Coronavirus pandemic | ClearScore shuts down India operations, says lockdown hurt business

ClearScore, a UK-headquartered free credit information service, has shut down India operations, becoming perhaps the first major casualty in the fintech space hit hard by the coronavirus pandemic as economic activity comes to a standstill in the country.

Informing its 1.6 million customers of its decision through an email, the company said the lockdown had stressed its revenues and it couldn’t afford to go on.

“ClearScore India will officially shut down on 13/04/2020 - after this date, you will no longer be able to log in via the web or the app. Please note that your credit data will be deleted … however, (we will) keep your contact details on record in case we decide to bring ClearScore back to India in the future,” said the mailer, a copy of which was seen by Moneycontrol.

The startup launched operations in the UK in 2015 and expanded to South Africa, India and Australia.

It offered free credit score to consumers in partnership with Experian and also helped them get loans from its partner lenders.

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It entered the Indian market in 2018 and got Hrushikesh Mehta, who spent almost a decade at credit bureau TransUnion Cibil, as the country head.

“It is hugely disappointing that we had to take this call to shut down the business in India, but the lockdown has caused severe stress on our revenues and we are not in a position where we could keep burning money market recovery and opening of lockdown is uncertain,” said Mehta.

He said a majority of partners had paused their lending programmes, making it impossible for them to continue as “we spend first and earn later”.

Given the lockdown and the economic stress, a lot of lenders have tightened their policies, causing aggregators like ClearScore to be left with no product to sell.

The company was also incurring costs on acquiring customers, fetching their bureau score and front-ending the entire application.

It was primarily backed by profits made by its UK parent, which has also been hit because of the pandemic. With almost no revenue and future visibility, the startup chose to shut down its operations. It UK, South Africa and Australia operations are on.

The company had a six-member core team, including Mehta, and another 25 to 30 personnel who supported the UK, South Africa and Australia operations.

Not just lending, document collection and identity verification processes, too, had stopped. Collections were also becoming a challenge with lay-offs happening.

“We were around six months away from the point where we could see profitability from a unit economics perspective, but this pandemic has materially disrupted all our metrics and short term assumptions,” Mehta said.

ClearScore India will now function as an offshore centre, offering shared services to its UK and South Africa businesses. The core management team would leave after cleaning up all the operations here, said sources.