The consumer lending space has provided lenders with a lucrative opportunity over the past couple of years thanks to the proliferation of fintech services that have become widespread in cities and towns.
There has also been a radical shift in Indian perceptions of “stretching your legs over the veil” when it comes to borrowing, and more Indians across the country are gaining access to small loans than ever before.
Naturally, this led B2B digital lenders to assess consumer lending opportunities segment, and especially in the small-scale economy, where loans are taken as needed.
Capital Float, one of the country’s largest lenders for small and medium-sized businesses, is actively engaged in consumer lending. In 2017, he announced a personal finance foray that culminated in the following August with the acquisition of Walnut, personal finance management application.
With walnut, Capital Float hopes to attract customers from consumer-oriented SMEs. The move came after the company received feedback from its SME borrowers that if Capital Float can provide loans to SME clients, both can mutually benefit from it.
With this, and following successful pilot projects, Capital Float began to actively advance in personal finance – eventually launching the BNPL model, which is now replacing the SME loan portfolio.
BNPL stands for Buy Now, Pay Later. These small loans that clients can get upon request, without the need to submit extensive documents or take out loans in excess of necessary.
Although the commissions and ticket sizes for loans for the SME sector are higher, there is an inherent problem that every digital lender faces when offering these loans: there are several other players in the market, and they all offer competitive interest rates as well as other incentives. such as additional functions such as accounting, inventory management software, etc., at no additional cost.
Thus, while Capital Float has proven its resilience in SME lending by establishing itself as a key player, Customer acquisition costs have been deferred.
User growth on Capital Float. (Source: Capital Float)
The consumer lending space offers several benefits:
- The cost of acquiring new customers and retaining old customers was low.
- There were few players in the BNPL vertical, and those who were active had a large enough pool to be involved so that everyone could coexist.
- Even though there was no constant borrowing frequency or borrowing amount, once consumers were hooked, they likely kept coming back for loans of varying sizes, especially if the BNPL option offered competitive interest rates compared to, say, EMI.
For consumers availability The BNPL option was a handy service, especially over the past year, as the pandemic has resulted in pay cuts, layoffs and a forced shift to e-commerce.
“The BNPL Capital Float option is readily available even at the checkout. Customers can quickly enter their basic information and quickly place an order without having to first register for an account separately and then return to the checkout page to enter this information, ”says Sashank Rishyasringa, co-founder of Capital Float. Your story…
BNPL loans versus fixed term floating capital loans. “Term loans” in this case refer to loans to employees and self-employed persons. (Source: Capital Float)
“Our goal was to make the BNPL option through Capital Float as. no problem, as if someone were paying for the order in any other way, “he adds.
Since the acquisition of Walnut and million active users per month This brought with it the fact that the startup issued more BNPL loans than SME loans – and not because of a conscious change in strategy, but because of net demand from consumers.
The company said it was uncomfortable with disclosing specific numbers, but noted that its The BNPL or consumer loan portfolio was larger than the SME loan portfolio.
The startup claims to have borrowed As of today, digital credit is Rs 10,000. Last month, the startup overcame Rs 2,000 crores of lifetime payments in BNPL, as well as two million customers on lifetime loans.
Capital Float co-founders Gaurav Hinduja and Sashank Rishyasringa
It aims to reach four million customers by the end of this fiscal year. Your story.
In the quarter ending March 2021, the company reported that In the same period last year, BNPL payouts grew 220 percent, and in March alone, Capital Float financed over a million transactions.
According to data aggregator website Crunchbase, the company has raised over $ 150 million in funding to date from major investors such as Sequoia India, Lightrock, Ribbit Capital, Amazon, Elevation Capital and others.
Capital Float’s BNPL model finds consumers even in lower-tier cities and extends to over 10,000 pin codes in India. The startup, founded in 2013, says it has a long way to go with many more clients to tap into.