In a country where 75% of households earn less than Rs 5 lakh annually, there is a big shortfall in consumer financing. Typically, banks and NBFCs are not equipped to provide a solution because they prefer catering to higher income segment, require plenty of paperwork and a longer-term relationship with the bank, which makes it challenging for consumers to avail this option.
Indian Fintech startup, CashCare has tried to explore this niche in this market by making financing process relatively simple for the consumers, using technology. Using an app or using a Web-based application, consumers only need to spend 2-5 minutes to fill basic personal and work information and provide access to shopping and spending history. As soon as the customer hits the submit button, the customer gets EMI options and can proceed to complete the purchase immediately.
Unlike other financial institutions, the CashCare option is available at the point of sale, where a customer can apply and instantly use the credit limit provided to them. Vikas Sekhri, Founder, Cashcare Technlogy, states, “We specialize in point of sale consumer loans where consumers can convert their purchases into EMIs with one click. CashCare has built a proprietary credit algorithm that enables consumers to get access to instant credit.”
Going beyond conventional data
What’s unique about CashCare’s business model is that it goes beyond credit score and bank statement data and uses social, shopping history, mobile payments, utility payments and behavioral data to understand credit behavior of the customers. The firm believes that with modern data, CashCare can calculate loan risk better and faster than any existing system in the market.
Its customers are value seekers and aspirational who are looking to purchase products that meet their current needs. Typically, customers have a salary range between Rs 10-25000 and belong to an age group of 22-30 years, and working in small to mid-size companies.
Real-time credit scoring system
CashCare uses technology to provide a real-time credit scoring for the customers. The firm uses more than 10,000 data points about the customers and utilizes big data analytics to assess the credit results within a few seconds.
“On a real-time basis, our system pings various databases (e-commerce data, CIBIL, bank statement, social connects) via APIs. This data is parsed, optimized, analyzed and run through a proprietary algorithm. We are revolutionizing consumer credit by creating IPs around fraud mechanics and using transactional data to predict credit behavior. We use banking, SMS, payments and shopping history data to do real-time credit assessment,” states Sekhri.
The firm believes that keeping up with changes in a consumer’s life is important to understand a consumer’s current ability to take and serve a loan. Both transactional and social data play a great role in understanding the consumer. For example, transactional data such as the purchase of home appliances and other products could signify a significant change in a consumers life such as the purchase of a new home, an increase in income, or a life event such as marriage.
“Typically, organizations are completely unaware of how to measure these changes and understand how they affect the borrowing ability of a consumer. We are using technology to level the playing field and are tapping into the underserved market to offer consumer credit more efficiently, accurately, and securely,” explains Sekhri.
At the point of sale, CashCare can enable a real-time approval process and customers can start using the credit within 30 minutes. From a customer’s perspective, applying and getting a credit card can easily take 7-10 days. The firm has already processed credit for more than 20,000 applicants and is growing at rapid pace.