Lending has been our star performer: MobiKwik founder
John Sarkar | TNN | Jan 31, 2019, 10:08 IST
NEW DELHI: MobiKwik co-founder Bipin Preet Singh talks to TOI about the startup’s journey from being one of the India’s first mobile wallets to a financial super app. Excerpts:
Q 1) How do you plan to become a must-have fintech app?
A) MobiKwik is now a Digital Bank for the millions of underbanked Indians. From accessing one’s bank account (via UPI),making payments, availing instant loans, to wealth management, buying/selling of digital gold and digital insurance— one can do it all on MobiKwik App. The App is targeted towards the 400 million customers who have bank accounts and smartphones but want a 21st century digital experience, not a web 1.0 or branch- led experience.
Q 2) How difficult or easy was it to make the transformation from a digital-only payments company to a more well-rounded player in the financial services segment?
A) MobiKwik was formed on the premise of bringing about impactful change in the lives of Indians. We have continued to innovate, to be able to drive financial inclusion in our country. The transformation to a full-stack fintech company came about, keeping in mind the opportunity in the country.
It has been an exciting journey over the last year or so. We have transformed ourselves from being a leading player in the consumer payments industry to one of India’s largest full-stack financial services company. Led by innovation, our brand new avatar, MobiKwik 3.0 has shaped up very well.
As of the end of the last financial year, we have a registered user base of more than 107 Mn users and a network of over 3 Mn merchants. We are aiming at 400% growth this fiscal. We are adding over 3 Mn new users every month, one of the highest in the industry. We will have close to 200 million users by the end of 2019.
Q 3) Among the product categories you have in your portfolio, which ones have the greatest potential to scale up?
A) Lending has been our star performer. We were the first consumer payments company to launch lending on our app. We started 10 months back and have been growing at over 15% MoM. We were also the first to disburse loans in the user’s mobile wallet, in 90 seconds. We have already disbursed loans of Rs. 350 crores and are targeting disbursement of Rs. 700 crores by end of FY18-19. We will be India’s largest digital lender before end of FY19.
Q 4) How has the current fiscal year shaped up for you? MobiKwik turned contribution margin positive in October? How do the numbers look now and how do you see the road ahead?
A) We have done phenomenally well this fiscal. In fact, 2018 has been our best year. In October 2018, we turned contribution margin positive. We have been consistently increasing the margin, ever since. This fiscal we are looking at doubling the revenues and halving the losses and will hit profitability by end of FY19-20.
Q 5) Can you give us your perspective on the digital lending segment in India compared with developed markets, including China?
A) P2P lending in China is going through an extremely tough phase. While the industry had seen rapid growth from 2007 onwards, when the first Chinese online lending platform was launched. In January 2016, there were 3,383 platforms in business with combined monthly transactions reaching 130 billion RMB, according to Home of Online Lending. Absence of regulation sparked the boom but also led to a huge number of defaults. However, the total number of P2P online lending platforms plummeted in 2016, owing to strict regulations and rising bankruptcies. The spike is long gone and it is estimated that 70% of lending businesses will close this year.
In India, digital lending is one of the most promising sectors. As per a recent study by Omidyar Network and BCG, digital lending is expected to be a US$1 trillion industry by 2023. The industry is regulated from the very beginning in India and hence, I do not foresee a situation like in China.
Q 6) How is lending shaping up?
A) Lending is growing by leaps and bounds ever since we started out. The opportunity is huge with less than 10% of Indians having access to credit. We have a huge advantage since we started out early. We invested resources in data analytics since we realized that the key to build a strong lending infrastructure is to be able assess the borrower’s ability to pay back the loan — also called credit worthiness. We built a data science model or a scoring model for our users before we started our financial services business. The loan sanction decision is taken by MobiKwik in less than 30 seconds, on the basis of an innovative risk scoring model called ‘Mobiscore’, developed by MobiKwik. The loan disbursal is done in the customer’s wallet in a matter of 90 seconds.
MobiKwik is working with a set of NBFC partners including Bajaj Finance, Aditya Birla and DMI Finance. Our product range includes an instant loan product called ‘Boost’ where we disburse loans of upto Rs. 60,000 in 90 seconds. Also, we have a credit line product as well as term loans with ticket size starting at Rs. 6000. We will also be offering working capital financing to SMEs. We have successfully built a loan book in excess of Rs.350 crores and disbursed loans to over 250,000 customers.
Q 7) What kind of product innovation can we see from the company?
A) Innovation in product design has been our core focus, from inception days. We have worked on a data science model called ‘Mobiscore’, a breakthrough solution based on data science that evaluates the creditworthiness of a user who applies for loans on our platform. This has been a game changer for us.
We are offering sachet sized products in financial services to our users, designed basis their spending behavior and user profile. Also, we are working on robo-advisory driven wealth management services that will provide 24x7, unbiased, data-driven advise to all investors on the MobiKwik platform.
