by Analytics Insight
February 3, 2022
Finance Sector is now well into the application of digital transformation as all of its services are turning into virtual mode day by day. FinBox is a similar company that is building end-to-end digital credit infrastructure by providing full-stack APIs and SDKs to embed credit across use cases. Embedded credit is helping its partners revolutionize their points of sale and future-proof their businesses in the age of tech-first consumption. Analytics Insight has engaged in an exclusive interview with Rajat Deshpande, Co-Founder, and CEO of FinBox.
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Kindly brief us about the company, its specialization, and the services that your company offers.
Viability is, and remains, the biggest hurdle for financial service providers to cater to underserved, unbanked populations, thereby, hindering financial inclusion. We realized early on that long-term business viability hinges on true digital transformation.
And as a team of technologists, we could visualize how technology could truly democratize financial services for the next billion Indians. That’s how FinBox was born.
We build end-to-end digital credit infrastructure by providing full-stack APIs and SDKs to embed credit across use cases. Embedded credit is helping our partners revolutionize their points of sale and future-proof their businesses in the age of tech-first consumption. We also provide a range of products in the data analytics space that improve the lending process significantly, especially underwriting and collections.
More importantly, we help lenders and enterprises harness the power of technology to achieve cost efficiency and economies of scale, and develop lean, innovative business models. This is bound to improve the reach of institutional credit.
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Brief us about the proactive Founder/CEO of the company and his contributions towards the company and the industry.
Rajat Deshpande, Co-Founder, and CEO of FinBox is a fintech specialist and a startup enthusiast. He laid the foundations of the company with the vision of laying out digital infrastructure for alternative finance solutions.
Under his leadership, FinBox has built multiple products in the embedded finance and big data credit analytics fields. His deep insights into the financial services industry come from his extensive experience as Head of Product with global consulting firms ZS, Citigroup, and GoPigeon Logistics.
Apart from Rajat Deshpande, there are three other founders of the company including Anant Deshpande, Srijan Nagar, and Nikhil Bhawasinka all of whom come from glittering backgrounds and have worked in some of the biggest enterprises in the world.
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Please brief us about the products/services/solutions you provide to your customers and how they get value out of it.
We are an embedded finance infrastructure company that develops and integrates software to help lenders and enterprises provide flexible, tailored credit right at the point of sale. We help build a consolidated, configurable platform that can power the entire credit life cycle, bringing together the entire stack from credit risk assessment to disbursement to compliance and portfolio tracking in one low code platform. This translates to a 60% lower drop-offs, 50% reduction in costs, 30% drop in delinquency rates, and a 100% increase in the eligibility pool.
Our AI/ML capabilities equip us to constantly optimize the lending funnel at every stage of loan origination – whether it is onboarding, underwriting, credit-decisioning, disbursal, reconciliation, or collections.
We have a suite of products to help do the same. FinBox DeviceConnect helps lenders underwrite with speed and efficiency while ensuring data protection.
It can help 60 crore new-to-credit customers with a digital presence get loans within minutes. Embedded within a merchant’s app and digital portal, FinBox DeviceConnect helps banks and lenders offer short-financing options such as Buy Now, Pay Later (BNPL) to even the thin-file borrowers, taking financial inclusion to the last mile.
Another product of ours, FinBox BankConnect, a UX-driven, intelligent bank statement analyzer helps lenders leverage artificial intelligence to assess creditworthiness and underwrite loans three times faster. It has the added benefit of integration with the Account Aggregator framework, the first of its kind, further strengthening and consolidating credit intelligence. It makes the loan approval process transparent and streamlined, helping borrowers with an end-to-end view of their loan application, right from origination to disbursal.
The most tricky part of lending, i.e, collections, is tackled by our product FinBox CollectX. It is a collection prioritization and early warning system that helps lenders drive collections efficiency by 50%. It leverages real-time cash flow insights to identify risky borrowers and prioritize collections resources. This has helped lower delinquency rates, reduce the cost of collections, and improve repayment success rates.
Our product FinBox Embedded Credit Line helps our partners offer fully embeddable credit lines tailored to serve their customers. It can fully manage all stages of the credit line life cycle including application, withdrawal, and repayment, within the app. It enables instant approval and activation as it is equipped to sanction credit lines immediately through a fully digital process.
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With what mission and objectives, the company was set up? In short, tell us about your journey since the inception of the company?
FinBox was born out of our conviction to incentivize financial inclusion. Although ‘financial inclusion’ has been the buzzphrase for a while now, the barriers to inclusion are tall and many. So we set out to build hard-to-resist technology propositions that would serve as a compelling reason for businesses to promote financial inclusion. The idea is that purpose is best driven by profit and capturing value.
The journey of FinBox spans over 4 years at this point. From being incubated by PayPal to raising a seed round from Arali Ventures, we have been generating steady and growing revenue month-on-month. We work with more than 50 clients across NBFCs, Banks, and digital lenders.
