FinBox deploying API as a gateway for financial institutions and businesses to accelerate growth and improve customer experience
FinBox is a B2B digital lending infrastructure company that has developed a cutting-edge FinTech stack as well as a risk intelligence platform. India is a burgeoning economy with a high need for credit, where the lending industry is poised at an optimistic $100 billion by 2023. There is a major upshift in corporate credit forecasted this year along with banks and financial institutions keeping the economic upturn. FinBox has been empowering the credit economy by offering API-driven solutions to banks and financial institutions to launch and scale modern credit products that reach millions of new borrowers.
FinBox’s API stack offers niche target segments and innovates millions of personalized products to its lending partners, usually banks and financial institutions. Banks using these API solutions offered by FinBox have seen reduced customer drop off rates (nearly 40%), making the whole lending process a lot more seamless. FinBox API stacks and intelligence tools have assisted financial institutions and businesses with endless possibilities to get started with their digital lending journey. FinBox has assisted them in disbursing over INR 2,000 crore and on boarding over 36 Million new borrowers every year.
FinBox’s API Infrastructure empowers its partners (Banks/ NBFCs/FI etc.) with the latest credit offerings in a matter of days, compared to the months and years institutions would take to build the digital ecosystem. Its unique offering enables regulated lending institutions to start lending on their customized platform with end-to-end embedded finance infrastructures and offers like BNPL, Credit Line, and Term Loans to both businesses and consumers. Mr. Rajat Deshpande, CEO and Co-founder, FinBox shares more insight on the same
- How have you seen the evolution of the fintech industry in the last 5 years?
Demonetization in 2016 was the major push towards India becoming the FinTech superpower it has today. 86% of the currency in circulation was banned, so naturally, digital payment picked up momentum, building on the infrastructure set up by the Unique Identification Authority of India (UIDAI).
It was during this time that several home-bred FinTechs came up (Paytm, Mobikwik introducing Indians to new and more convenient modes of payment.) UPI too was introduced the same year and it wouldn’t be a stretch to say that it was a turning point of sorts – it’s what truly made Indians realize how fast, effective, and secure online payments could be.
Since then, enabling government initiatives and changing consumer demands have seen the amalgamation of finance and technology extend beyond payments to credit, insurance, and investments, to name a few.
Today, there are over 2100 Fintech companies in India, out of which more than 67 percent have been set up in the last five years.
As we emerge from the pandemic, the future of FinTech is becoming increasingly exciting. Building on the foundation laid by OCEN and Account Aggregator, cash flow-lending to MSMEs is set to pick up as financial empowerment becomes the focus of both the government and private players.
We’re also going to see increased collaboration between traditional banks, FinTechs, and regulators, which will hopefully lead to the emergence of newer technologies and products specifically aimed at the yet unserved or underserved population.
- Kindly brief us about the company focus and its journey
My co-founders and I launched FinBox back in 2017 with our B2B credit risk decisioning offering. We launched our BankConnect product the following year and quickly grew to underwriting over a million loans per month.
Our aim has always been to change the unit economics of the current lending setup such that lending becomes an opportunity for value creation and capture. There are already thousands of high-frequency platforms where Indian entrepreneurs aggregate to run their business ops such as accounting apps, HR tech apps, retail apps, B2B ecommerce platforms, and the GST ecosystem. Our financial services stack enables these platforms to launch innovative credit products for their users and become their financial services providers of choice.
Soon enough, we raised our pre seed A from Arali Ventures, IIFL and others in 2020 and launched our end-to-end embedded finance product in 2021. Since then, we’ve achieved USD 5 mn ARR and onboarded over 70 clients across credit risk, decisioning, collections, and digital lending infrastructure.
Most recently, we raised $15mn in series A funding from A91 partners, Flipkart Ventures and Aditya Birla Ventures. We’re planning to use this funding to add to our product portfolio, double our team size, and expand to South-East Asia.
- Describe how has digitization has created an impact in the credit industry
Essentially digitization has enabled financial inclusion and access to credit. Digitization of banking as a whole has also meant that customers no longer need to visit branches and can access cheaper and more personalized products and services.
What’s more, coupled with the adoption of Aadhar, UPI has facilitated millions of small size transactions between businesses and individuals. Research has shown that this expansion of digital payments, facilitated by IndiaStack, has been an important driver of economic development in India and has helped stabilize incomes in rural areas and boost sales for firms in the informal sector.
In addition, it’s created a digital footprint for millions who didn’t have any kind of financial or credit history to show. With new-age underwriting technology, these new-to-credit borrowers can now be assessed on loans based on this alternate data, bringing them into the fold of formal credit.
- How API Infrastructure offers and enhances feasibility to lenders, and creditors to offer curated products
An application programming interface (API) is, very simply, a software intermediary that allows two applications to talk to each other. It allows a third-party interface to leverage an interface through which it can access a set of tools and services.
Our modern lending infrastructure consists of onboarding APIs, underwriting APIs, loan fulfillment APIs, and loan collection APIs. These lending APIs make it much easier for lenders to develop new and personalized products and underwrite borrowers based on both traditional and alternative data sources.
It also allows lenders to make credit products available across platforms – apps, loan aggregators, and their own website, to name a few.
Overall, APIs help lenders customize both the credit product and application journey to each customer’s risk profile, improving access to credit and boosting conversion rates.
- Any further expansion plans and launch of new products in the pipeline?
Hot on the heels of our series A funding, we’re working towards growing our team and expanding our footprint in South-East Asia. We’re also working on adding to our product portfolio, which already includes our risk products (BankConnect and DeviceConnect), our collections engine (CollectX), and our embedded finance infrastructure. Products in the pipeline include:
- Adaptive journeys across credit products and channels
- Deeper lender management modules
- Comprehensive partners management modules
- A prequalification engines and so on
- How have you planned the business roadmap of 2022 to overcome the challenges in alignment with the recent RBI guidelines?
To my mind, the latest digital lending framework has been largely an exercise in standard-setting and at FinBox, we view it as a positive step towards strengthening the digital lending ecosystem. Mainly, three themes find focus in the guidelines – consumer protection, data privacy, and compliance.
Essentially, RBI does not like any lending activity that diminishes the role of the regulated entity (RE). Here’s where we are different. We build digital infrastructure that empowers REs to be in the driving seat rather than the back seat in digital lending. We have from day one adhered to RBI’s extant guidelines on outsourcing.
When it comes to data privacy, we are an ISO-27001 tech infrastructure company who prioritizes explicit consent-driven communication, data anonymization, and principled approach to managing and responding to data incidents.
The FLDG question is the only aspect from the recent guidelines that still hangs in the air. As we await RBI’s final verdict on the same, we are getting ready with our agile Business Rules Engine to help lenders implement new lending policy changes, instantaneously. We are also prepared for technology migration requirements, should it come to that.
