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Technology has a Potential to Bridge India’s Lending Gaps – Piyush Khaitan

NeoGrowth is a pioneer in lending based on the underwriting of digital payments data. The Company’s proprietary technology platform offers unsecured loans to merchants who accept card or other digital payments from customers. Flexible repayment is a hallmark of the NeoGrowth business, offering customer’s small daily auto-repayment facility from card-based sales. NeoGrowth’s mission is to have a positive social impact on the financial lives of small and medium business merchants across India, more than 50% of whom are creditworthy but until now have been excluded from accessing loans based on traditional underwriting methods.

Piyush Khaitan is the MD & Co-founder of NeoGrowth. Piyush is a seasoned operating executive who has successfully founded a number of companies, and built and operated them to high levels of success. He was the managing director of Venture Infotek until its divestment in 2010 and had established DEI, India’s largest secure card personalization bureau which merged into Venture Infotek. He has also worked closely with Card Networks, RBI & IBA in framing policies and giving direction to the card payments industry in India, and was founder chairman of the ‘ePayments Focus Group’ of the Smart Card Forum of India (SCAFI) from 2000 through 2005.

In an interaction with IncubateIND, Piyush Khaitan talks about the role of technology in improving the loan process in India. Read On!

Tell us about yourself and what does NeoGrowth do? 

My brother Dhruv Khaitan (DK) and I founded NeoGrowth Credit Pvt. Ltd. in 2012-13. NeoGrowth is an NBFC, and a pioneer in SME lending based on the underwriting of digital payments data. The Company offers unsecured loans to merchants who accept credit/debit cards or other digital payments from customers using its proprietary technology platform. NeoGrowth loans are short-term and hassle-free with the facility of daily repayment; a key customer delight factor. At the heart of NeoGrowth business strategy is a mission to have a positive social impact on the financial lives of small and medium business merchants across India, more than 50% of whom are creditworthy but until now have been excluded from accessing loans based on traditional underwriting methods. Addressing this gap in the market is the basis on which NeoGrowth business has been built.

How Big Data and Artificial Intelligence are changing Online Lending?

Well, the entire lending ecosystem in India has evolved rapidly in the past few years and there has been a strong adoption of Big-Data, AI and Blockchain, which in fact is the most revolutionary trend. Today, financial institutions have turned towards a customer-centric approach rather than just a product-centric approach to keep up with the highly competitive market. In this entire process, high-end technology like Big Data has a substantial role to play by helping financial institutions to manage complex and voluminous data whilst providing accurate fraud detection, risk management & regulatory compliance. Technology is disrupting the industry in many ways especially by streamlining the lending services. At NeoGrowth, lending is based on the POS machine transactions and we use an analytics-driven underwriting method to determine the loan eligibility of our customers. We believe the industry will keep evolving in the years to come, thanks to the role technology is playing.

How tech-enabled alternative lending is bridging the gaps in credit systems?

Indian economy has been on an upward growth trajectory over the past few years. Accelerated penetration of internet and digitization have been amongst the key drivers of this growth, with advancements in technology irretrievably transforming every industry, including digital lending.

While constant innovation will be at the core of the growth of the lending industry, strong partnerships with established financial players, government bodies as well as favorable policies will also be pivotal in accelerating the momentum. The ultimate goal of economic mobility and financial inclusion will be possible once this sector receives the necessary push for enhancing reach and viability and entering its next level of evolution.

 How will new technology improve the loan process?

Today, technology can be used for just about anything, even when it comes to taking a new loan. Technology is eventually becoming more and more innovative and intuitive. Overall, by leveraging technology, financial institutions are able to improve internal processes and aid the way in which they interact with the consumer and make their financial experience better and simple. Fintech sector as a whole is booming and financial institutions are most often the first ones to adapt to various new technologies. Thus, the way in which we use and apply for loans today has seen a drastic change.

Some of the key advantages of integrating technology for loan processing are:

  • Better borrower experience
  • Increased transparency between lender & borrower
  • Less complex process and faster turn-around
  • Cost saving for both parties

Can Blockchain and related technologies solve India’s huge lending gaps?

Yes, definitely technology has a lot of potential to bridge India’s lending gaps. Today, India’s banking system has earned global recognition for its rapid growth in accounts, strong investment returns, and capable regulator. Still, a lot of Indians are a little hesitant to process loans online and opt for loans from family or friends. However, today, Governments have quickly begun testing innovative technology solutions for digitizing the payments industry and we can see that it is making a difference, slowly yet surely.

How block chain technology will transform SME Lending?

Lending has always been perceived as an activity that requires a tremendous involvement of physical signatures, complex regulatory compliance policies, never ending documentation work and assessments etc. However, today, all of this is almost eradicated, thanks to technology. The digital bandwagon is serving a big and underserved segment of the market. These players are also doing it far more easily and efficiently with complex loan categories like mortgages and SME loans. Use of technology not only reduces the need for man power but also gives the complete freedom for tapping other elements like credibility, identification and classification thereby fastening the loan disbursal time and addressing the consumer’s need efficiently.

Evidently, blockchain technology has a huge potential to disrupt the lending industry for SMEs. However, like many other tech advancements of this age, we must be careful with implementation, especially when it comes to handling the backend. Blockchain technology can help create new opportunities for funding while helping existing institutions make better lending decisions for SMEs, thus improving access to much-needed funding.

How is NeoGrowth empowering MSMEs in their financial stability?

NeoGrowth evaluates a borrower on the basis of digital spends occurring on POS machines at his/her outlet. Based on our experience & learnings from the last 5 years, and having reviewed in excess of 35,000 customer files, we realized that POS machines are an ideal source for measuring significant business and risk parameters of a retail business. We consider performance of the business rather than just the credit score of an individual. With our tech-enabled underwriting, we are able to provide business loans to various merchants as per their industry segments ranging from food & beverage, lifestyle & apparel, beauty & wellness, petrol pumps, automobile dealers etc. With a perfect mix of tech & touch, we are in a position to keep our loan disbursal TAT under 72 hours ensuring uninterrupted operation of the business for our clients. We focus heavily on customer delight initiatives resulting into a healthy renewal rate of around 70%.

How has digital lending been a game changer in the banking sector?

Digital lending has grown quite rapidly over the past couple of years and this is because of constant progress of technology and also the willingness of borrowers in embracing new-age technology. The digital lending space has been able to successfully establish itself and bring in a lot of benefits to consumers, for instance; convenience and saving time & money. While technology brings in many benefits and changes to the financial network, the core purpose remains to enhance consumer experience and thereby successfully build a successful online lending business by developing new products & services to meet the customer’s requirements. We believe the most productive opportunities for the banking sector overall will benefit fully when best competencies, technologies, and insights come together.

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