Fintech Innovation | Providing Credit Solutions to Underserved Segments Through mPokket App

Given the huge latent demand for credit in underserved segments like students and young professionals, and having demonstrated strong execution to capitalize on this opportunity, mPokket aims to be one of the top 10 technology-driven lenders in India in the next five years. mPokket will continue to grow its addressable market and plans to introduce loan products for young professionals in the near future, followed by products that cater to the needs of entrepreneurs and micro businesses.

As the Founder and CEO of mPokket – Gaurav Jalan, is responsible both for providing strategic direction as well as overseeing the on-ground execution of the company’s strategies. A fintech, management, and value investing enthusiast, he has been leveraging technology, analytics, and his rich professional experience to supplement cost-effective delivery of credit to those segments of the population that are often disregarded by traditional financial institutions, through mPokket. He speaks with Techdash.in about his innovative spirit and the brand’s journey and insights on it’s business model, expansion plans and the strategy.

Please start with the inception and journey of mPokket, how did the idea come up & the investments made till date?

At mPokket, we offer a line of credit to those who cannot avail credit from conventional financial institutions.

As a foreigner & college student in the US in the 90s, I was eligible for a Credit Card. My friends in India were not that fortunate. This was the genesis of the idea behind mPokket.

I started mPokket in 2016. Our seed round funding was in 2017.

By 2019 we had onboarded 1 million KYC approved users.

Our Series A round funding was in 2020.

In 2016, we were a 3-member team. Today, we are in 18,000+ pin codes in India with 700+ employees.

Give us insights on mPokket’s business model

mPokket offers short-term loans of small ticket sizes to college students & young professionals. Borrowers can repay the loans over a period of 3 months.

What are the future plans?

Today, we have 1.3 million KYC approved users. By the end of FY 2020-21, we expect that to grow to 1.5 million.

Please throw light on your Expansion strategy

We already cater to college students & young professionals. Very shortly, we will start offering loans to self-employed individuals as well.

Additionally, we are also working on disruptive models such as pay-via-EMI at your favourite shopping places.

Future Hiring plans

Personnel growth will be a function of our business growth. As the business continues to grow at a rapid pace we will continue to hire aggressively.

What are the new product range and funding? (Please do not give any specific numbers unless necessary)

As already discussed before, we are presently working on a pay-via-EMI model that will enable our users to shop at their favourite places.

Unfortunately, I cannot really discuss the funding details at this point.

How is the growth of lending in the times of Covid taking place?

As always, the lending industry is responding to the Covid challenge with innovation.

Startups are making their complete digital process highly scalable. From one corner of the country, they can cater to literally every district in the country. They are also creating an alternative index to the traditional CIBIL score to better service their more targeted customer base.

How is mPokket performing in the current Covid turmoil?

Unfortunately, because of the RBI moratorium & the lockdown, cash flow was substantially disrupted.

Thankfully, economic activity has steadily gained traction & our volumes are now better than pre-Covid levels.

How the digitisation drive in BFSI is fuelling growth in India’s fintech ecosystem?

PoS technologies, smartphones, P2P transfer applications & mobile wallets have revolutionised the Indian FinTech ecosystem.

Banks are upgrading their systems and making them API ready so that they can collaborate with fintechs to offer solutions to users.

What changes do you foresee in the liquidity availability, sources, rates etc for digital lending fintech?

As the digital lending industry becomes more regulated and grows with improved risk management, it is likely that banks and other financial institutions will become more willing to lend and increase exposure to fintech lenders. As this happens the interest rates available to them should also decline.

Is there a viability concern for NBFCs & digital lending fintech?

The RBI recently came down heavily on digital lenders who made false promises & unethically coerced their users into repaying their loans.

Nevertheless, honest operators who are registered with the RBI continue to leverage their business proposition successfully with their customers.

Demand scenario for small-ticket loans                                                             

Individuals often need small ticket loans for emergencies. Banks do not offer such loans because they have a high cost of acquisition and servicing, and therefore cannot make the economics work. Also, individuals who need these loans often do not have a good enough credit score to be eligible for bank loans or credit cards. So while there is significant latent demands for such loans, there is not enough corresponding supply from lenders.

What products will perform well and where the demand will diminish

Adoption of Fintech products has been growing dramatically and the trend should continue in 2021.

Demand for all products – loans, payments, savings, etc. – should continue to grow as the penetration in each segment is still very small relative to the size of the opportunity. As companies adopt newer technologies and improve the user experience, more customers will adopt fintech solutions.

Impact on NPAs of different customer segments

In the current economic scenario, individuals and small businesses continue to be under stress, although their condition is incrementally improving. So these segments will likely continue to report elevated NPAs compared to pre-COVID levels. Large businesses are doing extremely well as they gain market share so the NPAs in that segment should go down, but this segment is only serviced by banks and mutual funds.

 What are the digital lending trends in the post-Covid world?

I think that going forward, because of the Covid crisis, digital-only banking will become the order of the day.

We also anticipate more cooperation & partnership between fintech companies& the traditional financial institutions like banks, mutual funds, insurance companies, etc.