In an exclusive conversation with The Banking & Finance Post, Madhusudan Ekambaram, Chief Executive Officer, KreditBee spoke about the need to improvise, rising demand for robo-calling for streamlining of services, moratorium, digital lending, and COVID survival suggestions.
The centre has made a good attempt by announcing economic packages to cover all bases and sections of the society, especially large and varied demographics like India. However, when it comes to the moratorium and its extension, a varied behaviour is observed, where the salaried individuals have refrained from availing it. KreditBee has upgraded its tech platform to help customers in availing moratorium with the help of National Automated Clearing House (NACH) based payment scheduling, says Madhusudan Ekambaram, CEO, KreditBee.
- Give us an overview of KreditBee, its products and services.
Launched two years ago, KreditBee is an Instant Personal Loan platform for self-employed and salaried professionals. They can apply for Personal loans starting from Rs 1,000 up to Rs 2 Lakhs as per their requirement. The documentation required is very minimal, and the entire process – starting from registration on our app to loan disbursement does not take more than 15 minutes.
The application process is completely online, and upon approval, the cash is immediately transferred to the bank account of the user. Our Flexi Personal Loans are the smaller ticket size loans ranging from Rs 1,000 to Rs 10,000, to suffice the needs of salaried and self-employed for small expenses or unexpected emergencies, as also an essential infusion from much-needed funds during cash crunch at the end of them month.
We also offer personal loans for salaried to meet the fund requirements starting from Rs 10,000 to Rs 2 Lakhs. Our Online Purchase Loans are aimed towards easy and quick shopping with easily convertible KreditBee EMIs across all leading merchants like Amazon, Flipkart, Myntra and MakeMyTrip.
The interest rate usually starts at 18 percent, though for certain e-voucher loan products, we start disbursements with zero cost EMIs as well. With these offerings, we aim to become the first choice when it comes to quick and convenient personal loans.
- In your view, how do you think collection process, repayment and demand in the lending segment will revive post the pandemic?
The pandemic has called for many institutions to improvise their existing systems, which holds true for the lending segment as well. The collection process, for instance, is looking at a necessary integration with analytics and intelligence to derive customised collection practices for different cohorts. The reliance on digital and tele collections is only bound to increase. Many institutions will resort to evolved robo-calling to usher in an element of automation, working towards seamless customer experience despite disruptions. Also, the shift towards digital lending or contactless payments is only imminent. On the same note, a lot of regulatory purview is easing out to pave way for the effective functioning of the digital propositions only complementing the new avenues by the Fintech firms.
With respect to the repayment, initiatives have been and will be taken towards stakeholders’ benefits. However, proper knowledge needs to be imparted to the customers to ensure effective utilization of the initiatives. For instance, with the double moratorium the obvious sentiment expected was that of it being a loan holiday, resulting in a certain skewed repayment behaviour among users. Here, it becomes imperative for the institutions to constantly educate the customers, by making them aware of its boons and banes and if they actually require to take it. The proper literacy is thus needed, in order to bring the customers back on track with the usual norm.
For a customer driven market like India, demand will always be there. It’s the nature of the demand which will undergo change, from luxury-driven to necessity-driven. On the same lines, the change will also be visible in the ticket sizes and tenures.
- Please share your views on recent policy reforms, loan moratorium extension and economic stimulus?
In my opinion, the government has made a good attempt with its economic packages to cover all bases and sections of the society, especially for a large and varied demographic like India. Initiatives like Direct Bank Transfer to Jan Dhan accounts would ensure a lot of transparency and direct control of the schemes. Additionally, it has also attempted to benefit the ones who are running the MSMEs or are employed at these entities, with schemes to broaden their definition, extending investment limits, providing collateral-free loans and equity support to the stressed enterprises, clubbing manufacturing and service enterprises under small business. However, the offering can be rendered more effective with direct benefit schemes directed towards NBFCs.
When it comes to the moratorium and its extension, a varied behaviour is observed, where the salaried individuals have refrained from availing the moratorium, as is evident from the payments received from the segment being healthy and in-line with behaviour prior to the announcement. This comes from salaried individuals’ belief and knowledge that the postponement of the loan and paying more interest is less beneficial.
- What are your views on Digital lending in pre and post COIVD scenario? What major changes do you see?
The Fintech lending has been an essential resort for the new customers who couldn’t move to banks to lend, owing to them being more conservative in lending. However, a major change that the digital lending will experience is in its bid to assess the borrowers. With the traits like dexterity and innovation at their centers, the digital lenders are moving away from traditional assessment parameters like income and bureau score, towards using more profound demographic and psychographic parameters like location, employment industry and state, via customer’s digital footprints.
The Fintechs do enjoy the privilege of agile set-up and lesser dependency on legacy tech infrastructure, allowing them to revamp the existing models. A shift that will logically follow is the arrival of digital or contactless methods, demanding the enhancement of the self-sufficiency of the digital lenders, to another trend of lending happening in smaller ticket sizes and for smaller tenures. Also, this will require easing out of the regulatory norms towards digital lending, subsequently, the sector garnering high investments from the banks and NBFCs towards the digital initiatives.
- How did COVID-19 impact the digital lending segment? What initiatives have you taken at KreditBee for your customer base?
On the customer side, one effect of the pandemic is the reduced demand, where the responsible customers have refrained from buying. The flip side of the same coin is another group of customers who require the liquidity infusion more than ever, owing to their liquidity crunch. Cumulatively, demand has only increased. The later customer base is approaching the more convenient digital lenders to meet their urgent liquidity requirements. This however poses a major challenge for the digital lender to then assess their repayment capabilities. Institutions like us then ride on our evolved underwriting towards efficient lending process by considering more insightful parameters like location, education and employment details, and other proprietary parameters. Optimal utilization of customer’s data points and the extraordinary situation is fed back into the credit risk algorithms to make accurate disbursal decisions. For the existing customers who have been presented alternatives like moratorium, we have followed a two-pronged approach to educate them about the pros & cons of availing moratorium.
With that, we have also launched multiple offers like interest waivers and other benefit schemes which are the iteration of our commitment to stand with customers, who are facing the economic brunt of these unprecedented times. While the manual effort has gone into understanding & empathising with the customer on the cash flow constraints, the tech platform has been upgraded to enable customers to avail moratorium responsibly with the help of National Automated Clearing House (NACH) based payment scheduling.