The company, like many fintech companies, is looking for at least 200 million urban Indians looking for a loan to buy electronics, jewelry and household items.
A year ago, a Hubli journalist wanted to buy his mother a TV on her 60se birthday. But he was shocked to learn that because of his profession, the bank had refused him the personal loan he had requested to finance the purchase. Many Indians like him are not eligible for loans, simply because the banks have no mechanism to monitor their creditworthiness.
There is a whole population that has the money to repay the loans, but the traditional banks are rejecting their loan requests. This does not promote consumer spending, even though consumption has increased in this country. According to data available from the RBI, there are only about 27 million credit cards in the country and 300 million bank accounts. In 2016, although personal loans accounted for 22% of all bank loans disbursed, several Indians remained without personal credit.
With that as a backdrop, Krishnan Vishwanathan, a McKinsey consultant, wanted to find a solution to help people consume. Giving up his lucrative career, he created Kissht, which means EMI in Hindi, to provide unsecured loans for products that consumers want to purchase. Total loans disbursed so far stand at Rs 17 crore, with over 9,000 clients. Explains Krishnan,
“We are building a data platform by taking customers’ banking information and their social media profiles. Our engine is able to predict the ability of these applicants to repay the loan.
How it all began
Krishnan came from a defense family so they moved across the country. He graduated from IIT Delhi in 1998 and worked as an engineer before completing his MBA at Yale University in 2008. Soon after, he joined McKinsey. He worked on counseling banking companies by studying the entire credit system. It was here that the idea of starting a business that guaranteed unsecured loans was born.
In 2013, Krishnan established a strategic consultancy firm, Si-Creva, which has worked with over 100 banking and corporate institutions. In early 2015, he created Kissht, an app that allows consumers to get loans after quickly uploading their bank accounts and social media identities to the platform. Soon he partnered with a non-bank finance company and started acquiring clients after investing Rs 3 crore in the business.
In July 2015, Kissht began piloting its service by keeping inventory of products – like smartphones – that consumers would buy quickly and seek funding. They realized that they needed to register with as many merchants as possible, and within six months began to acquire merchants and businesses offering online education services. Names like Caratlane.com and Edupristine have registered with Kissht to provide services and allow users to apply for loans for the services.
At the end of 2016, the app had 78,000 downloads by users seeking to purchase services through these unsecured loans. “The value lies in getting repeat customers,” Krishnan says, adding that 19% of the app’s users were repeat customers. “However, for six months, we worked with three companies to make sure our platform had a solid foundation,” he says.
The company uses partner platforms for promotions; there is a banner either on the product or on the checkout page. When the customer requests a loan, his KYC validation is done on the application by linking his Aadhaar number. Following which an OTP is sent to the customer on his mobile and the loan is closed. Current non-performing assets are around 0.50% for Kissht, compared to 2% on average in their industry.
India has one of the largest unbanked populations in the world. So there is also room for competition. There is Zest Money, Capital Float, Faircent, Telr, Cashe and many more. There are at least 30 technology loan companies in India. The principle is simple: they will attack anyone who can save Rs 6,000 to Rs 10,000 per month and can save Rs 3,000 to Rs 5,000 in monthly loan payments, with an outside limit of Rs 75,000.
“The value of these companies depends on the scale they reach and there is an opportunity for banking growth through these channels,” says V. Balakrishnan, former CFO of Infosys and founder of Infinity Ventures.
The company has three banking partners, two of them have opened a large loan opportunity from their balance sheet. Kissht has more than 50 merchants on board. The company hopes to achieve great things by acquiring several million Indian consumers in the era of smartphone lending. The company must ensure that consumers find out about them and that they must be retained. Kissht is set to complete an undisclosed round with Venture East, a Chennai-based VC.