So far, we’ve been one of the first to pioneer an end-to-end digital credit suite that encompasses everything from onboarding to risk underwriting and collections.
The journey has been fulfilling, exciting and at the same time full of challenges that keep us grounded and keep our busy building. In short, the team at FinBox actually is focused on solving real-world problems in the financial services space to be distracted by the glitter and the noise that one finds in the general world where glory is mostly a PR exercise, and not a result of hard work. \
According to me, information asymmetry will decide the haves and have-nots of the future. A business that does not leverage data insights will not survive the fight with companies that enjoy the benefits of big data analytics such as massive cost advantages, optimum efficiency, and pinpointed insights to grow revenue.
Estimates suggest that artificial intelligence (AI) can generate up to $1 trillion additional value for the global banking industry annually. And then there are enterprises; banking is no longer the mandate of banks alone. To add value, platforms, and enterprises are increasingly embedding credit into their products, and in the process, leveraging AI/ML, for both, designing and delivering unique financial products.
Currently, many institutions use AI sporadically, for specific use cases, rather than deploy it across operations. This is sure to change given that a 360° digital transformation is imminent.
It will soon become imperative for lenders to partner with technology companies to offer new value propositions that are integrated across journeys, technology platforms, and data sets. Only an AI-first approach can optimize the entire lifecycle of digital operations efficiently.
AI applications will take over the entire financial services industry across verticals. This shift is bound to be much sooner than ever imagined as the number of digital consumers is rapidly increasing, thanks to the pandemic effect.
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Kindly mention some of the major challenges the company has faced till now.
The major challenge when we started was a general lack of fintech awareness beyond B2C use cases. Making a breakthrough with a potential customer i.e a lender or an enterprise, or even an investor, for that matter, was fairly difficult for two reasons — unfamiliarity and the perception that technology would mean a radical change.
Think of us as the invisible layer between a business and a financial service provider — the one with the underlying infrastructure railroads that transform a business into a digital credit enabler. But this is not easy to visualize. To figure out how this intermediate technology layer translates to meaningful business value, people need elaborate context and nuanced understanding.
We have managed to mostly overcome this over the years due to both internal and external tailwinds. One, the digital transformation that came about through UPI, etc has been phenomenal. Second, the overarching push in the financial services industry to digitize has been a growth supporter for us too. And third, a lot of work that we do has been around making sure that the context and information are bias-free for all our stakeholders and we work as their real partners focussed on achieving their goals rather than going in with a mindset to necessarily sell something they don’t need.
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What is your biggest USP that differentiates the company from competitors?
The very nature of FinBox – to cooperate rather than compete – sets us apart. At a time when fintech was cited as formidable rivals set out to efface banks, we partnered with lenders and other fintech – aiming to leverage each one’s core capabilities. This approach has led to high-impact outcomes and water-tight end-to-end capabilities, creating win-wins.
The very same collaboration-focused attitude has resulted in the practice of giving precedence to business-led technology strategy. We select technology based on the business objectives of our partners and performance metrics rather than our own scalability. For instance, using one programming language across the entire stack may not serve every use case in the best possible way, yet fintechs tend to build it all in one coding language for want of feasibility and scalability. However, we believe in cultivating capabilities that deliver optimal final outcomes, some of which include pod-structured project teams for high-level interoperability and defined standards for data protection and security.
In addition, we are one of the best FinTech teams in the country. We build super fast and we ship innovative products almost every week. It’s really one of our biggest advantages when it comes to playing in a market where there are 100s of companies that want to do the same thing as you are. It’s very reassuring to know that no matter what, the FinBox team will stand and deliver.
For example, we were one of the first companies in India to go live with the Account Aggregator ecosystem. The AA framework is deeply integrated into our user journeys which has further strengthened our credit-decisioning capabilities. This is over and above our AI-driven risk engines that use alternate date and contextualized risk, assessment models. This feature enables us to assess risk with significantly higher accuracy.
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How do you see the company and the industry in the future ahead? What is the business roadmap like for 2022?
The financial services industry is going through a great unbundling. Five years ago, we witnessed stage 1 of this evolution where specific use cases such as payment wallets, etc. grew their market share. Now, every bank has at least 2-3 apps each, and yet consumers have another 10-15 apps just around finance on their phones. It tells us something about the fragmented nature of the market and how no one company has been clearly able to solve the needs of even one specific segment.
My theory is that the coming few quarters will remove a lot of froth from the FinTech hype and building a financial services business will become a necessity more than a strategy. That is the inflection point at which companies like ours which help other companies launch FinTech products, will become super valuable and important. I think we are moving away from a winner-takes-all paradigm to more of an ecosystem approach where interoperability and integrations will be the predictors of success.
As a business, we are looking to grow our revenues by 5X on the risk underwriting side by FY23 and at the same time, aiming to do $1bn + in originations. There are many other metrics as well but I am most excited about our product launches and there are about a dozen of them lined up before we close out this year.