PUNE A startup that has not yet launched has effectively, not started-up. Yes, 4Fin has raised $1.1 million in pre-seed round through Curesense Therapeutics, investors behind biotech company Mylab. Yes, 4Fin founders Ajit Sinha and Amit Tewary, both senior former bankers, are more than aware of what it takes to be “profitable” in the lending space. Yes, 4Fin is based in Pune.
But, the CTO of this credit-embedded marketplace cannot be named till October, which is when the 4Fin service goes ‘live’. All we can reveal is this developer,; as per Sinha and Tewary, has created financial tech solutions for banks in 15 countries.
The fintech space in India, like 4Fin, is just kicking off, at least in terms of moving the market place online.
Traditional bankers still rule the lending space, especially at the lower end of the fiscal food chain.
Any one of these phrases by the founders of 4Fin might seem like the hundreds of “spam” messages that flood our inboxes every day: “Accessibility of loans for customers at affordable rates”; “capability of disbursing the loan the same day”; and of course, “very, very high probability of getting a loan”.
“We are into bottom-line lending, but volume-wise we want to be top-line,” is the first line of the chorus, followed by, “A credit-embedded marketplace for all your crucial needs in life”.
{{/usCountry}}“We are into bottom-line lending, but volume-wise we want to be top-line,” is the first line of the chorus, followed by, “A credit-embedded marketplace for all your crucial needs in life”.
{{/usCountry}}The line that underpins all the above is: “Lending is not about giving money, but is all about collection”.
The market
As per 4Fin data, there are 500 million smart phone users in India and 620 million internet users
Household debt to GDP ratio in India is at 37 per cent. The corresponding figure for the US is 80 per cent, Malaysia is 76 per cent and China is 62 per cent.
The industry size, banking with a specific intent on lending, is at $612 billion with an 18 per cent growth rate. As much as 73 per cent of small-ticket loans originate outside Tier 1 cities.
Given that startups like Capital Float (Bengaluru), MoneyOnClick (Bengaluru) and Rupify (Bengaluru) are already in the space, what would distinguish 4Fin from the rest?
The 4Fin pitch
First and foremost is “omni-channel access for any kind of support,” says co-founder Sinha. “It’s never a fixed model like conventional banking. Since, we have to do the loans fast, we rely lot on data. We will be very agile and robust.”
Lending is easy, collection is tough
Decades of experience in lending has provided great learning to the duo, who agree that lending is easy, but collection is tough. Says Sinha, “As a lender, I have to assess the market, dealers, manufacturers and risk is involved when you give money as working capital. Lending is not about giving money, but is all about collection. Either you recover the money or the asset. So, the value of the asset should be at least equal to the outstanding amount.”
Says Tewary, “Lending keeps changing every decade. A lot of changes have happened after Covid-19. The advantage of using fintech was there pre-Covid, but now its necessity has increased multi-fold. Customer acquisition has become easier due to online transactions. This change is rapid. However, customer care has taken a hit.”
4FIN – loan in a few hours
4Fin focusses on facilitating small loans to support expenses for health, education, electric two-wheelers among other basic necessities. 4Fin aims to make finance more accessible in Bharat (semi-urban and rural parts of India), offer personalised loan products and support its customers with its model of ‘4Fin Mitras’, designed to act as social-driven customer care.
4Fin has developed an in-house loan origination system, loan management system, debt services management, artificial intelligence-based algorithms for credit assessment and e-stacks for end-to-end automated processing. These solutions reduce turnaround time for approval and disbursal of loans, facilitating faster decision making and ensuring accessibility of loans for customers at affordable rates.
Says Sinha, “There can be genuine people whose credit history might have been affected due to some delayed monthly instalment payments in the past, and they may be unable to get loans from banks. Through our platform we will do a real matching. So, any customer coming to our platform will have a very, very high probability of getting a loan. We will give the best possible two or three offers, which a customer has the option of selecting. We have developed kind of tech stack that gives us the capability of disbursing the loan the same day.”
The Mitra effect
4Fin founders believe that customer support will be a big differentiator in the lending space and hence, they have decided to onboard 4Fin ‘Mitras’ (friend). It will be the “Uberisation” of trusted service providers on a freelance model. The Mitras will be connected through an app and upon query or request the nearest Mitra will reach the respective customer.
Says Tewary, “A big challenge in any online mode of business is that people feel lost in the customer care segment. Opening branches is a very expensive process for customer service. Hence, we are on-boarding ‘Mitras’ who, along with the technology team, will provide customer support. We will give the requisite training to the Mitras and they will be working with us on a case-to-case basis. They will be paid on a contractual basis and hence, will not be an economic burden. At the same time, it will solve all problems on the customer side. We are giving our customers an omni-channel access for any kind of support.”
Credit-embedded marketplace
A 4Fin app and virtual and real credit cards are in the offing, claims the founders. “We are creating a credit-embedded marketplace for some critical products in areas like education, health and electric vehicles. We will not go into the Buy Now Pay Later (BNPL) space. At present, we are doing lot of tie-ups and hence, possibly, we can offer our customers the best rates (discounts and lower interest rates) for electric two- wheelers from a particular company. Our range of lending will be from Rs50,000 to Rs5 lakh. Most expenses for any individual are covered in this range. We are into bottom-line lending, but volume-wise we want to be top-line,” they stated.
Oh, the “heartfulness” factor
Ajit Sinha and Amit Tewary, both senior former bankers with rich experience in wheels and inventory funding; and retail lending respectively, founded 4Fin in July 2021. Sinha came to Pune in 1998 for his MBA education and met Tewary in 2008 when they were working as colleagues in a bank.
Says Tewary, “I was heading the rest of Maharashtra region for retail lending, while Sinha was heading Western India for the wheels division. After a few years Sinha started his own consultancy and mentored many organisations, while I drifted more towards fintech. We both followed a meditation practice called “heartfulness” which kept us connected. We regularly interacted about the potential in the fintech space and decided to start 4Fin.”
“Two more co-founders (names withheld) are joining soon,” Tewary added.
Says Amit, “We want to reach out to the people. Beyond the top 25 cities of India, almost all regions are unbanked. However, generation of a lead does not necessarily mean we will be giving loan. Defaulting on loans is our problem (not the Mitras problem). 4Fin Mitras will get money on the transaction while the portfolio behaviour is our concern. Initially we are moving with our EV dealer partners and hence, dealers will be our Mitras. Our products will stabilise phase-wise till January or February 2022.”