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Mumbai-based fintech services unicorn Zeta has launched a credit-as-a-service platform to assist banks in conceiving, launching, and managing credit products using National Payment Corporation of India’s (NPCI) credit line on UPI.

The credit-as-a-service platform eliminates the need for banks to integrate multiple software and services required to manage a credit product, from origination to processing, and other digital services such as rewards and customer service, UPI issuer switch, etc. Zeta’s service consolidates functionalities from various software into a single package.

Additionally, it offers product blueprints to simplify the creation of credit lines on UPI products. Different types of credit offerings have varying requirements; for instance, a personal loan may entail different repayment times, compliance, or KYC requirements compared to an agricultural loan. Zeta has developed blueprints for various types of loans to expedite the go-to-market process.

Furthermore, Zeta provides bundled services such as customer support and operations, which it manages on the bank’s behalf to reduce operational overhead.

Ramki Gaddipati, CEO APAC and Global CTO at Zeta, describes it as a “credit distribution superhighway.”

“We saw UPI volumes put a strain on core banking systems. We anticipate similar volumes on credit line on UPI before long, and this calls for population-scale banking infrastructure capable of processing 100s of millions of credit accounts. We have pre-architected our solution for this from Day 1,” Gaddipati said.

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UPI as an accelerator

NPCI’s credit line on UPI feature expands access for users beyond just accessing a savings account using their numbers, now providing access to a credit line account. Zeta CEO Bhavin Turakhia said that most existing account holders are unaware of this access.

For existing bank customers with pre-approved lines, the cost of acquiring them as credit customers is significantly reduced. Customers can activate the credit line as needed without the overhead of applying, processing, and disbursing the loan.

Even if users are aware they have a credit line available, banks were only sanctioning loans or credits in large amounts, such as Rs 50,000. Customers can take smaller-value loans due to the on-demand nature of the credit line on UPI.

Zeta believes that this feature can help banks increase activation rates of pre-approved users for its credit lines from 1% to 10%. It also predicts that the transaction volume via UPI’s credit line feature will cross $1 trillion by 2030 and aims to capture 50% of this market opportunity.

Banks like Axis Bank, HDFC Bank, ICICI Bank, Punjab National Bank, and State Bank of India have gone live with the feature, and are the likely target customers for Zeta.

Next for Zeta

Zeta is also about to breakeven globally Ramki Gaddipati told YourStory. The Indian division of fintech unicorn, Better World Technology Pvt Ltd, achieved profitability for the financial year ended on March 31, 2023. It disclosed a profit after tax (PAT) of Rs 21.94 crore during the fiscal year 2022-23 (FY23), a significant turnaround from the Rs 20.7 crore loss reported in FY22.

Zeta currently employs approximately 1,700 individuals globally, primarily in engineering and product development, having allocated around $350 million for research and development. The company manages transactions from over 25 million active accounts onboarded through partner banks like HDFC, with an additional 60 million accounts from partner banks poised for integration into Zeta’s platform.

The company turned unicorn in 2021 after it raised $250 million led by SoftBank Vision Fund 2.

Gaddipati said that Zeta does not aim to raise funds in the near future as it aims to break even globally.