According to a report by BCG, close to 800 million Indians from 160 million households (60 percent) in the low to mid-income segment do not have access to formal credit. By 2025, this number would increase to 200 million households.
While India has made great strides in its attempts to drive financial inclusion through bank accounts, world-class digital payments, and direct transfers, when it comes to access formal credit, the financial services industry struggles to viably include the ‘next-billion.’
This leads many working-class Indians to depend on expensive informal credit options to meet their rainy day needs.
“We believe this must and can be changed. We aim to empower the working-class Indian with access to financial services beginning with formal credit. We launched Findeed to enable financial access to millions of working-class Indians by leveraging the power of data and technology,” Co-founder Srividhya Ramarathnam tells YS.
Founders (L-R): Sriram Shankar and Srividhya Ramarathnam
The Bengaluru-based consumer-focused fintech startup was founded in July 2019 by Srividhya Ramarathnam and Sriram Shankar.
The startup — which uses data and technology to harness the power of social collaboration/cooperation and a strong sense of community bonding — partners with employers, NGOs, and financial institutions to offer simple and fair collateral-free loans to underserved customers to meet their financial needs.
The USP
Sriram Shankar says, “When we looked deeper into how people came together to help each other borrow money, we realised the sense of social capital was very high. This is the key difference in our approach.”
“We aim to leverage the community bonding that exists today in the low to mid-income segment. The social cooperation and social capital a consumer holds in their network is a key factor in their ability to access informal credit. We leverage this both in our approach using technology and in our GTM strategy,” he adds.
Findeed’s social graph captures the strength of connections and builds a customer network that can be used throughout a customer’s lifecycle management — from credit assessment, collections to unlocking benefits for the group.
“Users apply for loans through our Android app, which already has over 10,000 downloads. All of our customers have access to a smartphone in their household. Our app supports native languages and is designed in a conversational style to make it easy for customers. We also have on-ground activation support if the customer needs assistance to apply,” Srividhya says.
Its initial go-to-market approach is to partner with institutions, such as manufacturing and retail employers, characterised by intrinsic connections with members, and acquire customers through these partnerships.
In fact, Findeed also provides rewards and products linked to individual and network performance.
At present, Findeed is operational in Karnataka. It has already onboarded close to 200 employer partners, including Swastik Technologies Bangalore, Hermes Laboratories, P N Rao Suits, Pegasi Spirits, Chilume Social Service Society, etc., with over 10,000 employee base.
So far, the startup has disbursed more than Rs 1 crore.
For new customers, the minimum loan amount starts at Rs 10,000 and goes up to Rs 60,000. For repeat customers, it can go beyond Rs 1 lakh.
“Our repayment tenure varies between three and 12 months. Usually, customers consent to the EMI deducted from their salaries. This is convenient as it helps them avoid missing payments and late fee charges. Basis the customer’s consent, our employer partners deduct the EMI from the salary of the loan customer and deposit towards the loan payment availed. In case a customer/employee leaves their employment, they make the payment directly through UPI,” Srividhya explains.
The team
With over 20 years of experience, Srividhya has worked across several sectors, including strategy and growth in ecommerce, financial services, and management consulting. She earlier led Flipkart‘s fintech initiatives and was also a business leader at Intuit.
Sriram, too, has donned diverse leadership roles in the areas of growth, business operations, and customer experiences in ecommerce, insurtech and SaaS companies. He was part of the early leadership team at Digit Insurance and previously led customer experience at Myntra.
At present, Findeed has a total team of 16 employees.
Moving forward
Earlier this month, Findeed announced raising an undisclosed seed round led by Venture Highway, Anicut Angel Fund, and First Cheque. The fintech startup plans to use the funds to hire fresh talent across profiles to build a strong team and to fuel its business growth.
“The COVID-19 pandemic robbed people of their sense of financial security, and the working class populace took the worst hit. We want to power their aspirations with financial access and help them in bringing their dreams to life,” says Srividhya.
India’s consumer lending market is projected to grow to $1.2 trillion by 2025 from $287 billion in 2017. However, this can only happen if the credit financial penetration in the low to mid-income segment increases.
According to CEIC data, the consumer household credit/GDP ratio is between 70-90 percent in western economies. This is around 49 percent in China. However, India stands at 16 percent.
Even while considering conservative estimates, access to formal credit for this segment represents a $400- $590 billion opportunity by 2025.
“Our goal is to reach 20,000 borrowers in a year, and 1.5 million in three years, which translates to growing from Rs 50 crore in disbursals this year to over Rs 3,800 crore by the third year. We also plan to raise our Series A round in the next one year,” Srividhya says.
Findeed competes with EarlySalary, Paysense, LoanTap, MoneyTap, and MoneyOnClick, among others, in this segment.
Findeed’s revenue comes primarily from the interest paid by the borrower on the loan and processing fees. This covers the variable costs the startup incurs to originate a loan, including credit checks, KYC, and activation assistance.
“As we expand to other products, monetisation would be through fees and commissions for providing those services,” Sriram says.
