Startup Circle: How is MoneyTap bridging the gap between personal finance and credit needs?

Earlier, the preferred option to sought a personal loan was to turn to banks. They would take time to process a simple loan application and still, we could not get a loan easily. Today, many companies offer personal loans within minutes if you fulfil the preconditions and submit the documents. One such FinTech startup is MoneyTap.

MoneyTap provides personal loans of up to 5 lakhs approved within hours for a period of up to 60 months. You can get the loan amount directly in your bank account in just 24 hours! It has a proprietary credit model that allows it to see past customers' credit score or history & understand the financial profile better. In conversation with CiOL, Mr Bala Parthasarathy, Co-founder and CEO, MoneyTap talks about the start of the startup, its offerings and an overview in fintech cybersecurity.

1. Tell us about your journey.

India was making significant inroads into the path of digitalization in 2015. At this time, several startups were popping up every day with apps focusing on food delivery, ride-hailing, and online shopping. Throughout our research process, we noticed the market & product gaps in the personal finance space and we realized that a digital solution was needed which empowers the users with flexibility & ease of borrowing. What was needed was a long term solution instead of a one-off requirement.

We also saw that most middle-class borrowers were always on the lookout for easily-accessible and hassle-free credit solutions to meet their day-to-day needs. But unfortunately, it wasn’t easy for them to secure even regular loans; mostly because of the reluctant nature of most financial institutions. That’s when we decided to address this challenge by introducing convenient, flexible, and fast credit to the masses on the back of a technology-driven process through India's first-ever app-based credit line. We launched the MoneyTap credit line in partnership with RBL bank. We have onboarded several NBFCs as our capital partners now in the years subsequently.

Since then, we have grown immensely, clocking a 5X growth trajectory. We have successfully maintained a loan book of INR 1,000 Cr; an annual disbursal run rate of INR 2,500 Cr. Further, we have established ourselves as a leading consumer lending company that offers flexible credit solutions of up to INR 5 lacs with a tenure of 3-36 months. All our services are backed by reputed banks and NBFCs. We also strictly ensure compliance with all the RBI guidelines. Thus, we aim to drive the financial inclusion of underserved populations across India. Present in upto 80 cities in India, we have recently kick-started our global journey, and aim to expand to other parts of the globe in the coming years.

2. How is MoneyTap different from other lenders?

MoneyTap offers credit to the growing middle-income groups in the most flexible, convenient, and affordable manner. The simple idea that we follow is to make money available to the customer on ‘tap’ with a ‘Line of Credit’.

It’s a one-of-a-kind product, which is very different from a regular personal loan or a credit card. You can call it a combination of both. The USP of our credit line is that users can choose to borrow any amount falling under the limit of up to INR 5 lacs as per their repayment capacity, and pay interest only on the amount used, instead of the entire borrowed amount.

We follow a straightforward process to offer this solution to consumers without even asking for collateral. We strictly follow RBI guidelines and only work with reputed banks and NBFCs, who are the actual lenders. At MoneyTap, we make sure that we follow all the RBI norms.

3. What are your plans for 2021?

Building new lending products with the utmost focus on innovation has always remained our prime aim. And COVID-19 has made that more clear for us. Since the pandemic, a lot of the needs that people have challenges meeting and that remain unmet have come into our radar.

For instance, consumers now look for quick credit solutions more than ever before owing to their increasing borrowing needs. As a result, we are working on various projects to meet these emerging lending requirements while keeping innovation at the forefront of our operations. We are also growing in a way where we will continue to introduce new products into the financial marketplace. And start to fill gaps in places where we see the fit. Though the credit line was our primary product, we have been expanding to offer other lending products for a while now. This includes Credit Cards, EMI financing options, UCL Lending, BNPL, etc.

4. Which markets are you looking at? How are you customizing your offering?

The lending sector has witnessed massive growth amidst the pandemic. People are borrowing even for buying essentials. Besides this, we have also observed a surge in educational and healthcare loans owing to the pandemic. To address these increasing lending needs, we aim to extend our services to more tier 2 and 3 cities.

Not only in India, but we are also looking to expand our footprint to South East Asian markets. In fact, we have already entered the global map. Thanks to the confidence we have been able to get after 5 years on Indian soil. We are now catering to the needs of the Indian customers and offer our services in our international expansion.

For customization, we are looking to expand the role of our tech and data teams, and combine AI and UI. We believe this strategy will help MoneyTap innovate further and make our credit offerings more customized than ever before.

5. What are the major challenges for the fintech industry?

One of the significant problems happening currently is the breach of privacy and harassment faced by borrowers by unregulated lending apps. At the same time, there are willful defaulters, too, who take advantage of the easy money available to them.

From a borrower’s standpoint, they must be more alert and borrow money only from an RBI-regulated fintech. This can be onerous & confusing for a borrower. The Digital Lending Association of India recommends several simple checks a consumer can do. The simplest of all is to check the tenure of the loans. If a lender is offering 7-days or 14-days or anything less than 60-days of tenure, they are termed a ‘payday lender and should be immediately avoided. Likewise, whether the lender is verifying their income, and giving them a loan agreement form, beware of any suspicious “procedure fees” and see if they are skipping mandatory KYC documents. A reputed lender will also disburse credit only after completing all the necessary checks. A well-known step is a lender will check the credit history of the individual before giving them a loan.

Moreover, borrowers should also be mindful when it comes to sharing data with digital lenders. If they blindly accept all the permissions and say yes to everything, it will be difficult to save them from data leaks. They become prey scams or fraudulent apps in the market today. We continually stress the importance that the consumer read up and learn about their own finances. They should ask questions to their lending provider and get full clarity before they go ahead.

6. How do you ensure data security in the world of rising cybercrime?

We have equipped all our lending processes with robust, and industry-leading banking encryptions to ensure complete safety to our customers at every point of operation. Since our servers are present in India, all our consumer data naturally stay here, unlike many other random lending apps that don't even provide transparency to their processes.

On top of that, we do not collect users' personal data without their consent. And when we need data for legal requirements, we make sure that it is encrypted before being stored or transported. As an additional safety measure, we also allow users to anonymize their data on request if they wish to leave the platform. Besides this, we have partnered with relevant authorities who regularly audit our systems for compliance and security; followed by our association with ethical hackers to address vulnerabilities in our in-house mechanisms.