Adding It Up
Online aggregators are doing much more than connecting the customer with the service provider. Their future depends on ability to keep innovating.
- Jul 9, 2018,
- Updated Jul 17, 2019 1:52 PM IST
People in need of funds are often not aware which financial institution will lend to them. They also do not know factors that impact their loan eligibility. As a result, most approach the wrong institution, only to have their application rejected, which further hurts their chances of getting a loan in the future. It is things like these that are driving demand for financial services aggregators such as Rubique, Loanadda, BankBazaar, Loanwala and Deal4loans which have built a marketplace for customers to search, compare and buy financial products. These offer products from the biggest banks, non-banking finance companies, or NBFCs, insurers and fund houses covering credit, protection and investment needs for every life stage. The aim is to ease customers' financial journey by reducing documentation and processing time by making the entire process paperless. For example, at BankBazaar, a leading player, a borrower can complete the entire application, documentation and verification process online and get his loan application approved in one business day.
These players started out as aggregators but have gone beyond that. Most now use proprietary algorithms that analyse consumers' credit scores and connect them to the most suitable service provider. They also do the initial KYC through Aadhaar. "Our biggest USP is our proprietary paperless process that makes applying for a financial product instant," says Adhil Shetty, founder and CEO of BankBazaar. For customers, this is attractive because they get to choose from a range of products by different brands, including a few that are not available online otherwise. "The application and documentation process is completed in minutes and approval takes less than a day. This means fewer customers drop off in between the process," says Shetty.
Similarly, Rubique has a proprietary Online Plus model that creates a technology-driven ecosystem to support the entire loan journey through advanced technology interventions and makes it simpler and faster for the customer. Rubique has done around 40-plus deep integrations with financial institutions' systems; the approval in principal is given on the online platform itself. The shortest time for loan disbursal is 48 hours.
Partner banks also help these platforms by providing them data for testing their algorithms to make their systems more robust. "Sanitised data of existing portfolio is shared with partners to test their algorithms and lead generation capabilities to ensure that the leads generated adhere to certain minimal quality standards," says Amit Shah, Head of Corporate Strategy, Fintech Marketing and Communication at Yes Bank. It is like working backwards. You start the journey knowing what the desired conclusion is and then figure out factors that will help you arrive at that conclusion.
Another company that is adding a lot of value in this space is Paisabazaar.com. It offers a complete spectrum of financial products based on the customer's needs -- whether it's to borrow, invest or save. Paisabazaar.com works with over 75 partners that include top private and public banks, NBFCs, digital lenders and AMCs and offers around 300 products on its platform. Rubique, on the other hand, has tied up with 90-plus financial institutions for 300-plus products. It has facilitated loan disbursements of around $450 million and realised $8.4 million revenue till date with around 2,00,000 customers across 32 cities.
The common element with these players is that they all leverage latest technologies. "Data analytics on hundreds of data points on Rubique's platform assess creditworthiness of customers (loan origination qualification), bringing predictability by giving them eligible offers to choose from. All credit policies are fed into the matchmaking algorithm which does base-level underwriting checks before passing them to the financial institution's system," says Sheetal Mayekar, founding member, Rubique.
"Rubique has 300-plus such policies digitised. With rise in the number of digitised policies, the approval rate of applications passing through the platform is increasing. For retail loan products, the approval ratio is around 90 per cent, while for SME loans, it is around 60 per cent," she adds.
"An aggregator's true worth is to provide a vast choice for the consumer, which means having many banks and NBFCs on their platform. Whereas it is a vital part of an aggregator's services to ensure that the customer can comfortably compare & contrast available alternatives, they also need to work with the customer. This can only be possible if the aggregator has an in-depth understanding of each bank's/NBFC's core competency," says Raj Khosla, Managing Director, MyMoneyMantra.com.
In most cases, however, the credit assessment is done by the lending institution and not these players. "Our algorithms direct the right consumers to our partner banks and NBFCs by analysing credit scores and profile information like income, city, employment, etc. Bureau check, credit assessment and underwriting is, of course, done by the lender bank or the NBFC," says Naveen Kukreja, Co-Founder & CEO of Paisabazaar.com. BankBazaar.com also does not conduct credit appraisal or assessment. However, it provides credit tracking services on its site through its partner, Experian.
The role of such platforms is not limited to being an aggregator. For example, Paisabazaar.com, through its matching model called 'Smart Match', directs borrowers to the right lenders. This is done on the basis of the consumer's profile and credit score and the eligibility criteria of various banks and NBFCs. The model tells the consumer his chances of approval against each lending option. "We disburse $1 billion worth of loans a year. At current volumes, we are around 2 per cent of the unsecured loan market. Our objective is to reach 10 per cent of the unsecured market in three years," says Kukreja.
