In an interview with TechGraph, Sameer Aggarwal, Founder & CEO of Revfin said, “This (COVID-19) crisis has impacted most of the economy but the lending sector has seen a disproportionate impact.”
Read the full expect:
TechGraph: Let us start with the first thing first, Could you please tell us more about RevFin?
Sameer Aggarwal: RevFin is a financial technology (Fintech) start-up that provides loans to its consumers primarily to finance clean technology.
Through our unique approach to underwriting, rich value proposition, and a differentiated distribution model, we plan to build a lending book of Rs. 3000 crores in the next 5 years, with ROE of 20%+. Our foremost intent is to encourage financial inclusion of the unbanked population of India.
To attain this, we give loans to customer segments that do not have access to formal and affordable lending. The loans are given out for productive purposes like employment generation. Our vision is to create a lending platform that is agnostic of language, literacy, geography, and culture.
TechGraph: What was the story behind the launch of RevFin? How did it all get started?
Sameer Aggarwal: When I made the transition from a large bank with a prime customer base to a sub-prime lender in the UK, I realized that the traditional methods of underwriting using credit bureau and banking transaction data does not work on the sub-prime population.
To create a method for digitally underwriting sub-prime customers, I experimented with many ideas like us self-psychometrics, machine learning algorithms, and gamification.
During a holiday in India, I researched the consumer lending market here. During my research, I found that the availability and quality of credit bureau and banking transaction data in India had similarities with the sub-prime based in the UK, even for prime customer base in India.
lt then became clear to me that a lending platform that relies on traditional credit bureau and banking transaction data will never be scalable. This was because such a platform cannot underwrite customers who do not have this data and such data is geography/country-specific.
A truly globally scalable lending platform must not rely on third-party data, but data that can be generated by a user through engagement with the lending platform. Thus, the idea of using Biometrics, Psychometrics, and Gamification came about. Every user can create data specific to them during a loan application journey irrespective of where they are.
TechGraph: What makes RevFin different from others who are already in this business?
Sameer Aggarwal: Among the other Fintech players, what sets up apart is, we are assertively looking at distinctive opportunities for financing which can help both financial inclusions and give support to the practice of green and clean technology. Our loans are productive as they support the economic and employment endeavors of credit seekers.
TechGraph: Could you please shed some light on RevFin’s innovative product portfolio?
Sameer Aggarwal: RevFin has a three-step product proposition – Start-up, Sustain, and Strive. Our customers generally take their first loan through us. This is generally to Start-up a micro-enterprise to increase their income. The loan is offered in form of an unsecured and auto loan.
Out customers also undergo a few emergencies in a year where they need immediate access to money for medical needs, family events, or vehicle repair/upgrade. To help them Sustain during this period, we offer a revolving line of credit which acts like a micro overdraft or working capital loan.
Finally, once our customers can put their finances on track and are looking for an aspirational lifestyle, we offer them personal loans.
TechGraph: What according to you is the scope of Fintech platforms in the Indian Marketplace?
Sameer Aggarwal: Fintech is one of the most prominent and promising sectors in India today. The sector includes digital payments, digital lending, KYC and Underwriting services, and data science-driven decisioning. Given the size and diversity of India, there is still a very large segment of the population that is deprived of the benefits of fintech.
Therefore, fintech will continue to expand rapidly in all areas. In the lending space, there are many underserved segments in India. The fintech sector has so far only scratched the surface of the credit needs. I see a huge opportunity for growth, which will be achieved either directly by the fintech sector or in partnerships with banks.
TechGraph: This pandemic has affected many businesses. How was RevFin able to deal with collecting and disbursing loans during this phase?
Sameer Aggarwal: The crisis has impacted most of the sectors of the economy but the lending sector has seen a disproportionate impact. The main reason being businesses and individuals losing cash flows thus unable to repay their debts.
The last six months have been very challenging for us. We are in the lending business and the strength of our balance sheet is determined by our ability to collect payments back. Since most of our customers are self-employed (micro-entrepreneurs, providing public transportation services), their earnings went down significantly due to the lockdown. Therefore, they were unable to repay their loan installments.
While non-payment of loan installments has an adverse impact on the balance sheet, there was also an immediate pressure on cash flow. Cash outflows on expenses continued as normal, but cash inflow had almost dried up. New business also had completely stopped, squeezing our revenue and growth.
Despite the challenges of corona-struck months, we were clear in our minds that this was a temporary situation and will be past us soon. We also knew that several growth opportunities will come to post the lockdown as individuals and businesses would try to resurrect themselves.
With that belief, we remained strong and looked out for new opportunities while also ensuring we were fully connected with all our stakeholders. From here on we expect better times for our stakeholders and our company.
