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FlexiLoans Reshaping India’s MSME Lending Landscape

FlexiLoans stands as a pioneering force in the lending sector, blazing trails with over 75,000+ loans disbursed, amounting to an impressive ₹5000 crores in just eight years. With an astounding 3 Lac customers applying for loans nationwide, coupled with a remarkable Turnaround Time (TAT) of sub 48 hours, FlexiLoans demonstrates an unwavering commitment to exceptional customer service. Maintaining credit costs consistently below 4%, FlexiLoans has not only been pivotal in providing initial business loans to 54% of its clientele but has also served over 70% of them hailing from Tier 2+ towns and cities. Its expansive reach spans across 2000+ towns and cities, supported by renowned financiers including Sanjay Nayar, Falguni Nayar, and Maj Invest.

In an exclusive conversation with The Interview World, Manish Lunia, Co-Founder of FlexiLoans, illuminates how his company revolutionizes the fintech landscape. By harnessing emerging technologies and empowering the MSME sector with seamless lending opportunities, FlexiLoans is at the forefront of reshaping the financial ecosystem. Here are the insights from his interview.

Q: What sets FlexiLoans apart from traditional lending institutions and other fintech companies operating in the Indian market?

A: FlexiLoans stands as a prominent fintech lender in the MSME sector, boasting a 100% digital origination process and nationwide coverage. With a commitment to fostering the growth of “Atmanirbhar Bharat,” FlexiLoans facilitates ‘loans at a click’ for unbanked and underserved MSMEs. The company ensures disbursal of funds in less than 2 days through seamless onboarding and documentation, all while harnessing alternative data sources.

By employing credit models and technology devoid of subjective assessments, FlexiLoans accesses diverse third-party data for comprehensive evaluation, reducing friction and enhancing processing speed and customer experience beyond what traditional models can achieve. The digital footprint of customers provides a clearer persona compared to traditional one-time meetings.

Each month, FlexiLoans processes over 300,000 applications in near real-time, thanks to advanced technological processes. With an established tech and collection infrastructure, we penetrate even the most remote corners of the country, with over 70% of our business originating from 2000+ Tier 2, 3, and 4 towns and cities.

Our data-driven ML/AI-based models, coupled with cutting-edge technology and strategic partnerships within the ecosystem, enable us to offer the most competitive deals from numerous financial institutions.

Even though 70% of Indian MSMEs remain outside the formal credit network, our cash flow-based, system-driven assessments have proven effective in processing them sustainably and viably.

Q: How does FlexiLoans leverage technology to streamline the lending process and provide quick access to funds for small and medium businesses?

A: In our pursuit of achieving 100% digital fulfillment within the realm of small-sized MSMEs, we prioritize leveraging technology. Our primary goal is to enhance the customer experience, streamline assessment processes, and ensure the highest caliber of clientele.

To achieve this, we employ various cutting-edge technologies:

Firstly, our AI-powered Risk Engines integrate bureau and banking connectors, alternate data connectors, policy orchestrations, scoring engines, and eligibility calculators.

Additionally, our Co-origination engine facilitates seamless integration with multiple lenders while efficiently managing capital.

We have developed a proprietary loan servicing engine that encompasses an efficient loan management system, lead prioritization engine, customer service, and BI systems.

Our Customer onboarding engine enables consumers to digitally sign documents, verify bank accounts, and complete digital KYC processes.

Furthermore, our Digital Lead Generation Engine enhances borrower experiences and seamlessly integrates with existing consumer products.

In essence, our proprietary data science assets and tech stack empower us to conduct stellar end-to-end risk assessments and facilitate digital lending processes.

Q: What specific strategies has FlexiLoans employed to ensure flexibility in its lending approach while maintaining risk management standards?

A: The company has developed one of India’s most comprehensive lending platforms, integrating unique end-to-end digital sourcing, underwriting, and servicing technology. This allows us to effectively evaluate customers using cash flow-based assessment modules, departing from traditional methods reliant on balance sheet or asset-based data.

Our key strength lies in our risk models. We have insights on millions of records to accurately price unsecured MSME loans in India. We continuously refine these models using advanced algorithms, ensuring they stay updated with the latest macro- and micro-trends detected by our learning algorithms.

Moreover, we have collaborated with our co-lending partners, including larger NBFCs and banks, to co-create underwriting models. This means that all necessary checks and requirements are seamlessly integrated into our platform, streamlining the decision-making process. As a result, we maintain full control over the end-to-end customer experience.

Q: How does FlexiLoans assess the creditworthiness of MSMEs, especially those with limited financial history or collateral?

A: In India, the majority of MSMEs have embraced digital practices, with more than 90% boasting a substantial digital presence that encompasses crucial aspects like KYC and sales data. This presence spans various platforms, including trading platforms and tax networks.