Q 8) In India, while investing in insurance, such as health insurance, people still tend to consult advisers, especially when the amount being spent is high. How much chance does a digital-only company have in tapping this particular segment?
A) Traditionally, most of the financial products were sold physically through bank officials or direct sales agents. This makes these products expensive and unavailable to a huge set of population, due to high ticket sizes. As a digital only company, we have a clear edge over the traditional players. There is a huge untapped market of millions of Indians across India. Distribution of these products digitally is the only solution, if one wants to impact the real India. The reasons being ease of use, accessibility and very low customer acquisition cost. We will be able to offer products of lower ticket sizes and have better economics using Technology as the differentiator.
Q 9) In your case, what's the profile of consumers you are seeking to engage with?
A) The awareness for digital payments is increasing by the hour, and we are seeing a lot of traction from tier-2 markets as well. Also, with the advent of India Stack and UPI, more people are of the opinion that it is easier to manage their money digitally, via an app. Our focus will be to impact the real India and reach out to users in the tier-2 and 3 cities of the country, along with the urban India. We will focus on adding first-time investors across the country on our platform.
Q 10) India does not have a high penetration rate for mutual funds and insurance. How will the entry of digital wallets help change this?
A) A majority of Indian population cannot afford to pay high insurance premiums or commit to investing huge amounts in mutual funds. They are either unaware of the offerings or are unable to go ahead, due to financial commitments required. At MobiKwik, our objective is to design products that cater to the real India. Like I mentioned earlier, there is a need to change the way the financial products reach the real India. We are offered customized products to our users, basis their profiles. Likewise, we are totally revolutionizing the wealth management industry, where the minimum investment amount was around ₹10,000 and was later brought down to ₹5,000. We are letting people start their investment journey for as low as ₹100. We want to inculcate a habit of financial planning amongst the youth and the unexplored. We are the first in the industry to allow users to buy digital gold for as low as Re. 1.
Q 11) What are the big focus areas for 2019?
A) Lending will be a huge focus for 2019. MobiKwik will offer a diverse portfolio of products for both individuals and SMEs. We are scaling up our wealth management portfolio by offering products that are simple and appeal to first time investors. We are here to materially expand the market for credit and wealth management.
Digital insurance is a key cross-sell vertical. We are targeting 1.5 million policies by end of FY 18-19. We kickstarted this vertical with the launch of accidental insurance of Rs. 1 lakh for annual premium of Rs. 20. We will be launching products across cybersecurity; fire insurance for SMEs and loan protect, this year.
Q 1) How do you plan to become a must-have fintech app?
A) MobiKwik is now a Digital Bank for the millions of underbanked Indians. From accessing one’s bank account (via UPI),making payments, availing instant loans, to wealth management, buying/selling of digital gold and digital insurance— one can do it all on MobiKwik App. The App is targeted towards the 400 million customers who have bank accounts and smartphones but want a 21st century digital experience, not a web 1.0 or branch- led experience.
Q 2) How difficult or easy was it to make the transformation from a digital-only payments company to a more well-rounded player in the financial services segment?
A) MobiKwik was formed on the premise of bringing about impactful change in the lives of Indians. We have continued to innovate, to be able to drive financial inclusion in our country. The transformation to a full-stack fintech company came about, keeping in mind the opportunity in the country.
It has been an exciting journey over the last year or so. We have transformed ourselves from being a leading player in the consumer payments industry to one of India’s largest full-stack financial services company. Led by innovation, our brand new avatar, MobiKwik 3.0 has shaped up very well.
As of the end of the last financial year, we have a registered user base of more than 107 Mn users and a network of over 3 Mn merchants. We are aiming at 400% growth this fiscal. We are adding over 3 Mn new users every month, one of the highest in the industry. We will have close to 200 million users by the end of 2019.
Q 3) Among the product categories you have in your portfolio, which ones have the greatest potential to scale up?
A) Lending has been our star performer. We were the first consumer payments company to launch lending on our app. We started 10 months back and have been growing at over 15% MoM. We were also the first to disburse loans in the user’s mobile wallet, in 90 seconds. We have already disbursed loans of Rs. 350 crores and are targeting disbursement of Rs. 700 crores by end of FY18-19. We will be India’s largest digital lender before end of FY19.
Q 4) How has the current fiscal year shaped up for you? MobiKwik turned contribution margin positive in October? How do the numbers look now and how do you see the road ahead?
A) We have done phenomenally well this fiscal. In fact, 2018 has been our best year. In October 2018, we turned contribution margin positive. We have been consistently increasing the margin, ever since. This fiscal we are looking at doubling the revenues and halving the losses and will hit profitability by end of FY19-20.
Q 5) Can you give us your perspective on the digital lending segment in India compared with developed markets, including China?
