A technology-based marketplace—Rubique, which serves both retail and SME borrowers, offers loan products with speed and accuracy based on a technology backbone. The company has seen impressive traction and believes it has the ability to grow rapidly on a sustained basis. The company MD and CEO, Manav Jeet, discusses the value that the company offers different players with Pankaj Joshi.
What is your current position in terms of activity and numbers?
Over a two-and-half year period of operations, Rubique has generated loan disbursements of Rs 1,800 crore, with great velocity. To give you some perspective, the disbursement figure for FY2016 was Rs 250 crore, which went up to Rs 1,000 crore in the next year. Our overall revenue on the aggregate disbursements is around Rs 25 crore.
For the current year, the April-July disbursements figure is Rs 500 crore. With this kind of momentum, we are aiming to be cash positive in this fiscal. The growth, over the past eighteen months, has come without any manpower enhancement. Our team strength has remained at 88.
For transaction completion, we have working arrangements with a spectrum of lenders, ranging from public and private sector banks to NBFCs to P2P lenders to even new-age lending organisations. We have applicants database of over 1, 00,000 and the total transactions have been 45,000. This represents a huge cross-selling opportunity, which we aim to monetise. We are increasing our offering to insurance products now for which IRDA approval is in hand.
Given that fintech in lending is not a field with high entry barriers, what is the specific different value that Rubique would offer?
Our key contribution is that we provide the best lending options keeping in mind the borrower’s need and the lender’s criteria for acceptability. In an environment where a borrower can access a personal loan from HDFC Bank at 12 per cent and Fullerton gives the same at 24 per cent, how much can the borrower search on his own? What we have done is converted each individual lender’s criteria into algorithms. This enables us to provide an integrated back-end and real-time processing solution when the borrower fills the application details at the front end. This would take varying amounts of time, like say a personal loan request form would need 20-30 minutes. We promise immediate feedback for all our retail products. Hence, the borrower has the value propositions of convenience; a good product fit and good rate options thrown out of a plethora of choices.
Speed and compliance are the key areas of focus in our functioning. We have our own proprietary Rubique Magic Score generated from the algorithm. Our philosophy is that a loan application cannot be bad and that every borrower has a lender. The question is – how can they discover each other, which is where the value of matching lies, for which our app is a facilitator. Our current monthly disbursement scale of Rs 125 crore represents Rs 2.50 crore in terms of income, of which around 30 per cent goes as payments to associates. The retail personal loan transaction has an average ticket size of Rs 4 lakh wherein our fee would be around 3.5 per cent. SME loan applications would range from Rs 15 lakh in unsecured loans and Rs 50-60 lakh in secured loans, where our fee would be around 1.5 per cent.
The KYC process is where our business associates are most active. As of today, physical verification is a substantial part of the process, mainly because the RBI and most lending institutions are not comfortable with e-KYC. For our associates – financial advisors, chartered accountants and similar professionals – tying up with us means access to 70 institutions and a basket of 12 products across the retail and SME segments, not to mention the incumbent insurance business which will cover all three types of insurance products namely life, health and general insurance.
The last leg of the verification – the physical verification of borrower documents – is the responsibility of our own team.
According to you, where is the market today in terms of both size and requirements?
The market potential is immense. India is a potential USD 600-billion market wherein barely 25-30 per cent would be serviced as of now. The SME funding gap is estimated at USD 300 billion. Within these two borrower segments, we can see retail movement to digital being much quicker, mainly because the products are standardised; the client awareness is higher; and the process is system-driven to a good extent. By contrast, SME lending involves a case-to-case approach and a lot of details and traits of each borrower must be studied and understood, with weightages. It is not a standardised process.
We are merely scratching the surface, though we are aiming to scale up in different ways. For instance, we have a working arrangement with the National Small Industries Corporation, a Government enterprise under the MSME umbrella. It has tie-ups with 30 banks, 170 branches of its own and a database of 3 lakh SME borrowers. Their issue is that rejection rate is just too high for loan applications made by their members. When there is such a situation, our responsibility is to handhold the borrower through the application process of a while. At the same time, using our abilities to improve the probability of loan approval. SME universe generally wants some assistance in reaching out and that is where we believe technology must be leveraged.
The internet-based loan businesses started from information but today it is about transactions, and speed is also needed. We generally facilitate retail transactions in around 48 hours and an SME unsecured loan can be processed in say two weeks. Our focus is more and more on crunching timelines, for which we are innovating our technology in the back-end. Our aggregate investment till now is around USD7 million, including technology as well as Rubique Fulfilment Centres across seven cities, which have so far been able to process applications from 27 cities. We are confident that the NSIC tie-up, if serviced properly, will open up a lot of growth opportunities and we have the infrastructure in place to grow rapidly.