From digital wallet to digital bank: How Mobikwik transformed its business model

V Bhatia

Mobikwik started out as a digital wallet provider, launching its first fintech product, a digital credit line linked to user’s Mobikwik account in 2018. It later launched its second fintech product, which was ‘sachet-size’ insurance on its app at affordable prices.

However, earlier this month, it changed its business models to position itself as a digital credit card. Kunal Bajaj, Head, Investor Relations, Mobikwik explains the reason behind this decision:

Q) What prompted the decision to change your business model recently?

A) The transformation to a full stack fintech company came to tap the huge market of Indians needing financial services. To drive financial inclusion and build a profitable business, we need to drive financial services. We entered into a strategic partnership with Bajaj Finance to offer credit to consumers along with the growing demand for digital payments transactions.

Today, we offer insurance products from partners including ICICI Lombard, Max Bupa, Aditya Birla Health Insurance and ICICI Prudential Life with premium as low as INR 20. We are now a ‘Digital Bank’ for the millions of underbanked Indians. From accessing one’s bank account (via UPI) to making payments, availing Instant Loans (in Wallet), wealth management for best returns, buying/selling of digital gold as well as buying life and general insurance policies, to get better returns to buying health insurance for your loved ones — we do it all on one app.

Q) How can Mobikwik leverage the advantages of its app-based distribution model?

A) Our app-based distribution model keeps our operating costs low by delivering the loan digitally. Since our fully digital self-serve model is agnostic to the ticket-size, we are equally happy providing an INR 2000 loan and an INR 200,000 loan.

Q) How do you measure your customer’s credit worthiness?

A) Our big-data scoring algorithm, MobiScore, uses over 500 raw and derived variables to measure a user’s creditworthiness. We then show them a credit offer, making it possible for them to access digital credit in their mobile app within 90 seconds.

Within 18 months of offering this service, we have provided close to a million actual loans and disbursed USD 100 million. Our target for three years is to provide accessible and affordable credit to 100 million users lacking a credit card.

Q) What are your plans for the future?

A) MobiKwik is amongst the first fintech player to recognize the importance of digital payments and simultaneously build a financial ecosystem around the platform. We witnessed strong growth in the lending business and aim to disburse loans worth Rs 1,500 crore in FY2020. There has been a 4X growth in terms of the volume (number) of loans disbursed as well, growing from 1.2 lakh loans in H1 of FY19 to 5 lakh loans in H1 of FY20.

In the insurance space, we offer bite-size insurance products tailored for the 25-40 age group, who are first time buyers, by removing the complexities associated with getting an insurance policy with a few taps of a button. We have sold around 5 lakh policies across categories and have clocked a premium of INR 4 crore till date.