Madhuri- Welcome to our channel “Fintech-X” and I, Madhuri Arora will be your host for this series. Look out and you can see an entire world that is creating something amazing. Well, I am talking about the Fintech world and here we will be talking about everything that is related to Fintech. Over the coming months, we will be covering various topics related to Fintech like sectors, products, news and a lot more and we will talk about that something, that X-factor in each one of these topics that have set them apart from the others.
Madhuri- So stay tuned with us to know what is that X that makes them unique from others out there.
Madhuri- With Fintech growing every second, there are numerous products that have come up. With the help of our guest today, we have narrowed it done to some products as per different areas. Today’s podcast will be on those products that have that uniqueness, that something amazing, what is that X-factor that makes them stand out from the rest of the products.
Madhuri- We have Hemant Joshi with us who is the product manager at KredX. He will be giving us some interesting insights into the different products out there. Hemant has more than 8 years experience in a variety of domains like data center products, digital payments, pre-paid wallets, digital lending, SME working capital. He has helped built products from the scratch and has launched them in these areas. He is doing amazing stuff out there and before we start the discussion, let us know from the man himself about his current role and what exciting insights he has.
Hemant- Thank you, Madhuri for such a great introduction. In my current role, I am working on evolving our existing KredX product into a more modular, more configurable format so that we can cater to the different needs of different sectors which avail our service. Secondly, I am more interested in optimizing the operational effort through automation. So these are the tasks that I am focusing on these days.
Madhuri- Hemant this sounds really interesting. So you know Fintech as an industry is not very old. So how would you define fintech and what changes have been there in fintech?
Hemant- If you look at the word fintech, it is a combination of finance and technology. So, finance is an age-old concept and it is there in the form of banking, insurance and other financial services from a long time but now finance is being redefined by technology. The whole experience, the whole way of doing things have been redefined and the new technologies like machine learning, the blockchain, data analytics combined with finance have coined this term fintech.
Madhuri- As a product manager, there are a lot of things that make you curious, that makes you think that is something really nice. What are those qualities in a product that stand out according to people out there in general and for you in specific?
So for any product to be successful, there are a few things which it should follow. So the first thing is it should be extremely consumer-centric. We should always look at what are the basic needs of the consumer and what they are actually looking for? We should understand the customer psychology, we should see the pain points that customer is facing. So what I would say for any product to be successful, it should either be solving any pain point of the customer or it should redefine the whole experience of doing anything in a very innovative manner.
Madhuri- So, As we know that different products come from different segments, so why don’t you explain these segments to us and then we will dive into the products according to their segments.
Hemant- If I talk about segments specific to fintech industry, there are different products in terms of consumer lending, insurance, investment markets and MSME and SME working capital finance. So there are few players which are there in between which are there in between acting as facilitators to do business. They act as a key component of the fintech industry.
Madhuri- Let’s pick these products one by one according to the segments of fintech. We will start with consumer credit. What exactly comes under this and which products stand out for you?
Hemant- So, any product which is giving out credits or loan to consumers or to what we call B2C product. it comes under consumer credit segment if fintech. There are different innovative players like Faircent is there which is a P2P platform where people can directly lend money to the borrowers so it is just acting as a platform. Similarly, there is a product called EarlySalary and MoneyTap which are completely digital and are targeting the next generation population and tech-savvy users to easily get the loans. Traditional banking systems follow a long procedure to give out loans and products like EarlySalary and MoneyTap have eliminated this lengthy process and optimized the operations of giving out credit. These are the products which have made getting credit an easy process.
Then there are few players which are playing on the convenience side of the business like Lazy Pay and Simpl which are popular products. Recently ICIC has entered the same segment. There are numerous products which are solving some of the problems in an innovative manner.
For me, these products stand out under consumer credit.
Madhuri- So, in the case of insurance what revolutionary product is out there?
Hemant- Insurance is one of the oldest fintech product available in the market and traditionally what insurance companies have done is that they have created a one size fit all kind of plans with the premium being on the same lines. With the availability of technology, people are coming up with unique concepts like toffee insurance is there which give loans based on the lifestyle basis. Then there is an Acko insurance which is leveraging the digital presence and it is optimizing and cutting the cost of paperwork and operations and giving out benefits to users. With the advent of new technologies in IoT and smart variables, this industry has the potential to bring big landscape changes to the industry.