A) P2P lending in China is going through an extremely tough phase. While the industry had seen rapid growth from 2007 onwards, when the first Chinese online lending platform was launched. In January 2016, there were 3,383 platforms in business with combined monthly transactions reaching 130 billion RMB, according to Home of Online Lending. Absence of regulation sparked the boom but also led to a huge number of defaults. However, the total number of P2P online lending platforms plummeted in 2016, owing to strict regulations and rising bankruptcies. The spike is long gone and it is estimated that 70% of lending businesses will close this year.
In India, digital lending is one of the most promising sectors. As per a recent study by Omidyar Network and BCG, digital lending is expected to be a US$1 trillion industry by 2023. The industry is regulated from the very beginning in India and hence, I do not foresee a situation like in China.
Q 6) How is lending shaping up?
A) Lending is growing by leaps and bounds ever since we started out. The opportunity is huge with less than 10% of Indians having access to credit. We have a huge advantage since we started out early. We invested resources in data analytics since we realized that the key to build a strong lending infrastructure is to be able assess the borrower’s ability to pay back the loan — also called credit worthiness. We built a data science model or a scoring model for our users before we started our financial services business. The loan sanction decision is taken by MobiKwik in less than 30 seconds, on the basis of an innovative risk scoring model called ‘Mobiscore’, developed by MobiKwik. The loan disbursal is done in the customer’s wallet in a matter of 90 seconds.
MobiKwik is working with a set of NBFC partners including Bajaj Finance, Aditya Birla and DMI Finance. Our product range includes an instant loan product called ‘Boost’ where we disburse loans of upto Rs. 60,000 in 90 seconds. Also, we have a credit line product as well as term loans with ticket size starting at Rs. 6000. We will also be offering working capital financing to SMEs. We have successfully built a loan book in excess of Rs.350 crores and disbursed loans to over 250,000 customers.
Q 7) What kind of product innovation can we see from the company?
A) Innovation in product design has been our core focus, from inception days. We have worked on a data science model called ‘Mobiscore’, a breakthrough solution based on data science that evaluates the creditworthiness of a user who applies for loans on our platform. This has been a game changer for us.
We are offering sachet sized products in financial services to our users, designed basis their spending behavior and user profile. Also, we are working on robo-advisory driven wealth management services that will provide 24x7, unbiased, data-driven advise to all investors on the MobiKwik platform.
Q 8) In India, while investing in insurance, such as health insurance, people still tend to consult advisers, especially when the amount being spent is high. How much chance does a digital-only company have in tapping this particular segment?
A) Traditionally, most of the financial products were sold physically through bank officials or direct sales agents. This makes these products expensive and unavailable to a huge set of population, due to high ticket sizes. As a digital only company, we have a clear edge over the traditional players. There is a huge untapped market of millions of Indians across India. Distribution of these products digitally is the only solution, if one wants to impact the real India. The reasons being ease of use, accessibility and very low customer acquisition cost. We will be able to offer products of lower ticket sizes and have better economics using Technology as the differentiator.
Q 9) In your case, what's the profile of consumers you are seeking to engage with?
A) The awareness for digital payments is increasing by the hour, and we are seeing a lot of traction from tier-2 markets as well. Also, with the advent of India Stack and UPI, more people are of the opinion that it is easier to manage their money digitally, via an app. Our focus will be to impact the real India and reach out to users in the tier-2 and 3 cities of the country, along with the urban India. We will focus on adding first-time investors across the country on our platform.
Q 10) India does not have a high penetration rate for mutual funds and insurance. How will the entry of digital wallets help change this?
A) A majority of Indian population cannot afford to pay high insurance premiums or commit to investing huge amounts in mutual funds. They are either unaware of the offerings or are unable to go ahead, due to financial commitments required. At MobiKwik, our objective is to design products that cater to the real India. Like I mentioned earlier, there is a need to change the way the financial products reach the real India. We are offered customized products to our users, basis their profiles. Likewise, we are totally revolutionizing the wealth management industry, where the minimum investment amount was around ₹10,000 and was later brought down to ₹5,000. We are letting people start their investment journey for as low as ₹100. We want to inculcate a habit of financial planning amongst the youth and the unexplored. We are the first in the industry to allow users to buy digital gold for as low as Re. 1.
Q 11) What are the big focus areas for 2019?
A) Lending will be a huge focus for 2019. MobiKwik will offer a diverse portfolio of products for both individuals and SMEs. We are scaling up our wealth management portfolio by offering products that are simple and appeal to first time investors. We are here to materially expand the market for credit and wealth management.
Digital insurance is a key cross-sell vertical. We are targeting 1.5 million policies by end of FY 18-19. We kickstarted this vertical with the launch of accidental insurance of Rs. 1 lakh for annual premium of Rs. 20. We will be launching products across cybersecurity; fire insurance for SMEs and loan protect, this year.
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