The abundance of data generated by these MSMEs can be effectively harnessed and integrated into systems, courtesy of our advanced technological infrastructure. Our objective is to eliminate manual processes, from application submission to fund disbursement. Leveraging our in-house machine learning technologies, we can swiftly analyze hundreds of diverse documents uploaded by users, enabling real-time credit decisions through our credit analytics tool.

To tackle intricate challenges spanning image processing, scoring, digital extraction, credit analysis, and financial analysis, we’ve established a specialized team known as the ‘Deep Learning and Technology Applications’ team. Utilizing AI and ML technologies, this team ensures efficient classification and tagging of customer-uploaded documents using our in-house ML engine.

Furthermore, we possess over 20 proprietary data science assets and have developed five patentable algorithms tailored to various stages of the loan life cycle. These algorithms rely on synthetic or derived variables seamlessly integrated into our system. Their contribution is instrumental in constructing comprehensive risk and growth models, thereby reinforcing our core strengths.

Q: In what ways does FlexiLoans adapt its services and offerings to cater to the diverse needs of MSMEs across different industries and regions in India?

A: FlexiLoans has been dedicated to empowering deserving but underserved MSMEs in India for the past eight years. We’ve achieved this by digitizing our operations and implementing innovative business models, revolutionizing our entire workflow.

Our digital presence is unmatched, with over 300,000 new borrowing applications per month spanning across 2000+ cities and towns. As a result, we’ve established ourselves as a premier digital brand, both online and through our app. Additionally, our strategic partnerships with industry leaders like Flipkart, Amazon, and Pine Labs provide seamless credit access to millions of small merchants operating on our 100+ partner platforms.

At the core of our operations is our cutting-edge underwriting process, driven by advanced machine learning algorithms and alternative digital data sources, rather than relying solely on traditional metrics.

Despite the complexity of business loan documentation and processes, our system handles over 75% of customer interactions autonomously. Leveraging technologies such as computer vision, IVRs, bots, social media support, and workflow automation, our small CRM team efficiently manages approximately 10 lakh documents and calls per month.

We firmly believe that our technology-driven online marketplace presents the optimal solution for meeting the financial needs of SMEs without established credit histories, who may struggle to access loans through traditional banking channels. Headquartered in Mumbai, we extend collateral-free loans across the entirety of India.

Q: With the rapidly evolving fintech landscape in India, what future trends do you foresee for MSME-focused lending, and how is FlexiLoans preparing for them?

A: The fintech sector in India is rapidly evolving, with significant implications for lending focused on micro, small, and medium enterprises (MSMEs).

As fintech companies continue to evolve, they will increasingly integrate lending solutions into various business platforms and services utilized by MSMEs, thereby offering embedded finance options.

Moreover, lenders will extend their offerings to include value-added services such as financial management tools, business advisory services, and access to new markets. Collaborative efforts between fintech firms and traditional lenders will capitalize on the strengths of both to deliver innovative lending solutions.

Furthermore, there is a rising demand for sustainable lending solutions that support environmentally friendly businesses and contribute to social impact initiatives.

For instance, FlexiLoans is already utilizing alternative data sources for credit assessment and actively exploring the integration of artificial intelligence and machine learning for enhanced decision-making processes.

The company aims to diversify its product portfolio beyond traditional loans to address specific MSME requirements like invoice discounting and working capital finance.

In pursuit of this goal, FlexiLoans is establishing a robust data infrastructure, tapping into alternative data sources for comprehensive credit assessment, and integrating its offerings with various business platforms to deliver embedded finance solutions.

Q: Could you shed some light on FlexiLoans’ long-term vision and goals for empowering MSMEs in India and any upcoming initiatives or expansions we can expect to see?

A: Our goal is to reach Rs 10,000 crore in Assets Under Management (AUM) within the next three years. We are committed to maintaining profitability with strong fundamentals and aspire to be among the leading pure-play MSME lending institutions nationwide.

Currently, the firm is disbursing loans at an annualized rate of 3,500 crores. We aim to double this rate within the next 12 months. Moreover, we plan to expand our co-lending activities and establish partnerships with more PSU banks.

Confident in our trajectory, we foresee reaching even greater heights in the future. Our mission is to support MSMEs as India progresses towards its goal of becoming a US$5 trillion economy by 2025.

Undoubtedly, MSMEs represent the most dynamic and potent segment of India, Inc. This sector significantly contributes to our economy and holds immense potential for growth with the right financial support. The zeal and innovation within the MSME sector are unparalleled, transforming lives at the grassroots level. To further our objectives, we will increase investment in technology, products, and processes. We aim to tap into a large pool of deserving yet underserved customers in India.

FlexiLoans – A Pioneer in MSME Lending Space
FlexiLoans – A Pioneer in MSME Lending Space
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