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₹oopya for all; progressive credit that leaves no one behind

Posted on by MSC

“Yet again, my loan application got rejected. These banks keep asking for an income certificate,” rued Mohan to his wife after another day at his garment shop. Mohan runs his small outlet in the Gorakhpur region of India’s Uttar Pradesh state. He has been looking for a business loan for about five months now. Mohan want to improve the stock at his shop to increase earnings to support his daughter’s education. He is short of capital and is tired of applying unsuccessfully for a loan at commercial banks.

Does he need to turn to the local moneylender again to fund his business? Will the system leave Mohan and countless others like him out of the formal lending ecosystem yet again? These are hard questions that a handful of FinTechs have tried to answer.

The FinTech market in India in 2022 was valued at USD 584 billion, of which the lending tech market was worth USD 270 billion. Digital lending is also expected to grow 4.75X by 2030, with a market size of USD 1.3 trillion. The top three lending SAAS platforms in India raised $58 million in total, while the FinTech SAAS platforms raised around $360 million. The availability of skilled talent, rapid adoption of digital solutions, and the enormous market potential of over 900 million smartphone users in India by 2025 have led to the growth of fintech companies. New-age FinTechs like Roopya can accelerate digital lending by using ubiquitous digital public infrastructure (DPI), India Stack.

Roopya’s foundation goes back to the founders’ early days

Raman and Sudipta found their entrepreneurial spirit in their early childhood days. Raman started earning in the eighth standard by renting out video games. Raman reminisces how those video games changed his future forever. On the other hand, Sudipta wrote software and did market research assignments to support his college fees. Raman and Sudipta are tech and data enthusiasts and realized early on that data could change the landscape of the lending industry.

In 2014, they acquired a startup called Roopya.com that worked as an institutional DSA and generated loan leads for their lending partners. Over time, in 2018, they realized that to serve more customers, Direct Selling Agents (DSAs) need a platform that can connect them and their customers to multiple lenders. Hence, with a vision to make instant loans a reality for the masses, they founded another company called Roopya. Money that works to connect all stakeholders in a lending ecosystem on a single platform.

Roopya as a catalyst in #LendingToTheNextbillion

India has a diverse credit market, with a population of 1.4 billion people. We can categorize India’s population into five segments based on differentiated income levels (See diagram 1). As per an Experian report, while the elite and affluents have formal digital lending sources available, the aspirer and strugglers find it difficult to identify the right credit products, despite their readiness for formal digital credit. Our tailor, Mohan, who is from this segment, can approach the Roopya platform through their webpage on his own or through DSA to find a lender for his credit needs.

Roopya, with a specified user license, has made instant loans a reality

Roopya, with seven NBFC partners and 30+ DSA partners, has served as a catalyst to fulfill credit needs of more than 300,000 people like Mohan who often struggle to get a loan as they do not know lenders who offer a variety of credit products. The same is true for small lenders (Regional Rural Banks, Small Finance Banks, and Non-Banking Financial Companies) that intend to serve customers like Mohan but have limited avenues to reach and source these customers. Roopya made gross revenue of USD 194,000 in the financial year 2022-23.

Roopya’s specified user license enables it to obtain the credit information of the borrowers from the credit bureaus registered on its platform. Roopya designed an AI/ML-based credit assessment tool that creates algorithms based on inputs such as credit scores and demographic variables to filter creditworthy individuals and share it with lenders. Lenders can then reach out to these borrowers and provide them with the desired loan. Roopya caters to the diverse credit requirements of customers by mapping them to portfolios offered by various lending platforms. The following diagram illustrates the role of Roopya’s LaaS platform in the digital credit journey of the customer.

What does Roopya offer to various stakeholders?

Roopya’s LaaS platform provides several benefits as follows to the DSAs and the lenders. The following figure illustrates how Roopya adds value for various stakeholders:

Primarily to lenders:

  • Loan origination and underwriting: The platform enables loan origination and underwriting support on a single platform combined with a workflow module, decision engine, and scorecard to manage millions of customers. Its advanced AI/ML can help lenders design early warning signals to assist loan disbursement decisions.
  • Monitoring tool: The platform provides agent monitoring tools to lenders and institutional DSAs.

