This Startup's 'Full-stack' Ambition Became a Reality
At WeRize, the underlying belief is that a full-stack model is the only way forward, where one has to create the products and distribute them with a high touch model to win small-town India
Fintech is a booming industry that's on everyone's mind, especially investors. According to CB Insights, the space has raised $13.4 billion in the first quarter of 2021.
The explosion of fintech companies and startups isn't surprising. As the tech savvy millennial generation has aged, banking and financial options evolved, too, and once rare perks like mobile banking became standard, forcing brick-and-mortar institutions to become tech-enabled.
But banks aren't the only financial institutions that have made tech-driven changes. Entire markets—from digital loans and mobile stock services to e-commerce payment platforms and digital currency exchanges—are rooted in digital financial access.
COVID-19 accelerated and compressed several years’ worth of adoption of digital tech into a year. It put an already vibrant fintech ecosystem in India into high gear, and investors in fintech startups anticipate the rise of many multi-billion-dollar ventures in the sector.
The fintech space today is structurally poised for the big league.
WeRize chief executive officer and co-founder Vishal Chopra in an interview with Entrepreneur India said, “During my tenure in Lendingkart, I got a glimpse into how underserved small-town India was in terms of credit facilities and SME loans. I probed deeper to understand if these challenges also translated to the consumer side and after doing some research, I found out that there was limited penetration of financial products in this market. I realised that the private sector banks and insurance companies don’t design products for this specific segment, which comprises over 100 million families and 300 million customers across 4000 small towns in India. Thus, the idea of starting WeRize alongside my co-Founder Himanshu Gupta was formed. We were committed to addressing this underserved demographic and equipping them with the financial tools that they require.”
Small town India families primarily bank with government or regional cooperative banks that only provide a basic bank account and don’t provide other financial products such as unsecured loans, credit cards, insurances, or investments. Whilst the Indian fintech ecosystem on the other hand is geared towards building do-it-yourself (DIY) apps that help customers choose the right financial products for themselves. However, this approach doesn’t work for small town India families as a high-touch model is required.
At WeRize, their underlying belief is that a full-stack model is the only way forward, where one has to create the products and distribute them with a high-touch model to win small-town India. They have used their proprietary data science models and over one billion data points to create customized credit, savings, and group insurance products for small town India. Additionally, they have married ‘high touch’ with tech at WeRize to create a unique social distribution network where thousands of financially literate freelancers use their ‘Social Shopify of finance’ tech platform to sell their products to their friends and family. Not only is this a $200 billion opportunity, but there is a social element to helping their customers and alleviating their financial problems.
In 2019, the company has raised a Seed round of $2.25 million. Recently, they have raised a Series A funding round of $8 million led by 3one4 Capital, Picus Capital, Kalaari Capital, and Orios Ventures.
The tech platform enables social partners to source business through online and offline channels recommend the right financial product to their customers as well as provide after sales support.
The startup claims to have undertaken extensive research to understand the market and the challenges that prevail in small town India. They have realized that insurance options are very limited and largely the focus is on LIC policies, which are used as a saving tool as opposed to insurance. Whilst on the savings side, there exist a dearth of products and as a result people are compelled to buy gold or invest in high-risk chit funds. Apart from going through public reports from CIBIL and others, they have also garnered a billion data points from 500,000 customers over the last two years through their distribution network. This has provided them with deep insights to enable them to introduce the right products to this market.
Chopra believes that this $200 billion and growing annual market expect a very different product set as well as distribution model which traditional private banks, insurers, and mutual fund companies are unable to provide. The economics of these products as well as operating in small cities is not feasible for traditional companies due to their high-cost branch-based distribution model. Small town India families primarily bank with government or regional cooperative banks that only provide a basic bank account and don’t provide other financial products such as unsecured loans, credit cards, insurances or investments. Providing access to a broader set of products in this demography requires a more differentiated and deeper risk management capability. Small town India lives in joint families and tend to have a single P&L for the family. WeRize has used this insight to develop financial products with entire families (and not individuals) in mind.
Additionally, this market needs high-touch sales and after-sales service which can only be profitably provided using a social distribution model. The Indian fintech ecosystem on the other hand is geared towards building DIY apps that helps customers choose the right financial products for themselves. However, this approach doesn’t work for small-town Indian families as there is a huge trust deficit about non-government financial products. In this space, public sector banks are their eventual competition.
“As we continue to reimagine financial services for a large and profitable customer base that has been inadequately served by the existing ecosystem, we will grow our presence to 4000+ towns in the next 2 years, whilst onboarding over 50,000 freelance financial consultants across India. We will continue to place the emphasis on innovating to create new and exciting products for our customers, whilst focusing on our ‘Social Shopify of Finance’ tech platform,” Chopra further shared.