NeoGrowth’s Data-Driven Approach Propels MSMEs Digital Future

Arun Nayyar

NeoGrowth’s strategic stance within the Indian MSME lending landscape signifies a forward-looking approach, technological adaptability, and an enduring commitment to fostering the growth and prosperity of small and medium enterprises, shared Arun Nayyar, Managing Director & Chief Executive Officer, NeoGrowth, in an exclusive interaction with Srajan Agarwal of Elets News Network (ENN).

Given the dynamic nature of the Indian MSME lending landscape, how does NeoGrowth position itself within this space? Can you elaborate on the impact NeoGrowth has had on supporting and catalysing growth for small and medium enterprises in the country?

NeoGrowth’s digital payment-based lending aligns seamlessly with the digital transformation in India’s financial services ecosystem. NeoGrowth’s prowess lies in its unique cashflow- based lending model, which is exclusively tailored for MSME credit. This approach reflects our deep understanding of the specific financial nuances and challenges faced by small businesses. We have disbursed more than INR 11,000 crore in loans, establishing connections with more than 1,50,000+ MSMEs, thereby playing a pivotal role in fueling the growth engines of a diverse array of businesses.

We have analytics-based scorecards to assess borrower repayment capability and calculate associated risks. This analytical meticulousness ensures a balanced approach for us, fostering sustainable lending practices. This also facilitates customer value management by identifying eligible customers and offering them a loan with fast-track digital underwriting, enhancing customer experience, and reducing turnaround time. Moreover, we have seamlessly integrated with India’s Digital Public Infrastructure (DPI) – leveraging e-KYC, Aadhaar, GST, Account Aggregator, and digital payment data. This integration has enhanced the speed and accuracy of credit assessments, facilitating faster and reliable lending decisions. With a presence in more than 25 cities across the country and serving over 75 MSME segments, NeoGrowth’s expansive geographic footprint and diverse sector focus represent its commitment to addressing the unique financial needs of a broad spectrum of businesses.

In essence, our strategic stance within the Indian MSME lending landscape signifies
a forward-looking approach, technological adaptability, and an enduring commitment to fostering the growth and prosperity of small and medium enterprises. Through innovative solutions and strategic initiatives, NeoGrowth will continue to be a driving force, shaping the future of MSME lending in India.

NeoGrowth is known for providing innovative financial solutions. Could you share some specific examples of these solutions and how they have addressed the financial needs of underserved businesses, fostering their growth and sustainability?

NeoGrowth’s approach to lending is centered on creating a positive impact for MSMEs, which sets a distinctive standard for financial inclusion in India. In fact, our business activities are aligned to siX out of seventeen United Nation Sustainable Development Goals including good health and well-being; industry, innovation and infrastructure; decent work and economic growth; gender equality. We have been working towards holistically contributing towards these to drive a positive impact. For instance, use of Digital Public Infrastructure (DPIs) such as e-KYC, Aadhaar, DigiLocker, PAN eSign, and UPI have significantly helped NeoGrowth improve the lending process, and reach a large section of underserved businesses.

We use transaction data, particularly digital payments data leveraging digital public infrastructure especially to evaluate the creditworthiness of customers swiftly. This data- centric approach enables us to make informed credit decisions, resulting in faster approvals and reduced turnaround times for businesses seeking financial support. Developing unique customer scorecards based on comprehensive data analysis facilitates objective decision-making and precise customer segmentation. This tailored approach has empowered NeoGrowth to customise financial products, interest rates, and repayment terms, ensuring affordability for borrowers and contributing to a more inclusive and resilient financial ecosystem at large.

Also Read | Digital is the Key to Resilience, Amid Uncertainty: Arun Nayyar, CEO, NeoGrowth Credit

Utilising Aadhaar-based e-Sign for digital agreements ensures secure and legally binding transactions. This innovative practice facilitates a seamless, paperless experience, reducing
administrative burdens, and enhancing the overall operational efficiency in the lending process.

NeoGrowth’s integration with the Account Aggregator ecosystem has positioned it among the first NBFCs in the financial ecosystem to leverage this digital platform. This integration empowers individuals to securely share financial information across institutions, enabling us
to conduct comprehensive assessments of potential borrowers, leading to more informed credit decisions. The Digital Journey offered by NeoGrowth allows for instant approval, benefiting customers, channel partners, and internal teams alike. This streamlined process enhances customer experience, minimises friction in accessing financial support, and supports the growth objectives of underserved businesses.

Through these practices, DPIs have been majorly contributing to NeoGrowth’s journey of achieving sustainability goals.

As NeoGrowth enters the next phase of growth, what are the primary drivers that will propel the company forward? Are there specific market trends, technological advancements, or strategic partnerships that NeoGrowth sees as instrumental in driving sustained growth in the coming years?

While there’s significant untapped potential in our existing markets, we believe consolidating our presence in the 25+ cities we operate in is crucial.

Amidst the usage of other modes of payments, we shall continue our focus on digital payments. According to NPCI, there are more than 70 million business users on the platform, who can potentially benefit from NeoGrowth’s offerings. Furthermore, automating customer onboarding through advanced digital tools has not only simplified transactions but also provided invaluable insights into buying patterns. This deep understanding empowers us to offer personalised solutions and boost lead conversion, driving further growth. Moreover, our own NeoInsights Business Confidence Survey 2024 paints a bright picture. With 60% of surveyed MSME owners looking to invest in technology and digital, the demand for seamless digital loan processes and customer engagement opportunities is undeniable. This trend is further echoed by the fact that 24% of MSMEs are planning to digitise their operations, which unlocks a vast source of raw data for us to understand and assess customer behavior better.

The organisation’s future growth is fueled by a potent miX of persistent market focus, capitalising on booming digital trends, leveraging technology for superior customer experiences, and a deep understanding of evolving MSME needs. We are confident that by harnessing these drivers, we will not only drive our own business growth but also empower the digital growth aspirations of countless Indian businesses.

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