People in need of funds are often not aware which financial institution will lend to them. They also do not know factors that impact their loan eligibility. As a result, most approach the wrong institution, only to have their application rejected, which further hurts their chances of getting a loan in the future. It is things like these that are driving demand for financial services aggregators such as Rubique, Loanadda, BankBazaar, Loanwala and Deal4loans which have built a marketplace for customers to search, compare and buy financial products. These offer products from the biggest banks, non-banking finance companies, or NBFCs, insurers and fund houses covering credit, protection and investment needs for every life stage. The aim is to ease customers' financial journey by reducing documentation and processing time by making the entire process paperless. For example, at BankBazaar, a leading player, a borrower can complete the entire application, documentation and verification process online and get his loan application approved in one business day.
These players started out as aggregators but have gone beyond that. Most now use proprietary algorithms that analyse consumers' credit scores and connect them to the most suitable service provider. They also do the initial KYC through Aadhaar. "Our biggest USP is our proprietary paperless process that makes applying for a financial product instant," says Adhil Shetty, founder and CEO of BankBazaar. For customers, this is attractive because they get to choose from a range of products by different brands, including a few that are not available online otherwise. "The application and documentation process is completed in minutes and approval takes less than a day. This means fewer customers drop off in between the process," says Shetty.
Similarly, Rubique has a proprietary Online Plus model that creates a technology-driven ecosystem to support the entire loan journey through advanced technology interventions and makes it simpler and faster for the customer. Rubique has done around 40-plus deep integrations with financial institutions' systems; the approval in principal is given on the online platform itself. The shortest time for loan disbursal is 48 hours.
Partner banks also help these platforms by providing them data for testing their algorithms to make their systems more robust. "Sanitised data of existing portfolio is shared with partners to test their algorithms and lead generation capabilities to ensure that the leads generated adhere to certain minimal quality standards," says Amit Shah, Head of Corporate Strategy, Fintech Marketing and Communication at Yes Bank. It is like working backwards. You start the journey knowing what the desired conclusion is and then figure out factors that will help you arrive at that conclusion.
Another company that is adding a lot of value in this space is Paisabazaar.com. It offers a complete spectrum of financial products based on the customer's needs -- whether it's to borrow, invest or save. Paisabazaar.com works with over 75 partners that include top private and public banks, NBFCs, digital lenders and AMCs and offers around 300 products on its platform. Rubique, on the other hand, has tied up with 90-plus financial institutions for 300-plus products. It has facilitated loan disbursements of around $450 million and realised $8.4 million revenue till date with around 2,00,000 customers across 32 cities.
The common element with these players is that they all leverage latest technologies. "Data analytics on hundreds of data points on Rubique's platform assess creditworthiness of customers (loan origination qualification), bringing predictability by giving them eligible offers to choose from. All credit policies are fed into the matchmaking algorithm which does base-level underwriting checks before passing them to the financial institution's system," says Sheetal Mayekar, founding member, Rubique.
"Rubique has 300-plus such policies digitised. With rise in the number of digitised policies, the approval rate of applications passing through the platform is increasing. For retail loan products, the approval ratio is around 90 per cent, while for SME loans, it is around 60 per cent," she adds.
"An aggregator's true worth is to provide a vast choice for the consumer, which means having many banks and NBFCs on their platform. Whereas it is a vital part of an aggregator's services to ensure that the customer can comfortably compare & contrast available alternatives, they also need to work with the customer. This can only be possible if the aggregator has an in-depth understanding of each bank's/NBFC's core competency," says Raj Khosla, Managing Director, MyMoneyMantra.com.
In most cases, however, the credit assessment is done by the lending institution and not these players. "Our algorithms direct the right consumers to our partner banks and NBFCs by analysing credit scores and profile information like income, city, employment, etc. Bureau check, credit assessment and underwriting is, of course, done by the lender bank or the NBFC," says Naveen Kukreja, Co-Founder & CEO of Paisabazaar.com. BankBazaar.com also does not conduct credit appraisal or assessment. However, it provides credit tracking services on its site through its partner, Experian.
The role of such platforms is not limited to being an aggregator. For example, Paisabazaar.com, through its matching model called 'Smart Match', directs borrowers to the right lenders. This is done on the basis of the consumer's profile and credit score and the eligibility criteria of various banks and NBFCs. The model tells the consumer his chances of approval against each lending option. "We disburse $1 billion worth of loans a year. At current volumes, we are around 2 per cent of the unsecured loan market. Our objective is to reach 10 per cent of the unsecured market in three years," says Kukreja.