Financial empowerment through education: How mPokket helps customers make informed financial decisions

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mPokket’s business is heavily driven by technology and, therefore, they are actively seek to expand their workforce in areas such as technology, product, data analytics and digital customer experts, writes Gaurav Jalan, Chief Executive Officer and Founder, mPokket, in an exclusive interaction with Srajan Agarwal of Elets News Network (ENN).

Can you walk us through the early stages of the company’s development and some of the biggest challenges you faced in establishing it as a viable business?

mPokket was created with the mission to help Indian youth gain access to credit and make them more financially independent. The inspiration came from my personal experience. Even as a foreigner and a fresh college student in the US in 1997, I was able to procure a credit card, which allowed me to manage my finances much better and overcome temporary cash shortfalls quickly. However, whenever I spoke to my friends going to college in India, it was clear they had no access to any kind of formal credit. Their only way of getting money was to borrow from friends and family – a situation that prevails to date. Therefore, I founded mPokket in 2016 to address this credit gap and empower the underserved youth of India. The increasing penetration of smartphones helped to create an app through which tech-savvy college students could easily and instantly borrow small amounts of money to meet urgent cash needs.

Initially, I faced much discouragement with the industry’s general outlook and response being that college students wouldn’t repay the loan. They might not have the means to pay it back or may not be responsible enough. That there was great risk involved in targeting an unorganised market of students. Nonetheless, I was certain students would understand the implications of any default and make wise decisions for their future if they were properly educated about loans, the significance of timely repayments, how it affects their credit scores and other financial factors.

mPokket has been active in the Indian market for several years now. How has the company evolved since its launch, and what are some of the key metrics that you track to measure the success of the business?

We launched the mPokket app in December 2016, raised our first round of seed funding in 2017 and began to earnestly scale the business in early 2018 after we had refined our technology and underwriting algorithms, product market fit was well established and a path to profitability was apparent. 2018 was a landmark year for us as we also raised a Pre-Series A funding round and also turned profitable during the year.

In 2019, mPokket crossed 1 million KYCapproved users. In 2020, we raised funding in the Series A round and also launched smallticket loans for salaried individuals, apart from our existing offerings for college students. We also surpassed an annual distribution run rate of INR1500 crore in 2020. During the difficult months of the initial COVID lockdown in 2020, we are pleased that mPokket was one of the few digital lenders that continued onboarding new customers and disbursing fresh loans. We are proud that lending from our end has never paused, irrespective of market conditions.

The business has maintained a steep growth trajectory while remaining entirely committed to its purpose of empowering India’s youth. In the seven years since its inception, mPokket has expanded from a 3-employee venture to employing more than 2700 people serving students and salaried individuals in 19000-plus pin codes across the country. We have disbursed INR8000 crore till now to more than 30 lakh borrowers, with plans to double these numbers in the next year.

We created unique processes, systems and customer acquisition strategies that are unique and tailored to our business model, which has kept our cost structure lean. We have also seen robust adoption of our product, which has led to healthy revenues.

mPokket’s technology platform has been key to its success in delivering instant loans to customers. What kind of investments is mPokket planning to make in its technology infrastructure in the coming years?

We are a digital lending company that operates entirely via mobile apps, digital platforms and chatbots. We strive for constant growth by improving our technological algorithms and making services sustainable for customers. We also continuously optimise our platform to ensure a seamless and efficient customer journey, tweaking processes to facilitate smoother user onboarding and loan disbursal.

Our business is heavily driven by technology and, therefore, we actively seek to expand our workforce in areas such as technology, product, data analytics and digital customer experts. We have also implemented several checkpoints in our systems to detect and prevent fraud since most of our users have little to no credit history and we cannot rely solely on external credit agencies. For credit decisions, we make extensive use of Machine Learning and Artificial Intelligence, considering the various factors involved.

How does mPokket ensure that its customers understand the terms and conditions of their loans and are equipped to make informed financial decisions? What kind of educational resources or support does the company provide to its users?

Nowadays, there are hundreds of apps offering different services. However, during the inception of our idea, no other companies were offering similar services. By the time of our launch, only four to five companies had joined the segment. Owing to our early dedication and effort, we have grown to become the go-to financial partner of the Indian youth today.

Since most of our user base is college students and early working professionals, we ensure customers are educated about the importance of timely loan repayment and the financial implications of failing to do so. Our customers are continually nurtured and motivated to be financially responsible, improve their credit scores and reach financial stability.

As mPokket continues to grow, what future initiatives and features are you planning to roll out to better serve your customers? How do you see the company expanding and evolving over the next few years?

At mPokket, we strive consistently to make ourselves more valuable and relevant for our users. We have developed multiple disbursement and repayment options and features over time to make the lives of our customers easier by providing a solution that is as customised to their needs as possible. In addition, we don’t evaluate users’ creditworthiness based on external Credit Information Bureau scores. Instead, we have created our Proprietary Algorithm that incorporates hundreds of variables based on alternate data. This initiative has helped us provide funds to a sizable section of users overlooked by other lenders, while also restricting NPAs and ensuring low defaults.

mPokket is just getting started on its growth journey. In the next few years, we plan to grow the business 30 to 50 times its current size and double our originations in this fiscal year by INR8,000 crore. As our current customer base is a small percentage of the Indian population, we are eager to expand our bouquet of services. The company can serve more customers and provide them with a comprehensive range of products and services. We plan to introduce buy-now, pay-later products and micro-insurance policies to cover various emergencies and loans for self-employed individuals. We are also exploring opportunities to expand outside India by leveraging the knowledge gained from our experiences here for growing in other markets as well.

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