StartUp Circle: How is RevFin transforming the way people take entrepreneurial loans?

With the specialization in product profitability management, credit risk and analytics, Mr Sameer Aggarwal (Founder and CEO of RevFin) has worked in both prime and sub-prime lending space for approximately 13 years in over 15 countries. Of those years, he had the longest stint working with HSBC (Hong Kong and Shanghai Banking Corporation), London, where he did several successful tests with alternative data and techniques.

When he found Revfin, the vision was to create a lending platform that is agnostic of language, literacy, geography, and culture. Today, as the platform increased vertically and horizontally, the vision has amplified. Read Sameer talk about his venture and plans.

What is RevFin about? Tell us about the team?

RevFin is a financial technology (Fintech) start-up that provides loans to its consumers primarily to finance clean technology. The platform is used to underwrite and manage consumer loans through our own NBFC. Through our unique approach to underwriting, rich value proposition and a differentiated distribution model, we plan to build a lending book of Rs. 3000 crores in the next 5 years, with ROE of 20%+.

RevFin’s primary objective is financial inclusion for financially marginalized people especially in tier 2 & 3 cities in India. Also, our loans are productive in nature as they help generate employment opportunities for loan seekers which makes them more secure.

As for the team, I am the founder, a former banker who has held several leadership roles in consumer lending, credit risk and analytics; with a long stint in the UK with HSBC and experience of working with different customer segments in several countries.

Apart from me, Revfin has 18 employees working in Technology and Operations.

How did you come up with the idea?

When I made the transition from a large bank with a prime customer base to a sub-prime lender in the UK, I realized that the traditional methods of underwriting using credit bureau and banking transaction data does not work on sub-prime population. To create a method for digitally underwriting sub-prime customers, I experimented with many ideas like psychometrics, machine learning algorithms and gamification.

During a holiday in India, I researched the consumer lending market here. During my research, I found that the availability and quality of credit bureau and banking transaction data in India had similarities with the sub-prime based in the UK, even for prime customer base in India. It then became clear to me that a lending platform that relies on traditional credit bureau and banking transaction data will never be scalable.

This was because such a platform cannot underwrite customers who do not have this data and such data is geography or country-specific. A truly globally scalable lending platform must rely not on third party data, but data that can be generated by a user through engagement with the lending platform. Thus, the idea of using Biometrics, Psychometrics and Gamification came about. Every user can create data specific to them during a loan application journey irrespective of where they are.

What is the Fintech industry looking for in the upcoming 5 years?

Fintech as an industry would be looking for expansion in terms of capability, customer and capital. This will include entering new geographies, customer segments and also providing new products. It will lead to a lot of change in the technology for underwriting as well. The whole industry would be revamped and changed accordingly. Fintech lenders would have to reduce leverage, it would be better if the players build a rainy day fund for the difficult times.

What is your business/market growth?

Our main area of focus is electric vehicle financing. This segment is growing at over 9% annually. With the pandemic, there is an increase in demand for electric vehicles for personal use as well as for last-mile mobility and hyperlocal deliveries.

In terms of our business, our revenues have increased 2.5X year on year; our balance has grown 1.7X year on year. Our customer base has also grown 2.1X year on year at end Sep 2020.

The pandemic has affected every sector. How are you coping?

The pandemic has affected most of the sectors and the lending sector is not an exception. In fact, the lending sector has seen a disproportionate impact. The major reason for this is the severe cash flow crunch experienced by both businesses and individuals, making them incapable of repaying their loans. This has led to a reduction in cash inflows while outflows remained the same.

The situation was and continues to remain very challenging; at the same time, we knew that it is temporary and several growth opportunities will emerge post the lockdown. People and businesses will try to revive themselves. We have focused on building new partnerships for future growth.

You cater to a very wide market. Who are your customers?

Our primary objective is financial inclusion. Our typical customer is 35-year-old smartphone user, semi-literate and resident of Tier 2/3 towns. They have never taken a loan in the past and have very limited banking transactions. Their main objective is to set up a micro-enterprise to make sufficient money to send their kids to school.

What are your Post-Covid plans?

It is early to determine when Covid will end and what the world will look like then. In the immediate future, as the lockdown is easing, we are planning to expand our operations. We have taken the last few months to develop new partnerships for growth. We have also made several additions to our technology stack to support new products and segments. Our on-ground presence and capabilities have also expanded significantly.

Funding.

We have raised two funding rounds, one in 2018 and one in 2019. We had received seed funding from a group of angel investors including Harsh Jain (Chief Executive Officer, Litejoy International, and UK based businessperson); Anil K Goyal (Founder, Anil K Goyal, and Associates); Anil Lanba (Senior Technology Executive, EVP Pyramid Consulting) and Krishan B Singh (Investor based in New York).