Primarily for DSAs:

  • Automation: Roopya provides the digital infrastructure for agents to manage customer It automates the process through digital onboarding and processing customers’ documents. Consequently, the agents save time and effort as they no longer need to visit the customer’s location multiple times, earlier required for onboarding formalities.
  • Many-to-many network benefit: The platform also supports the agents by connecting them to multiple lenders.
  • Cost saving: Roopya can help DSAs cut down the opportunity costs associated with physical lending processes by more than 30%, thanks to its robust loan origination and AI metrics.

Challenges for Roopya

Roopya in its five years of operations, has grown to disburse loans with a cumulative value of USD 3.65 million. Roopya innovated to stay relevant in the challenging environment of economic shock and policy and regulatory changes that the digital lending industry has faced. The latter impacts their operations as they require more resources to build regulatory-compliant technology. In addition, it isn’t easy to convince traditional DSAs who operate within a closed credit ecosystem to use their platform. Hence, Roopya has to offer several customizations to cater to their varying needs to establish itself as a platform of choice.

Support provided by the Financial Inclusion (FI) Lab

The FI Lab’s technical support to Roopya capitalized on its strengths to position the startup as a preferred LaaS partners for lenders and institutional DSAs. The Lab helped Roopya to understand the needs of credit providers and enablers, such as lenders and DSAs, in the customer credit journey. The research with lenders and DSAs helped identify the pain points of these institutions and identify the stages in the journey where Roopya could support them. The insights helped Roopya identify the LaaS platform’s value proposition for different kinds of lenders and DSAs and thus design their partnership pitches accordingly.

MSC also supported Roopya in understanding various SaaS platforms used by banks in the loan process such as loan origination software (LOS), and loan process software (LPS). This helped Roopya identify the opportunities for value addition services that may be offered with the Roopya LaaS platform.

Way forward

In conclusion, Roopya has significant tailwinds to become an important partner in the credit space for India’s LMI segment. Roopya can take advantage of the new Digital Public Infrastructure initiatives, such as Open Network for Digital Commerce (ONDC) and Open Credit Enablement Network (OCEN), that aim to create open and interoperable platforms for financial services. ONDC enables secure and consent-based data sharing among various entities, while the OCEN protocols allow lenders to connect with loan originators and service providers. Roopya can use these protocols to offer seamless and customized lending solutions to small enterprises and underserved individuals, the backbone of India’s economy. By doing so, Roopya can enhance its value proposition and contribute to the larger social and economic impact of financial inclusion.

Promoting inclusive climate adaptation finance for smallholder farmers: The role of catalytic financing

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The session included discussions around how catalytic financing can drive the supply of climate adaptation finance for the agriculture sector, especially for smallholder farmers who remain most vulnerable to climate change’s impacts.

The discussion intended to address the following questions:

  1. Why do we need to mainstream climate adaptation finance for the agriculture sector?
  2. How can catalytic finance help with the issue?
  3. How is the impact investing community responding to this need?

Click on the timestamps from the webinar stream to hear specific segments.

Time Discussion points
00:57 – 03:08

Welcome note by Prasun Das, Secretary General, APRACA.
03:37 – 24:47

Prasun Das elaborates on the need to finance climate adaptation finance for the agriculture sector. He highlights the necessity of knowledge collaboration, coherent policies, innovative financial instruments, and effective networks to overcome the barriers to green finance for smallholder farmers, who comprise most of the global agriculture sector.
26:18 – 35:40

Sandeep Bhattacharya, Advisor, Climate Change at GIZ, speaks about the initiative by Sustain Plus Energy Foundation and CINI to create farmer collectives called Production Hubs. He explains that these hubs use various technologies and practices to boost their income sustainably while facing challenges around maintenance, cost, scalability, and refinancing.
37:17 – 47:24

Krati Garg, Manager, Innovative Finance, KOIS, suggests that impact investors can help climate businesses attract commercial finance that balances impact and returns by using catalytic finance, standard impact measurement frameworks, and impact monetization.
49:27 – 01:03:50

Speakers address questions from participants
01:03:51 – 01:04:41

Conclusion and note of thanks by Prasun Das, Secretary General, APRACA.

