How is mPokket delivering micro loans and reaching the unearthed user base?

mPokket was founded by Mr Gaurav Jalan in 2015. The company received early-stage funding of $50,000 from VC Village Capital through a contest-type selection process. It essentially provides loans to college students; plans to tap those who are fresh in their jobs (early-stage jobholders). Loan offerings start from as low as INR 500 and can even go up to INR 20,000 with an interest rate of 3 per cent a month.

mPokket’s business model is similar to credit card lending but it focuses on a segment who are ineligible for that but requires instant loans. Thus, to know more about the startup, CiOL talks to the Founder and CEO of mPokket, Mr Gaurav Jalan.

The Customer

India is a young country with a large Gen Z and millennial population. Unlike the generations before them, they are far more independent. They have engaged to either chart out a successful career for themselves or take the entrepreneurial leap. However, this generation also needs the right tools and feel empowered to make certain decisions themselves. This is where short term finance from mPokket can help. We have 5M+ registered users and have also disbursed 11M+ loans. Further, in FY20-21 we expect to disburse INR 1200+ Crores.

The Challenge

College students and new to credit salaried professionals often have temporary cash needs that exceed their cash inflow. No organized credit product is available to these 50 million college students and 780 million adults. They currently rely on friends and family for stop-gap credit because of lack of lending history, small borrowing needs, etc.

The Solution

Our mobile app avoids physical documentation and provides fast approval and instant disbursement of loans ranging from Rs.500 to Rs. 20,000 to a bank account or digital wallet. Timely repayments help these new to credit borrowers build a credit history. It also improves their bureau score.

The Theme

The organization started with a single focus on solving an unaddressed problem. How to lend to a segment without a credit history? And how to scale the business in a cost-efficient manner? Since the money lent is of a smaller denomination compared to other lenders, for the unit dynamics to work; the process of selecting the right audience to lend to and the process of collecting it back requires ingenuity. That is how the organization can be summed up. So, because we understood the inherent needs of this segment and devised specific solutions to address them, we were the right partners to help our customers fulfil their quest.

The Implementation

One of the key success parameters of the lending business is how you manage risks. Building a fail-proof credit scoring mechanism, tireless months of iterating and perfecting the system, building strong collection capabilities, building a scalable technology stack that enables the business rather than inhibiting it, are areas the organization put a lot of emphasis on. It was through commitment and perseverance as a team that we were able to overcome the initial hurdles in scaling the business.

Results

The scope of this new market is immense, with figures pegging the opportunity at INR 30+ Billion and INR 5+ Trillion loan disbursals for student and salaried professionals. We have only scratched the surface with the penetration rates being as low as 0.3%. The unplanned advantage of this market is the opportunity to retain them as they progress to having a salaried career, where mPokket can utilize the transaction history and other submitted user data to offer additional products and keep serving their needs for short term funds.