Getting a loan isn’t easy. Satyam Kumar, Co-Founder, LoanTap, spoke to BE’s Ankita Chakraborty about the present lending industry and how his company is working towards providing hassle-free lending services.
Q. What was the idea behind LoanTap? How does it work?
A. Until a few years ago, traditional financial institutions (FIs) were not easy to borrow from. Documentation hassles, assessment of credit worthiness and large turnaround time made it difficult for consumers to seek credit. When Vikas Kumar (co-founder of LoanTap) and I started on this project, our initial market research pointed out that a majority of barriers to credit penetration could be easily countered by leveraging an array of digital technologies and non-conventional data repositories, especially with reference to salaried professionals. We also discovered many flaws in credit assessment, which in a majority of cases extended credit to undeserving candidates and added to bad loans. That often prevented creditworthy applicants from availing the same. Our primary goal behind incorporating LoanTap was to offer credit within a matter of hours. The idea was also to minimise the paperwork. It also applied to those candidates who had no credit history. We have developed our proprietary algorithm that sources and scrapes relevant information online and evaluates multiple data points to provide accurate creditworthiness of a candidate. We also conduct AI-based retrospective tracking to further enhance our evaluation.
Q. Who are the existing investors of LoanTap?
A. We currently have a mix of equity and debt investments by Kae Capital, India Quotient, IFMR, MAS Finance, and Muthoot Group in addition to our High Net Worth Individual (HNI) investors.
Q. What are your easy lending schemes and how is it different from the traditional banking system?
A. LoanTap has customer centric innovative products such as rental deposit loans, EMI free loans, salary advance and personal overdraft. These products are to meet different life needs of the customers. The traditional banking channels use a singular approach of providing personal loans for an array of purposes and have fixed repayment cycles. Now as these personal loans are availed by customers for different reasons, which could be anything from holidaymaking to buying a luxury bike or for weddings, there are different factors affecting loan origination and therefore their repayment cycle should also be different. Our intense personalisation of loan products addresses this challenge and simultaneously improves customer convenience.
Q. What are your views about the current lending sector in India?
A. India has faced considerable disadvantages due to a non-customer centric approach to credit that has been followed for years. What we often fail to consider is that loans are not only beneficial for the borrower; it is also beneficial for everyone involved in the value chain. The spent amount directly generates jobs and increases the circulation of money in the economy which benefits the entire economic ecosystem.
Since salaried individuals are the most reliable loan takers, it is to our advantage that increasing digitisation has helped to catalyse the credit penetration towards this high-potential segment. We believe that this is a positive development that will considerably boost our economy.
Q. How does LoanTap provide relief to the salaried classes?
A. Primarily, we help them avail credit with turnaround time as low as 24 hours from the initial application. Secondly, we provide intense flexibility in terms of our loan offerings. For instance, our EMI-free loan helps our customers reduce their monthly EMI outflow by up to 40%. Similarly, rental deposit loans help our customers to avail rental deposits for as long as 33 months. Each and every loan product of LoanTap extends a unique benefit to our customers and adds to their overall convenience.
Q. What are your expansion plans?
A. We will continue to bring new products to the market. We are currently working on three products that are to be introduced in the first quarter of this financial year. One of these three products will address a core need in SME sector which relates to the low risk area of value chain finance.