KreditBee Sees Two Times Growth In Loan Disbursement, AimsTo Double AUM In FY24

The Indian market has witnessed robust demand for credit, reflecting the nation's evolving fintech landscape. This surge in credit demand serves as a clear indicator of both the nation's economic strength and the ambitions of its individuals. NBFCs have had a strong presence in areas that were otherwise not serviced by banks. 

The increase in internet penetration, a growing middle-class population, a tech-savvy customer base, the demographic advantage in India, government initiatives, and contributions from fintech companies have led to increased spending and demand for credit. Consequently, this has expanded the potential customer base seeking credit. Even today, credit card penetration in India remains in single digits, providing ample opportunities for NBFCs to tap into this market.

In 2023, digital lending platform KreditBee’s disbursement grew over two times to ~Rs. 14,000 crore against ~Rs. 5,800 crore in FY22. This was led by multiple factors like increased digital adoption, advanced technology utilisation by lenders, superior customer experience by fintech players, faster loan disbursals, among others.

Vivek Veda, Co-founder and CFO, KreditBee shares his views on how the industry shaping up in India and the future plans for the company.

1. How do you look at the Indian market and this rising demand? How prepared is KreditBee to cater for this demand?

Fintech companies have revolutionized credit access in India by offering customized products, ease of borrower onboarding, and underwriting through digital infrastructure since they can access a wide range of borrower data from various regulated sources.

As for KreditBee, we are well-positioned to cater to this escalating demand. At KreditBee, we have developed a keen understanding of the Indian market and the evolving financial needs of our consumers. To accommodate this rising demand successfully, we are focused on several key areas, such as risk management, scalability, and regulatory compliance. A robust credit assessment process, prudent lending practices, and an agile response to market dynamics has been vital to sustain growth while safeguarding the interests of borrowers. Additionally, maintaining strong relationships with investors and securing adequate funding sources will be crucial in supporting this growth.

KreditBee is well-prepared to meet this demand by leveraging our fintech prowess and adapting to the changing market conditions, ensuring we can continue to provide access to much-needed financial support for individuals and businesses alike.

2. In the last three years, what are five prominent trends that you have witnessed in India’s lending segment?

The fintech industry has been evolving rapidly and has seen some dynamic changes in the last three years, with some of the significant ones being:

· Online platforms and mobile apps have played a more prominent role in facilitating instant loan applications and approvals, providing a convenient and efficient borrowing experience for customers.

· The fintech industry is continuously growing, bringing both opportunities and challenges for companies. I believe that the instant loan market is heading towards further digitization and integration of advanced technologies. This means that lenders are increasingly leveraging artificial intelligence, machine learning, and data analytics for credit assessment, underwriting, and loan disbursal processes.

· With the government's emphasis on financial inclusion and entrepreneurship, there has been a surge in microfinance institutions and lenders targeting small businesses. These loans support entrepreneurship and economic development at the grassroots level.

· The tremendous growth that Fintech companies have showcased over the last 5-6 years and the further growth potential it has in store, regulators have become active with respect to ensuring that the interests of the consumers are protected. Ensuring compliance and responsible lending practices has become a top priority for the industry. Fintech Players are focusing on working closely with regulatory authorities to ensure that the operations meet all necessary legal requirements. This includes data privacy and security regulations to protect customers' information and keep their data safe.

· Through increased strategic partnerships of fintech players with various stakeholders such as banks, NBFCs, e-commerce companies, and digital wallets, these collaborations aim to further expand the reach of lending services to the underserved and unbanked population.

3. What are your current focus areas? Talk about your focus on Tier II, III cities.

KreditBee is on a transformative journey, positioning itself as a holistic financial conglomerate geared toward providing a wide spectrum of customized financial solutions that cater to the distinct needs of individuals, enterprises, and their various financial requisites. The company is resolute in its dedication to addressing the multifarious dimensions of customers' financial well-being and is poised to enhance its service portfolio accordingly. 

