India is a $280 billion consumer finance market and is the second-largest market after China. People with more than ₹10 lakh income per annum amount to 9% of India’s population who consume over 70% of the credit which is given out in the country. On the other hand, people who are making ₹1.4 lakh to ₹4.5 lakh, known as “the Next Billion” amount to 45% of the population but have access to only 8% of the formal credit.
For this Next Billion segment, the major problem is the friction in getting a loan. Now, over the past couple of years, things have changed significantly with the advent of FinTech — the process has become a lot faster and the paperwork has gone down drastically.
However, there is one more challenge that seems bigger than the tedious process and credit friction — credit democratisation.
Now, Bengaluru-based Shubh Loans, a credit scoring startup has been working on democratising credit for millions of borrowers who are not part of the formal credit system and are expanding the availability of fair and transparent credit. In fact, since their inception, the company has gained significant traction in the credit scoring industry. Today, Shubh Loans has over 45 lakh customers and has generated over 20 lakh credit reports.
In order to understand the industry better and how Shubh Loans is using emerging technology like data analytics to solve the pain-points in the Next Billion segment, Analytics India Magazine talked to the Monish Anand, CEO and Founder of Shubh Loans.
Shubh Loans has a mobile app for Android that the customers can use to check out their offerings. Users can download, install and sign up to the app to proceed further to generate their credit score.
“We don’t have an IOS version because our target audience is more of android users and when we build this app, we were also cognizant of the fact that it has to be a light app. Our users are those that have an android phone but a budget one,” said Anand.
Once signed up, the app looks at your various data points and builds a Shubh Loans credit score. It’s a proprietary score and is between 1-100 range. Furthermore, the app not only gives them a credit score but also provide them with a report which explains about their credit score. That is not all when a user gets a credit score which doesn’t match the criteria to apply for a loan, the app also makes sure that it suggests the user some of the best practices to get the required score. The App basically sends out a notification that helps you, guide you and improve your scoring. And all this in 10 different Indian languages.
“The whole idea is that the applicant should completely understand, in a very basic co-local language, how can they improve their credit score,” Anand added. “It’s your birthright to know, why you are not getting a loan and what you can do to improve your credit score.”
The Role Of Data
When it comes to utilising data, Shubh Loans uses two sets of data — the democratic data which everybody has access to and data which is uniquely available with the Shubh Loans. According to the company, it always first focus on what is the available data and how it can use it strategically. Once collecting the public data, the company test the data. Further, Shubh Loans has one to one target corporates. When a salaried employee applies for a loan, Shubh Loans also get the data point which the company has shared the salaried employee, and it helps us in mitigating the risks. “For example, if we are giving loans to food delivery boy, we are targeting the food delivering, food tech company. We get data which is very unique, and which is not publicly available,” explained Anand.
When asked about the team, Anand said that Shubh loans has 150 employees where 35 alone are in the data science team. And when it comes to qualification and experience, Anand said that the company’s chief data scientist, Oriol Mirosa has a PhD in Data Science and has worked across global platforms. “We are probably one of those FinTech companies which actually has a strong data science teams with that kind of background,” said Anand.
The Future Roadmap
Looking into the future, Anand said, “We want to continue doing what we are doing in a better manner.” In fact, the company is aspiring to become India’s first true credit scoring company and is also planning to have its own lending license.