[Product Roadmap] How CASHe used proprietary technology and credit writing systems to disburse Rs 2,500 Cr in loans
A report by global wealth management firm Credit Suisse reveals that Indian fintech startups have raised $ 10 billion in funding over the past decade, with digital lenders raising $ 2.5 billion.
At the same time, India has experienced a growing need for credit, especially for some underserved segments.
V Raman Kumar, founder and president of CASHe decided to solve this problem and founded in 2016 CASHe, a digital loan startup that meets the financial needs of professionals aged 25 to 35.
“We wanted to challenge the status quo of digital lending business in India, using technology to change the entire delivery system seamlessly. We looked at the existing credit business in India and overseas to create a unique business model, ”said Yogi Sadana, CEO of CASHe.
Raman realized that the idea of credit is invariably linked to a borrower’s credit rating. A borrower will not be eligible for a loan if the rating provided by the credit bureau is not accepted by financial institutions.
He also found that most young professionals, especially those new to the workforce and applying for a loan, had no credit history.
“That’s when the big idea hit us. We needed a solution that gave a new perspective to the lending business. We focused on millennials because we thought they had some common traits across the world. CASHe was launched with the clear aim of providing millennials working in urban areas in India with the path to better financial health., with the help of technology through their smartphones, ”says Yogi.
The CashE team
What he does
In a smart digital world, the CASHe application aims to offer quick and easy personal loans through “transparent and up-to-date” processes.
The fintech startup has a robust automated credit lending system, and the AI-based algorithm – developed in-house – assesses a borrower’s risk based on the user’s social and mobile data footprints. .
the the model goes beyond traditional measures of credit risk and assesses the borrower’s “quality quotient” and repayment capacity. Therefore, CASHe lends to young active professionals who are either subprime or subprime borrowers with or without a credit history.
“We operate in a digital world that surpasses that of a tactile model in terms of scalability. We used a combination of AI and big data to create an engine that trains, learns, adapts, and predicts human behavior – otherwise a monumental task.
“The Cumulative loan disbursement for CASHe amounts to Rs 2,500 crore since inception of operations. Our percentage growth in disbursements is around 30% over one month, with an overall active customer base of around three lakh, ”Yogi said.
From ideation to fundraising and having the right set of people to create the technology, it took the CashE team six months to start rolling out their services. They started with 15 and 30 day loan products.
Yogi says the concept of getting hassle-free loans through a smartphone was relatively new to India about five years ago.
“We have been encouraged by the response and have seen a dramatic increase in the tendency to obtain a loan through a technology platform like CASHe. Finding that unique app idea is often the easiest part.
“Creating and developing our first proprietary technology algorithm with very little to no data was a challenge. The predictive engine was a work in progress as it continued to learn from each transaction. Launching upgrades every week to keep the app top-in-class and ahead of everyone else in the market has helped us stay ahead of the competition. ”
The goal of an MVP was to bring together validated learning from minimal effort. The build-measure-learn process helped launch the product, with the ability to make changes based on user feedback and schedule future updates for better service.
Use data to grow
The data collected helped the technical team introduce many features on the go, creating a better borrowing experience for users.
“We ran the MVP for about three months with a set of potential clients. The feedback received was encouraging and the learnings ensured further improvements, and we launched the service across India in 2016, ”Yogi said.
The aim was to disrupt the Indian credit landscape and ensure true financial inclusion. CashE provides loans to those who otherwise cannot obtain loans through the traditional credit system. Lack of financial data and credit history make them sub-optimal borrowers for traditional lenders.
Yogi says the current business model is fully scalable as it allows the team to deliver value-added services. CASHe was the first fintech lender to debut on Google Pay, offering short-term loans to Google Pay customers.
Credit line, BNPL and customer returns
The team also launched a line of credit facility, which provides clients with funds based on their eligibility. Customers can also use part of their funds as buy now, pay later loan to shop from online shopping sites and return to easy and inexpensive NDEs.
With long-term recurring revenue streams associated with all of these services, Yogi says CashE is one of the few fintech lenders to be profitable within two years of starting operations.
“We think it’s important not to be content with incremental product improvements. We need breakthrough development and innovations in business models to offer unique solutions, ”he adds.
CashE introduced short term loans for those who faced a financial crisis at the end of the month. “We have slowly but steadily expanded our product offerings to reach more people to benefit from our technology and services. ”
The constant improvement of the products was facilitated by the establishment of a customer feedback loop.
Yogi says this gives them an edge over the competition, creating a high-quality customer experience and enabling them to offer new services that users want.
“The results of the user feedback loop have led us to expand our product offerings. We have introduced higher value loan products, reduced loan application time and made the user experience less burdensome, ”says Yogi.
The Technology That Helped “Fileless” Consumers
Low credit penetration, especially low unsecured credit, is mainly due to the fact that Indians tend to be “thin” or “no records” customers from the perspective of traditional lenders.
The program, SLQ, uses a combination of big data analytics and proprietary AI-based algorithms to assess inputs and the user’s digital footprint to measure their creditworthiness.
It measures a borrower’s propensity to repay – based on currently available information – as opposed to traditional credit scoring systems which provide a score based solely on historical financial behavior.
This means that a person with no financial history can get a loan from CashE if the SLQ engine determines that they have a “reasonable propensity to repay”. “This is a unique feature and we have been successful in creating a large customer base. “
In addition to the seamless, next-generation digital lending experience, the team also experimented with marketing tactics, advertising efforts, website design decisions, and other tasks to quickly convert leads and generate sales. Aggressive customer acquisition campaigns have been carried out on social platforms, and they have also looked at electronic media such as television and radio.
“We’ve tried to achieve growth on as many measures as possible, most often using low cost marketing to get results.
“For example, we could achieve rapid growth through a barrage of paid advertising. growth hacking strategies encompassed content marketing, substantial incentive fee waivers, social media, and similar tactics. Their main asset was often creativity and we were able to scale the business by reaching as many uses as possible, ”said Yogi.
Challenges along the way
CashE’s AI-powered credit scoring platform was designed entirely in-house.
“We chose our in-house crack team of around 15 tech specialists to build the platform from scratch. We added later specialists, including developers and data scientists, to help build and evolve the platform, says Yogi.
However, the team had their fair share of challenges, starting with the fact that technology moves at an incredible rate and it can be difficult to keep up. Finding and hiring the right talent for a new category of product / service was also difficult.
Other challenges included planning which components would be part of the user experience for the best standards of use, determining the best security and data protection practices, and ensuring that the application technology and the business approach were in accordance with government regulations.
The founders invested in cutting edge technology to build and evolve the platform. They developed a roadmap for the future by determining what capabilities the platform would need remain competitive and innovative. Cloud technology is thus becoming at the heart of their transformation efforts.
Market and future
In 2020, the Reserve Bank of India (RBI) issued notifications to non-bank financial corporations (NBFC) and banks, mandating additional disclosures / compliances and notices to borrowers warning them against fraud platforms.
The Digital Lenders Association of India (DLAI) has also issued guidelines, with a regulatory pipeline.
Fintech players like CashE continue to thrive on adherence to RBI guidelines. It competes with platforms like Anticipated salary and PayMe India which follow a similar pattern.
“We want to be an agile organization. Our goal is to build a great financial model and to reach every touch point in the financial life of our clients with unique and differentiated products and services.
“Our goal is to increase customer acquisition 5X and double our size in the next six months. We will be part of a vibrant financial ecosystem that will drive new collaborations and create unique business models to increase customer convenience and bring more value to the business, ”Yogi said.