Lending penetration in non-metro cities depends on economic development, infrastructure, as well as financial inclusion initiatives in those cities. Increased economic growth, aspirations to own homes, and government initiatives have led to an increase in lending penetration in non-metro cities. At KreditBee, out of the total customers served to date, approximately 75 per cent are from non-metro cities, showcasing our reach beyond metro cities. The ease of accessing loans through the app, digital underwriting, and reduced processing time have helped KreditBee cater to this segment. The ease and convenience we offer bring these customers back to us for loans repeatedly.

4. Give us a snapshot of your company’s scorecard. How was your last quarter?

FY24 is clearly shaping up according to our expectations. We look to double our AUM in FY24 and grow disbursements by 60-70 per cent on a YoY basis. The growth and profitability momentum that we showcased in FY23 continued into H1 FY24, with our overall AUM crossing the Rs 6,000 crore mark as of Sep 2023, and the company has already reached the profitability of FY23 in H1 FY24.

We currently have co-lending partnerships with 12 partners, with the recent addition being Tata Capital. We are in the process of onboarding 2 banks as colending partners. With these and additional ongoing discussions, we will have 14-15 colending partners by the end of FY24.

5. In your last funding round KreditBee’s valuation nears USD 700 million. When do you plan to go for the next funding round and join the ‘Billion-dollar’ club?

FY23 was a great year for us wherein we closed our Series D Funding and raised USD 200 million from Advent International and MUFG Bank, and our existing investors. This funding has come at a time when the start-up eco-system is witnessing funding winter. This round reinforced the confidence in our profitable business model and the long-term sustainability of it. The new funds will be used for scaling the existing business and diversify our product offerings. We have recently started offering secured loans to our existing customers who need more capital.

With this recent funding, we are well capitalised to reach AUM of Rs 10,000 -11,000 crore, post which we might look for another fund raise to fuel our next leg of growth.

6. The segment is becoming highly crowded, how is KreditBee different? What are some of the challenges are you witnessing?

At KreditBee, we distinguish ourselves by focusing on specific customer segments that are currently underserved or have distinct needs and we customise our personal loan offerings to effectively address these unique needs.

One of our primary competitive advantages is our streamlined loan application and approval process. Our goal is to provide a seamless digital experience by reducing documentation requirements and ensuring swift approval times. Our ultimate objective is to expedite fund disbursement, aligning with the expectations of customers seeking immediate loans. Through our user-friendly and efficient digital platform, we are committed to delivering a hassle-free experience, making the borrowing process as effortless as possible for our customers, understanding the value of time and striving to make the loan application and approval journey convenient and straightforward.

Over the past 5-6 years, we've witnessed remarkable growth in fintech companies, and the industry has even greater potential ahead. Regulators have proactively stepped in to safeguard consumers' interests. We are actively addressing this evolving regulatory landscape to benefit the industry in the long term. Our top priority is ensuring compliance, and we maintain close collaboration with regulatory authorities to ensure our operations adhere to all legal requirements. This includes a strong commitment to data privacy and security regulations, ensuring the protection and safety of our customers' information.

7. What are your future growth plans? How do you see this segment evolve in the next five years?

The fintech lending segment is poised for substantial evolution in the coming five years, shaped by several pivotal factors and emerging trends. A prominent catalyst for this transformation is the escalating use of advanced data analytics and artificial intelligence (AI). 

Another pivotal evolution in the fintech lending sector is the growing emphasis on financial inclusion. Fintech lenders are playing a vital role in providing access to credit and financial services for underserved populations, both in developed and emerging markets. Their accessibility and user-friendly interfaces are helping bridge the financial inclusion gap, making it easier for individuals and small businesses to access credit.

As an integral part of our strategic expansion blueprint, we are diligently preparing for our imminent entry into the capital markets in the coming years. This strategic move is aimed at unlocking access to a wider spectrum of capital resources, which we intend to utilize for the purpose of propelling our growth initiatives, fostering innovation, and sustaining our continuous expansion. This step will firmly establish our position as a prominent player in the financial services sector, signifying our commitment to ongoing growth and excellence in serving our customers