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The pandemic made it clear to SMEs and MSMEs that the way ahead was one: digitisation. 

Financial services, payments, and credit were core focus areas, and the SME segment has since then seen the emergence and growth of several fintech players. 

However, when Lucas Bianchi, Gaurav Anand, and Krishnan Parameshwaran founded Namaste Credit in Bengaluru in 2014, it was one of the few startups looking at the space closely. 

Namaste Credit, which combines a loan marketplace with an AI-based credit underwriting engine to help banks and NBFCs lend to SMEs, democratises access to credit for SMEs. 

What does it do?

“We firmly believe in end-to-end digitisation of the process. The documentation required for SMEs, on the liability side and on the asset side, are huge – pertaining to information such as KYC of business and its directors/partners/stakeholders, bureau of business, and its director/partners/shareholders, banking, financials, GST, and many more,” Gaurav says. 

He says the platform offers a hassle-fee procedure by fetching documents, digitising scanned images through their ML-driven OCR technology, analysing and triangulating all details, preparing reports, rules driven policy matching, checking eligibility against different products, and being format-agnostic. 

“Going through the process, we verify the information with its data sources, identify frauds in submitted documents, and also validate if the shared information is accurate or not,” Gaurav says. 

He added Namaste Credit enhances efficiency, reducing turnaround time by 95 percent to process and fast sanctioning, and also improving coverage with 100X more data points analysed. 

Until mid-2019, Namaste Credit disbursed Rs 1,700 crore worth of loans. This figure nearly doubled in the last two years.

“We have served more than 25,000 SMEs in the last six years and have facilitated lending to brick-and-mortar SMEs from petrol stations and local restaurants to schools and even startups that need working capital,” Gaurav adds. 

He explains the team had researched and found several reports that stated there are 60 million SMEs in India, and only 35-40 percent get access to any kind of formal credit. 

Starting with democratisation 

The founders wanted to build a product and technology company that would democratise SME lending in the country.

“Namaste Credit has always focused on SMEs. Ironically, this is one of the fastest growing sectors but is largely underserved globally, in particular in emerging markets. This led us to create an environment where this issue is not just resolved but replaced with sustainable and long-lasting solutions,” Gaurav says. 

The fintech startup has been following flexible workflows to achieve common digitisation goals. The team has focused on all user personas that exist in the market, including DSA, channels, borrowers, sales relationships, and credit teams. 

The idea was to solve two problems: SMEs discovering credit and lenders underwriting credit.

This is what led to a platform that is a blend of a B2B loan marketplace (for SMEs) and an AI-based credit underwriting engine (for lenders). 

“Recently, we have come up with a dynamic rule engine for Lender Policy Matching, and have filed a patent for the same. We have developed our own OCR engine that uses AI and ML to process unstructured data without any manual intervention. Technology has helped the loan digitisation process evolve, made it less time consuming,” Gaurav says. 

Building the MVP 

Bringing in a loan eligibility check with the very first product along with access to a large set of lenders and quick TAT on the whole process through digitisation was what helped. 

The first product with the workflow took the team about three months to reach a viability stage; they had two to three dedicated developers to work on this. They used the framework and technology that was popular at that time; availability of resources was not a constraint. 

“Being process-driven, we started by using open source tools on code repo, project management, and build management. Delivering in agile methodology was integral to the team. Additionally, we used cloud solutions for getting our product into market quickly, wherever possible,” Gaurav says. 

While building the first product, the team took into consideration a few points: 

• Cloud architecture should be secure, needs to have all layers to protect customer data
• The product should be usable by customers and available with failover coverage
• The product should cover critical and important functionalities
• The architecture should be scalable with automated load balancers

The product team started by building everything in the cloud. However, in a couple of months of using a hosting provider, they realised that there were dependencies and bottlenecks in using these. 

“So, we quickly switched to AWS and started architecting the solutions by leveraging their services. This helped us build things faster. Sometimes, even AWS did not have the services range they have today so we built them only to be replaced by better and efficient cloud services like Athena and Lambda,” Gaurav says. 

Working on a two-week framework 

The initial roadmap was for three months, and they started building using sprints of two weeks. Gaurav, who has an AGILE development background, implemented basic processes. 

“We had a lean team. We had releases happening every now and then, with new and better versions. The roadmap covered feedback from both internal and external users,” he says. 

The platform changed direction from a normal portal to a SAAS-based framework. The team soon realised that banks wanted to use their platform on a white-label basis. Since then, the SAAS product has evolved into a separate product offering, where they have onboarded many banks in India and are helping their digitisation initiatives through the platform. 

“Lenders get access to our proprietary intelligent credit assessment model (iCAM) that helps assess creditworthiness of borrowers, identify and minimise fraud, and reduce turnaround time from one to six weeks to a few days,” Gaurav says. 

The technology platform, which started as a portal for digitisation, had to re-orient itself into a Software as a Service platform, moving towards micro-services architecture to address the needs of the business, including support for multiple products offerings. 

“This meant we had legacy issues that had to be rectified; there were fundamental changes to the product as assumptions changed from base design. Since we had the micro services, we could easily navigate these changes. Right now, we are on a hybrid cloud, available on both AWS and Azure cloud,” Gaurav says.

He adds that the OCR technology with ML Models, scalable and customisable SAAS platform, and binary format to address the format agnostic approach are some solutions that really helped the team build a better platform.

“We have been working to make financial information easily available, even if its agreement is based on financial institutions to easily process the requests. We have additionally been focusing on a lot of ML and data-driven approaches to grow further and deliver quality results to existing and potential customers. At Namaste Credit, we will continue to adopt technology–led solutions to overcome challenges,” Gaurav says.