Money may not fall from the sky, but innovations are ensuring that money flows via various channels to the individuals who want it. While startups have seed funds and angel investors, most people depend on banks to gain access to funds. But, is it the only way to get money? No.
Bengaluru-based MoneyTap provides people a chance to secure a line of credit up to Rs 5 lakh, with the whole KYC process occurring through their mobile application. The organization’s name can be interpreted in different ways—either as a ‘tap’ that stores money underground for a ‘tuff day’ or the more strict interpretation of money accessible at the tap of a Smartphone. Without a doubt, the company is reshaping the line of credit in India.
Let’s see what Bala Parthasarathy, Co-founder of MoneyTap, has to say about the company, challenges they faced in the journey and what advice he wants to give to young people who want to disrupt the industries with similar technology solutions.
MoneyTap is India’s first app-based credit line for consumers, offered in partnership with leading banks & NBFCs.
MoneyTap introduced the concept of Credit Line (personal line of credit for consumers) in India when it launched in September 2016. It gives a credit limit of up to ₹5 Lakh, without any collateral or guarantors. Customers can borrow any amount from this limit (even as low as ₹3,000) multiple times. Interest is charged only on the used limit, and the rates can be as low as 1.08% per month. Customers can choose flexible repayment options on the app with EMI tenure choice of 2 – 36 months. The limit also gets automatically topped up as soon as EMIs are paid back.
When customers take money from their Credit Line, the company makes money.
A couple of years ago, India was undergoing a massive digital transition. Start-ups were creating apps for online shopping, ride-hailing, and food delivery almost on a daily basis. However, a few NBFCs/banks were working on solutions addressing the requirements of consumers for credit. So we thought this might be an interesting area to explore.
Yes, absolutely. Because we were introducing a new category.
India didn’t have a concept of personal credit line before this. Before we launched, we talked to hundreds of people to know what their problem was – they were still borrowing from their family and friends and facing embarrassment. A product was required where they could borrow and repay conveniently at their own terms.
From the customer point of view there was a need for this kind of product, but from a business point of view, it was a new product, and we knew we’d have to create a market for it. If the people didn’t use it, then the economics wouldn’t work out us.
We took about a year to build the product and launched in phases. Extensive testing and recalibrations were done before it scaled.
Convincing banks and partners that we can provide credit easily. That this is a good idea.
Like we said earlier, Credit Line was a new product that we introduced in India. And it was a big challenge to convince the banks that it was going to work. Ultimately, it’s their money that we lend.
The most important thing that sets us apart from our competition is our pricing – we provide the best interest rates to our customers because we are backed by the banks.
We compete with banks as well as startups. Banks can match our interest rates but can’t match our modern interface and usability. Startups can match our interface and processes, but can’t match our interest rates. Our customers get the best of both worlds.
MoneyTap is an app-first business. So 99% of our marketing spends are on digital.
For app launch, we mainly focused on digital marketing. Supported by on-ground activities and regional PR.
When we started, we were just a few people. And now we have some brilliant people with us who believe in the product and are doing the best they can to bring the best service to the customers.
Disbursing over Rs. 1,000 Crores per annum going up to Rs. 4,000 Crores next year.
Long time ago, I visited a bank and saw long queues of people waiting for loans, and asked the bank manager – “Why do you take so long for disbursals? If you want you can process the loan applications faster.” To this, the bank manager replied – “Where are these people going to go? I’m the one with money, they want the money. They’ll wait.”
India was already going digital with services such as ride-hailing apps, food delivery apps, etc. But financial companies did not have a service mindset. They did not even have the intention of providing a better service.
This was the ‘Aha’ moment!
It is then that we decided to bring convenient, flexible and fast credit to the masses, without the hassle of going through the tedious loan process.
We will be going after new customer segments and to new cities. And we are super excited about making the process even more comfortable and smoother for the customers.
“Think differently. Don’t be afraid to take risks and solve big problems.”