This Startup Is Helping Lenders Recover Loans, With The Help Of Tech
SaaS-enabled debt recovery platform Credgenics is designed to help lessen the burden of the lenders through better data management and ensuring lesser cost and time consumption in the recovery process
AI represents the onset of a new era for businesses and consumers: one that empowers companies to be more efficient in high-volume manual processes and attentive to customers.
It’s also inspiring disruptive software-as-a-service (SaaS) products by scaling human-like expertise to solve previously unscalable bottleneck problems.
In an industry that evolves and adapts at warp speed, SaaS companies like Credgenics want to crash shores before competitors must spare a seat for AI and machine learning in their tech stack.
In India, where the credit demand of more than $600 billion is being met through informal sources, digital lending is set to cross the $100 billion mark by the end of 2023. Credgenics is a part of the financial industry, especially the lending and debt recovery ecosystem. Anand Agrawal, Mayank Khera, and Rishabh Goel co-founded Credgenics in 2018.
The SaaS-enabled debt recovery platform of Credgenics was designed to help lessen the burden of the lenders (banks, NBFCs, fintech) through better data management and ensuring lesser cost and time consumption in the recovery process. At present, over 50 lenders are using the platform, which includes 7 banks with notable names like ICICI, Axis, and HDFC and more than 40 NBFCs, such as LoanTap, Drip Capital, Udaan, among others. In the last three years, Credgenics has managed to grow month-on-month 80–100 per cent.
Navigating back to why they started Credgenics chief executive officer and co-founder Rishabh Goel told Entrepreneur India in an interview, “Behind every beginning is an idea or a solution to an existing problem. Credgenics began with an idea to solve the debt recollection issues. In 2017, when I was working as an Investment Banker with Blackrock, I began noticing the archaic debt recovery processes (more than two decades old) that had severe issues in data management, manpower utilization, and harassment of borrowers; this observation continued through 2018 as I worked with Deutsche Bank. I resolved to bring about a sea change in the collections process by using modern data management and analytical capabilities with fair treatment to the borrower. As the idea started taking form, I reached out to Anand, whom I knew from the IIT-Delhi days, the institute being their alma mater. Anand at that point in time was working with the founding team of 1mg. Mayank, whom we knew through common friends, was already practicing law and working on promoting judicial inclusion to the under-represented, joined to make the legal aspect of debt recovery a solid wing. This combination of us three geniuses with diverse experiences resulted in the best fit.”
The motto of the company is ‘converting bad debts into good assets’.
In India, where the credit demand of more than $600 billion is being met through informal sources, digital lending is set to cross the $100 billion mark by end of 2023, especially with the widening NBFC and fintech sector as the company can already see. With an increase in the loan book, they see a corresponding increase in overall NPA, especially with the existing archaic collections processes and new lending firms with limited experience in handling collections.
This is where the company can be the solution provider to help lenders maintain a healthy risk profile as they grow. They believe that their platform is the only platform that presents end-to-end management and transparency on the performance of all collection’s efforts across channels. So far, they have been successful in improving the recovery rates by upto 20 per cent for their clientele through their AI-enabled digital collections efforts. Such improvements and associated time efficiency with lower overall costs of recovery across delinquency buckets have been possible through cloud-based systems for quick deployment and updating. They have been able to substantially reduce the legal burden through digital bulk send out of legal notices, bulk real-time tracking of notice delivery, wherein the case of digital notices the time stamp and clicks/open are tracked, and in case of physical notices, actual delivery status in real-time from Speed Post is checked and tracked by their team.
“Credgenics does not have a comparable startup within the Indian ecosystem that is a direct competitor. We are currently pioneering digital debt collections in India. There are legacy debt collection agencies that are currently used by the lenders, which we are replacing through much-advanced recovery methods guiding it with data intelligence,” Goel claimed.
He believes that the pandemic has had a devastating impact on banks and financial institutions around the world as the global economic crisis led to a rise in defaults and bad loans. The situation of the NPA crisis is particularly serious for the Indian banks that are already struggling to cope with the rising bad loans. Before the pandemic struck, the estimated NPA was at 7.5 per cent by September 2020, and the financial health of the economy was worrisome. But within the next 4 odd months, it doubled and rose to ~14.8 per cent. Having said that, the banks could have seen their NPAs rise by 10–60 basis points if it had not been for the top court's ruling. Thousands of crores worth of loans have gone sour due to non-payment by borrowers and the amount of NPAs is likely to increase further, especially with the critical situation being faced by the economy. While there are other problems like low corporate loan growth, the NPA problem seems to be the biggest hidden issue that may erupt by 2022 when relaxations like loan restructuring may come to an end. And at this tough moment, the entire lending industry faced a moratorium from the Reserve Bank of India (RBI) with respect to loan recoveries. This proved to be a major speed breaker in their initial journey, but only to lead to a much better run thereafter.
“COVID has in fact benefitted us by proving how our SaaS-based collection platform could efficiently replace the existing manual collection measures. The platform has been through a testing phase where each case being monitored brings forth a new challenge - be it in terms of data management, borrower traceability, or solutions to deep delinquency buckets. As our team and geographic reach is growing, we constantly stay updated about the judicial and RBI guidelines around ethical recovery operations keeping in mind a fair treatment to the borrower at all times,” he further shared.
So far, the company has done three rounds of investments – Seed, pre-Series A, and the recent one is Series A with total funding of ~$30 million and a valuation of over $100 million.
They have recently raised $25 million in the Series A round from WestBridge Capital and Tanglin Venture Partners with the participation of Accel Partners at the valuation of over $100 million. In October 2020, Credgenics raised the Pre-Series A worth $3.5 million, led by Accel Partners and DMI Finance. The beginning of 2020 saw the organization begin the year with the Seed funding worth $300,000 led by Titan Capital.
The future plan includes targeting three things of strengthening their platform and services with sharper AI/ML-based analytics. Increase their offerings and bring more products under the Credgenics wings which would make the debt repayment and recovery smoother and geographical expansion to similarly under-served or archaic collections processes countries, Goel stated.