How FinTech Startup Coine.ai is Reshaping Lending for India’s Lower Economic Sectors
Last year, in the midst of the pandemic, Manideep Vasa applied for a bank loan. However, despite being a professional CA with regular income, his application was rejected due to inconsistencies in salary credits. This got Mani to think – if this could happen to him, what about people who don’t have a formal credit rating?
The World Bank reports that nearly 90 percent of Indians do not have access to formal credit. In addition, around 81 percent of employees in India work in the informal sector.
Spotting a business idea, Mani discussed this crucial issue with his friends Vasava Chaithanya, Raghu Muvvala, Manikanta Racharla, and Rajesh Kumar, and the five set out to solve it.
“Security guards, street vendors, call center executives, workers in small and medium enterprises… they do not have access to formal credit. Even low-paid employees working for big companies can’t get a loan from a bank, ”he says.
Determined to solve this problem, in December 2020, the five colleagues founded Coine.ai, a Hyderabad-based fintech startup that makes credit accessible to people in lower economic sectors through digital lending. The team has partnered with Goyal Associates Ltd., an NBFC listed on ESB and Liqui Loans.
Coine, which provides low cost loans between Rs 1,000 and Rs 30,000, makes loans accessible to millennials who are new to credit with a low or zero CIBIL score for any unforeseen expense.
The startup – which now has a team of 100 people – uses a digital, professional and social footprint to assess an individual’s finances and follows strict data protocols.
Access to credit
Rajesh, Manikanta, and Raghu have already developed a mobile app that has helped small businesses create and manage invoices with Payfix. In 2014, they sold the technology to NASDAQ-listed company QIWI and launched their next business ShopTap, a B2B e-commerce startup. Within two years, the startup had established a strong merchant base of 6,800 outlets across India.
Chaitanya, on the other hand, is a CA and a lawyer. According to Mani, the five founders have “complementary skills” that help them work well together.
When the five founders started, they chose to look at the problem from a credit writing perspective. Access to credit is restricted for most of the population in India. The problem stems from two factors: first, most of the population has no formal borrowing history and therefore no office score (CIBIL), and is therefore invisible to banks.
Since banks don’t have enough information about the borrower, they ask for collateral – that’s why most loans are secured.
Second, because of their large branch network and employee base, banks have a heavy cost structure. They need a certain loan amount to be economically viable.
“There is a reason why you cannot apply for a personal loan of Rs 10,000. Again, most people are not able to borrow and repay a loan of Rs 10,000 or more. which further encourages informal money lending at high rates, ”Manideep explains.
He explains that advancements in machine learning models, data science, technology and India’s government ‘India Stack’ infrastructure are enabling companies to create products that underserved people need and need. they wish. This made it easier for the team to create Coine.ai.
“By having a fully digital and operationally lean infrastructure, we can not only provide products that matter to underfunded people, but we can also provide a better lending experience,” says Manideep.
From finding clients through digital platforms (Instagram, YouTube, Google) to performing paperless risk assessments based on AI and ML using automated prediction and disbursement algorithms, the journey End-to-end customer is transparent on Coine.ai.
Competition and differentiation
In 2020, the Reserve Bank of India (RBI) issued notifications to non-bank financial corporations (NBFCs) and banks, demanding additional disclosures / compliances, and a notice to borrowers warning them about fraud platforms.
The Digital Lenders Association of India (DLAI) has also issued guidance, with a regulatory pipeline on this front as well.
Coine’s competition includes MoneyTap, NIRA and Pune-based EarlySalary, which has disbursed over 1.6 million loans through 2020, amounting to over 2,850 crore rupees, and registered over 10 million rupees. app downloads. There is also Creditt, based in Ahmedabad, which offers small loan amounts, and CashE, based in Mumbai.
Manideep says: “Our solution is 100% digital, which saves 90% of costs compared to traditional loan cycles. The digital subscription process takes less than five minutes with Coine.
The main stages are:
- Digital KYC
- Aadhar and PAN validation with UIDAI, NSDL
- Machine learning based risk assessment (owner).
- Stable fund scoring system for underserved clients (credit score owner)
- Bank Statement Analysis – cash flow analysis with ability to forecast income / expense ratio (owner)
- Digital loan sanction letter, loan agreement
Income and the future
Coine onboarded 1,42,600 users, received over 78,000 requests and processed over 38,000 loans with a book value of $ 1.3 million. He reported sales of $ 231,000 in 9 months and his EBITDA is positive.
The platform charges a processing fee of between Rs 200 and Rs 1,500 for loans disbursed to clients. The startup also collects part of the late payment fees.
“In the midst of the pandemic, at Coine, we disbursed loans to users and supported them for their basic needs. Out of the total number of customers that we have onboarded, we could keep over 68% of the customers on our platform with a 92% customer satisfaction rate, ”Manideep said.
He adds that Coine aims to create a comprehensive platform for underserved Indians living in Level II + areas with simple credit products, small-sized insurance, no-frills bank accounts, and micro-savings options. , enabling financial inclusion across the country.