Credit Scoring Evolves Again
With all the talk of India walking headfirst into a highly digitized future, some crossroads have appeared. Indian consumers love the ease and flexibility of this cashless new world, but many merchants still feel more comfortable accepting cash.
This surprised the people at Launchpad Consultancy, who have been doing market research for FIDDO, which is calling itself India’s first “credit wallet” app. They presented the results of the surveys in a recent webinar. The captain at Launchpad, Pankaj Ojha, has now been named the Marketing Strategist for FIDDO.
In the webinar he explained how merchants felt online security risks were the number one concern when it comes to accepting digital payments. This was followed by non-realisation and delay in receipts. He determined if these hurdles were crossed, widespread merchant adoption could happen faster.
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Robust social credit scoring model
He went on to add that the scope for a cashless solution that could do all this was huge, especially with encouragement from regulators such as the RBI. While digital wallets seemed slow to catch on in present-day India, Pankaj cited an Economic Times report in which the country’s mobile wallet market was projected to reach Rs 30,000 crore by 2022. The biggest advantage, according to him, was that India has the largest smartphone user base in the world, making it the perfect place and the perfect time for digital wallet companies to come into the market.
Another area that could see significant growth is the retail lending sector, where the potential for credit wallets could go up to $5 billion by 2020, said Pankaj, quoting RBI findings. However, one major challenge for this sector is the current method used to gauge the creditworthiness of a potential borrower – the CIBIL score on which all formal lending decisions are based. Pankaj said that a majority of potential borrowers are unware of their credit record, and less than 20 percent of Indian consumers have a good CIBIL score. This means that a whopping 80 percent of the eligible population, who are above 18 and have incomes, don’t have retail lending eligibility, as per their CIBIL scores.
And it is this segment that they are hoping to target with India’s first credit wallet app FIDDO. Rather than using only a CIBIL score model, FIDDO has developed an alternate scoring model that leverages both traditional and non-traditional data sources like social platforms. This model positively factors in borrowers who deviate from CIBIL-modeled loan performances. Through this robust credit risk evaluation model called Payscore, they hope to approve more good borrowers and reject more bad borrowers than they would if they used CIBIL alone.
Fast, flexible and easy lending process
Other than this, the FIDDO team wants to focus on user convenience, flexibility, and standardise the entire lending process. Their offerings include consumer loans; credit and debit mobile wallets; and virtual credit card services. Another unique feature of the app is the personal assistant facility, which facilitates bills and utility payments, and travel bookings, among others.
Pankaj then walked the audience through the FIDDO app, to demonstrate its simple and speedy authentication process; the seamless P2P money transfers; the quick and secure online payments; the easy approval process for the credit wallet through CIBIL; and their proprietary social scoring model. Since the approval process is done entirely through the app and is directly visible, it eliminates manual intervention and brings down the turnaround time needed for credit approval.
The app also offers analysis and reports, which enable a user to get a better understanding of their transaction patterns and also includes features such as geolocation to find the nearest POS outlet, forex calculators, and a facility for offline payments with over 14,000+ vendors already on board.
Setting off on the right foot
Backed by an NBFC-registered company since 1994, FIDDO is compliant with RBI’s framework for lending. The app is being promoted by Anekant Jain and Kranti Shanbag, who have a combined experience of over 20 years in the finance and technology space. At present, the FIDDO team has 25+ members and is growing.
Currently bootstrapped, they are looking to raise funds to expand their business operations across multiple locations in India. The team plans to launch a limited beta version of the app on January 26 for a select crowd, and has an initial target of getting 7,500 to 10,000 users on board.
They have entered into a strategic alliance with payment gateway PayU, and are in discussions with other key brands, including Jabong, Grofers, RedBus, Flipkart, Snapdeal, Big Bazaar, and MakeMyTrip, among others.
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