Bengaluru-based digital lending fintech Qbera identifies itself as a managed market place for personal loans.
Bengaluru-based digital lending fintech Qbera provides lending services to salaried individuals who have traditionally been overlooked by banks and NBFCs.
“Many of these prospective borrowers are often unable to obtain loans from institutional lenders due to their low credit score, or no previous credit history,” says Aditya Kumar, Founder and CEO of Qbera. Through a completely digitized delivery model, this lender is now able to offer loans to a new segment of customers in less than an hour.
Aditya Kumar shares the vision behind Qbera and how digital platforms are disrupting the lending space.
What are the gaps Qbera is trying to fill in the market, considering that there are many digital lending players?
There is a common perception that the banks do a good job of providing loans to salaried individuals, which is true to some extent. But, most banks and NBFCs focus only on the niche high-end spectrum and segments which are extremely low-risk. Our idea is to make financial services more inclusive for those who are currently not served or underserved. For instance, there is a large majority of borrowers that include individuals with incomes less than Rs. 6 lakh per annum, and employees working for companies unlisted with banks. That’s the gap we are trying to address.
There are close to over a million employers in the country whose employees do not even fall under the focus of banks and NBFCs. Qbera focuses on reaching out to this large untapped segment in the country, that needs quick access to fairly priced loans. The irony of it is that we do this in partnership with banks and NBFCs.
So what exactly is Qbera? A Fintech? A Lending platform?
We are uniquely positioned and act as a business facilitator to banks and NBFCs. We are, in fact, helping banks and financial services organizations to extend their reach to a huge spectrum of consumers, which is otherwise inaccessible to them – primarily, because of their policies, low risk-appetite and traditional distribution channels. Also, the operating cost around small ticket loans is not really justifiable for any bank. We are able to source this new segment of customers for them.
I would call ourselves a ‘managed market place’ for personal loans. No money flows through us. The money is given by the institution to the consumer. So, we do not fall under the ‘NBFC’ category either. We work with banks and NBFCs on a revenue sharing model.
Currently, we have partnerships with IndusInd Bank, RBL Bank and Fullerton. Our target is to disburse loans worth USD 1 billion in the next 5 years.
What will drive the next phase of growth for this industry?
The underlying growth is going to be driven by demand. One of the biggest challenges faced today, by both small business as well as their employees, is access to capital. This is fuelling the demand for credit. Secondly, the availability of data about the consumer isn’t an issue for the lenders, thanks to bodies like Credit Bureau and other private entities which share the customer data with banks, financial institutions and fintechs.
The availability of data, combined with the availability of technologies to harness the power of data, has in fact been the biggest growth factor here. Lenders can now make better inferences about prospective borrowers and build more sensible offerings.
How is technology helping you in this journey?
Technology helps us do things ‘better, faster and cheaper’. Better, because technology enables us to take data-driven decisions. It also provides us with better processes for the customers. Faster, because a customer can today apply for a loan on Qbera platform and within 60 seconds understand if he or she is eligible for the loan. A customer can get an approved loan offer within an hour, which will be transferred to the account in 24 hours. Whereas in the banks, a personal loan will take you a minimum of 3-4 days if you have a good relationship with the respective bank. Cheaper, because it helps us save a lot of cost around processes, operation and resources.
Our major technology investments are going to be around data science. We will make the platform more comprehensive and robust.
How do you see the digital lending space evolving? We see some consolidation happening already.
I think each player has distinctive advantages. Incumbents have access to low cost funds, which no fintech today can get access to. They have certain risk management practices in place and have a lot of experience in lending, building portfolios, and building profitable lending businesses. I think a lot of fintech companies are lacking these capabilities.
Where the banks and NBFCs run short are on things like agility, cost, innovative distribution channels and automated process. There is too much manual intervention. That’s where the fintechs will play a role. I think the collaboration between banks and fintech are here to stay for the time being. We will also see a lot of consolidation in the industry going forward.
What are some of the challenges — on regulatory, technology, security front or on any other area — which needs to be addressed to move forward?
Since we are uniquely positioned in the market, as a facilitator between banks and consumers, there’re no significant challenges for us at this stage. But overall, from a fintech perspective or lending perspective, I think the KYC and the Aadhaar authentication issues are concerns.The second potential challenge, I think, is how the RBI views a lot of fintech companies, especially those that are not NBFCs. NBFCs fall under the guard of RBI. There are a whole host of companies including us who believe that we come under the definition of some sort of a guideline that exists today. But the regulator is yet to take a stand on that.