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Fintech firms expand bouquet of offerings

LiveMint logoLiveMint 05-03-2017 Vivina Vishwanathan

To attract new-generation borrowers, most banks are betting on fintech companies for technology and product innovations. Meanwhile, fintech firms in the lending category have also evolved over the past year and are shifting their focus from only banking products. They are converting themselves into a market place for all financial products. Mint takes you through the evolution of fintech companies.

These companies typically worked as aggregators for banking products such as loans, credit cards and savings accounts. They are now also looking at investment and financial products such as mutual funds, insurance and personal finance apps.

For instance, till last year, BankBazaar.com used to provide only banking-related products. But now it also offers mutual funds and insurance products. “We have an RIA (registered investment adviser) licence for our mutual fund offerings and a web aggregator licence for insurance,” said Adhil Shetty, co-founder and chief executive officer, BankBazaar.com.

However, if you are a first-time investor, you can only buy mutual funds on the website through Aadhaar-based eKYC. The company also offers term plans in the life insurance category and car and health insurance in the general insurance segment.

Besides the investment and insurance platform, it also provides free credit score and a personal finance manager app. “We have tied up with Experian (credit information company) to provide free credit scores. Our expense manager app is built in-house. We pull data from SMS messages that banks send to customers, after taking consent, to provide an expense view,” said Shetty. BankBazaar has raised $80 million and investors include Amazon, Sequoia Capital, Walden International and Eight Roads Ventures.

PaisaBazaar, another aggregator, has also started selling mutual fund products on its websites. “We have an RIA and distributor licence for mutual funds. We launched the platform 6 months ago,” said Naveen Kukreja, co-founder and chief executive officer, PaisaBazaar.com. The company is a subsidiary of PolicyBazaar, which has raised $82.87 million from Naukri.com, Intel, Tiger Global Management, Inventus Capital Partners and Ribbit Capital Portfolio Company. It has also tied up with Experian to provide free credit scores.

Delhi-based Deal4loans is planning to reposition itself as personal finance solutions provider and rebrand itself as Wishfin. Its official website and app will be launched soon. “We plan to offer mutual funds and have got a distributor licence. We realized that we should bring in more products,” said Rishi Mehra, founder, Deal4Loans.com. The company has raised $15 million from Franklin Templeton Investments, Venture Highway and Sherpalo Ventures.

Unlike loan portals, fintech companies are targeting the SME segment and looking at expanding their base. Indifi, a loan provider that targets the SME segment, continues to focus on providing small-ticket credit in the unorganized sector, using alternate credit scores and data.

“We offer credit to new SME customers in segments like hotel, retail, merchant and e-commerce,” said Alok Mittal, chief executive officer, Indifi Technologies Pvt. Ltd. “For instance, for hotels we look at their reviews,” he said. The company has raised $10 million from Accel Partners, Omidyar Network and Elevar Equity in series B funding.

LendingKart—which raised $42 million from Bertelsmann India Investment, Saama Capital and Mayfield India—is focusing on SME loans, with no plans to diversify. “We are a registered NBFC (non-banking financial company) and are focusing on SME loans of Rs50,000-10 lakh. We cater to first-time borrowers and look at transaction flows and social profile to understand the person’s risk profile,” said Harshvardhan Lunia, co-founder, LendingKart.

Meanwhile, companies such as CapitalFloat have tied up with banks. “Financial institutions, including IDFC, participate as co-lenders on the marketplace. It is ‘hybrid’ in nature and a certain percentage of each loan is co-funded by CapitalFloat along with the institutions on the platform,” the firm’s spokesperson said in an email. “We have an NBFC licence and we are also a co-lender. The percentage varies depending on the loan,” said Sashank Rishyasringa, co-founder, CapitalFloat, which has received $42 million in equity funding and $40 million in debt funding from SAIF Partners, Aspada, Sequoia Capital and Creation Investments Capital Management LLC.

As more companies expand products and services, customers will have more options to fulfil their needs. Soon you may go to just one portal for all your financial requirements. The next time you go to your bank, it is likely that you will use a fintech company’s services.

Typically, all fintech companies ask permission to access your information. So, use these products only if you are comfortable sharing details. There is no harm in trying out new technologies, if that leads to greater convenience.

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