling risk, improving quality of the portfolio, offering superior customer experience, leading to scaling up businesses further. “With variety of fintech innovations playing out and each one of them focusing on scale to become successful, there could be consolidation of the industry,” he added.
For starups like CreditMantri, 2017 has been a good year as they were able to reach out to 3.8 million Indians with their CreditMantri platform. By utilizing a combination of institutional, alternate and user-declared data, CreditMantri has developed tailor-made products with lender partners. This combination of data and technology has helped borrowers gain access to credit by providing and verifying their profile data digitally, and has enabled lenders to make more informed, more efficient and more reasonable credit underwriting and credit fulfilment decisions.
“In 2018, the intent is to double consumer base. An area of strategic focus is to deepen consumer engagement by meaningfully solving for our user's credit needs. On the supply side, the intent is to help lenders underwrite and approve more loans besides helping lenders cut down on verification costs,” said Ranjit Punja, CEO & Co – Founder, Creditmantri.com.
For Pune based startup Loantap, which focuses on providing lending platform to Salaried Professionals, 2017 has been a good year. It's Co-Founder and CEO Satyam Kumar said, “If we measure start-ups in terms of ‘Fund Raise' and ‘Business Traction' then fintech will get 10/10 on both counts. We at LoanTap, have witnessed strong surge in consumer demands for new loan products like ‘‘EMI Free Loan'' & Credit line (Overdraft).” He bets that 2018 is going to be great year for LoanTap and his firm will cross 100 crore Loan Book within first few months.