With IoT and smart variable kind of things, we can track people’s fitness consciousness. For motor insurance, we check and track how people drive for motor insurance. Based on that, you can build a very customized, people-centric plans and premiums can be charged exactly on how people behave and how their lifestyle is. These are the leverages which insurance industry have.
Madhuri- So, another upcoming area which has a lot of scope is investment. Is there any product there which has made investment easy. Initially, the products were slow and tedious but are there any products which have made investing easier?
Hemant- I wouldn’t call investment as a very tedious thing but what I would call it as something which has lack of understanding and awareness about where to invest. Lack of knowledge in terms of the domain because most of the people don’t know many industries apart from where they are working. So this has given an opportunity to different companies. Few companies are coming up with robo-advisory services like Scripbox and Zerodha. Paytm money is launching a product for investment. These are robo-advisory services which tune your investment based on the financial goals and targets of the consumers. These figure out where you should invest, what percentage should go into what kind of risk profile. This is a new thing which is coming up in the investment sector. Another thing that is coming up is the alternative investments. So, apart from the traditional equities, mutual funds and securities bonds, and fixed deposits, there are few alternative investment options which are coming up. As I told one of the examples is Faircent, a P2P lending platform. If somebody has a surplus and is looking for a higher rate of return, he/she can go as an investor in Faircent and lend out to different people who are in need. Then KredX is also a platform which has an innovative way where people can directly invest in invoices of other companies. It is again a relatively safer and a high yield investment option. There is a company called SmartOwner which does a similar thing like KredX but in the field of real estate. So these are the exciting products that are available in the market in terms of investment.
Madhuri- Another upcoming sector which according to me has a huge potential is business finance. I am sure there are multiple products in this segment. But then again we are talking about products which are unique and have that something ‘X-factor’ in them. So which products in there in this sector which are unique?
Hemant- Yes so, SMEs and MSMEs are very important sectors as per the economists. These are the lifelines of our economy as they contribute significantly in terms of employment and GDP of the country. In SME lending as well, the new generation startups have changed the way od how traditional banking was done. For example, if you talk about KredX, we do a cashflow-based underwriting on the other hand if we go to traditional financial institutions, they do it based on the balance sheet as they have to show the revenue, they have to show the profits to get the loan. Whereas the SMEs and the startups which are coming up in the country, they might be a loss-making entity right now but they have a regular income and a regular inflow of cash from their customers and can be big profit earning firms in the future. So that is how KredX has changed the outlook in this scenario. We have other companies like Lendingkart, Capital Float, Aye Finance. These companies are again in the SMEs lending segment and they give term loans and other financial products to the companies which come under the SME and MSME segment. Even the government is acknowledging the need for the SMEs and MSMEs business. Recently on Diwali, our prime minister announced a one crore loan sanction within an hour. So speed is the key in SME business as it is all about working capital there.
Madhuri- What about facilitators?
Hemant- As I explained to you, facilitators are the players which work in tandem with the existing fintech players and they somehow help fintech companies in doing business effectively or giving an enhanced experience to the users. For example, there is JustPay which facilitates the payments by enhancing the experience. SignZ is there which helps in digital contracting and KYC. There is a company which handles the bank statement processing and these kinds of works. Cloud lending is a loan management software provider. There are numerous such kind of companies. Yodlee is there which brings a human element to the fintech where the digitization of information is the key. As I told, technology is changing the way business is done and for technology digitization of data is needed. Even now a lot of data is non-digitized. There are organisations which are helping in converting the off-line data to a digitized format.
Madhuri- Have these customers created a great customer journey? All these products that have come up or are yet to be launched are because there are certain things that were being done in a traditional way. To move from a traditional to a modernised way, these products are launched. Have these products managed to achieve this and get the attention of the customers?
Hemant- Obviously. In the starting, I mentioned that the product should do one of the two things, either solve the pain point or be consumer-centric. If you talk about KredX, Lendingkart, capital float and other above-mentioned companies, they have managed to solve the pain point, the gap of knowledge, the inconvenience to actually built a good product. Companies like Yodlee and SignZ have changed the experience for the customers.JustPay has changed the experience of payment by making payment a one-click thing. So all these companies fall under one or the other category that I have mentioned earlier.
Madhuri- If there is one thing that I have learned apart from these products is that the consumer comes above all. So thank you for coming to this podcast, talking about products and giving us such insights. It was great talking to you. Thanks for taking out the time for the very first podcast