Personal Finance Apps Stepped In When Traditional Lenders Became Stringent

With the need for fair and reliable financial services and capital growing, especially among the middle class, mobile apps are a huge plus. It saves time and makes even the most complex banking process convenient. Most importantly, customers do not have  to go from pillar to post.  This is where apps like Branch helps. Branch provides access to instant loans with no physical documentation.

Sakshipost exclusively spoke to Branch Personal Finance App MD-India. Sucheta Mahapatra tells Reshmi AR about how the entire process works.

1) What is the vision and USP of the company?

Branch is an RBI-approved NBFC which provides unsecured loans to underbanked Indians. Among the apps focusing on different aspects of a user's financial needs, Branch has a unique value proposition. Branch Personal Loan App helps Indians get access to personal loans upto Rs.50,000. The entire process can be completed on the phone and the money can be credited into the user’s bank account within minutes. What’s more impressive is that Branch is able to assess the risk of a user with a standard credit score. We access the data on the phone and other shared data to make a cash flow for each user and assess their risk profile within minutes. This paperless process is smooth and fast. Branch’s loans are available to non-salaried users as well. Users can also build their credit history with Branch and improve their credit score.

2) What are the recent changes in policies the brand has initiated for the betterment of customers and business?

Branch piggybacks on its data science models and builds alternate credit risk models, Branch is able to lend to a wider audience who don’t have access to lending services. It is able to solve the catch-22 situation of building credit history through taking loans and vice versa. The focus is on the ability of a user to repay in the future instead of relying on the value of collateral & security and credit history.  The alternative credit score uses machine learning algorithms to create a cash flow statement using all publicly available data and user shared data. In addition to enabling more users to access credit lines, this helps in creating custom products based on these models helping users pick the repayment periods, time, terms and more. 

3) What’s the majority age group of the customers reaching out to you?

The majority of users that we address are men below the age of 25. The users typically use the funds to meet daily expenses, fuel, education and travel. 

4) How are you disrupting the lending sector? State with some stats

The lending sector is cluttered with traditional players which only lend based on the value of collateral or credit score. This presents a very critical problem.If one tries to remember the struggle to get one’s first credit, it is an uphill task. The same applies to lending. This happens because the banks would not lend to users who do not have enough credit history and one cannot build credit history without lenders giving them credit. This chicken and egg problem is resolved by using alternate data. This helps us approve more users. The approval of users is roughly 2X of what a traditional lender does. 

5) Since the covid has hit India and the Globe, businesses have started suffering. Did it have any impact on your business? What kind of impact was it?

Covid has been a mixed bag in the fintech business. The Covid pandemic has accelerated the overall adoption of personal finance apps. The pandemic fuelled uncertainty in the market and traditional lenders became more stringent (or altogether stopped) with lending. The personal finance apps however were able to come to the rescue of these users by having simpler, faster and more effective services. On the other hand, not all demand is good demand. There was an expected surge in people defaulting on loans.  

6) Any expansion plan or any major collaboration?

The company has a few exciting projects being launched in the coming months. The focus is to build a product for the young indians. Localisation and focusing on tier 2 & 3 cities remain a main focus.  

7) Any other points you want to highlight?

It is noteworthy that the company has heavily invested in technology and is committed to generating more jobs in India. To this effect, the company has rolled out internship programs to freshers at a stipend of 50,000. With the fortification of technology and product, the aim is to grow 4X this year in India.