Lending SAAS – How to build business and gain partners’ trust?

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Click on the timestamps below to watch the specific segments.

Chapters

04:29 – What is Lending SAAS?
08:30 – What was the trigger to start Roopya Money?
11:41 – Explain the business to a 5-year-old kid.
13:05 – How did you approach the building of the SAAS platform for the Indian lending industry? Given that the lending process is varied with such broad requirements, what were the underlying principles for you to design and build the product?
24:45 – Let’s talk business – what’s your model to earn? What is your cash cow? Other avenues that will open up.
29:19 – Are Indian lenders willing to open up for a lending SAAS? What are the underlying challenges you have faced?
36:10 – What’s your take on AI, especially with new-age generative AI impacting the financial technology industry?
39:06 – The RBI has recently given more clarity on the partnership between fintech and REs. FLDG has also received in-principle approval. Do you think REs may prefer to go with fintechs instead of investing to build their own stream of borrowers?
45:07 – India Stack is evolving – AA and OCEN and ONDC have become the buzzwords. How do you think Roopya can add value or gain from this ecosystem?
49:59 – How do you think India’s SAAS industry will shape up? What are the blind spots and opportunities?
52:11 – How does the acceleration by FI Lab help Roopya? How it can help scale the solutions. Any pearls of wisdom for both budding entrepreneurs and accelerators?

Climate Resilient Agriculture – Can digital technology make a real difference?

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In developing nations, underserved people rely on agriculture, livestock, forestry, and allied activities for livelihoods. However, these sectors still struggle with technological advancements, particularly in digitalization. Innovations like AI/ML, blockchain, IoT, and large language model-based applications have emerged, but they face challenges like fragmented solutions, inadequate collaboration, and lack demand-driven reach. Initiatives like the AgriStack program and Integrated Digital Farmer Services Platform in India can help overcome these barriers.

Climate Resilient Agriculture (CRAg) Whitepaper

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Various digital solutions have emerged as potential game-changers in how the agri-food market functions and productivity-enhancing solutions are delivered. What constrains the potential of these innovations? If we take a systems perspective on the agri-food sector, we must consider three broad inter-related aspects:

  1. Integration and coordination in value chains
  2. Diffusion of innovation across value chain participants
  3. Financing innovation end-to-end

If these solutions are to be effective, actors in the development sector need to mobilize a strong collective effort. They should determine how to harness digital technology to address the practical problem of change—many of which fall within the locus of these three areas. Finding viable routes to financing potential transformation pathways to resilience will be decisive.

Indian Post Payments Bank: Building an inclusive world

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The support is divided into four workstreams: (i) an active, efficient, and capable CICO network; (ii) a suitable product for underserved segments; (iii) streamlined G2P and bulk payment processes; and (iv) a comprehensive ecosystem of merchants to drive digital transactions.

MSC’s support has helped IPPB grow and increase its revenue by 140% in the past three years, from FY 2020 to FY 2023. Such impressive growth and significant contribution to financial inclusion (47% of all accounts are women’s accounts) have attracted attention from across the globe.

The IPPB model offers many lessons postal banks can replicate in other developing countries. Delegates, including the Bill & Melinda Gates Foundation Co Chairs and visitors from 25 countries, such as Africa and South Asia, have recently visited IPPB financial camps. They showed a keen interest in IPPB’s low-cost distribution strategy supported by robust technological solutions. 

IPPB was launched in 2018 to provide accessible and affordable banking services to every household in the country. Since then, IPPB has used India Post’s extensive and trusted network of 155,000+ post offices and 129,000+ postal agents (GDS) to deliver banking and payment services. Thanks to its extensive network, the IPPB now reaches underserved and unbanked customer segments at their doorstep.