Whatsapp & the future of lending
What would an end to end digital experience using account aggregators look like?
If the startup ecosystem were a giant e-commerce website, then lending would be the most wish-listed item. The path to reach lending seems simple - identify an opportunity, capture distribution and empower people with credit. A colleague once shared this quote
West makes money through adtech and the east will make money through fintech
As Angela Strange says, every company will be a fintech company one day. If the distribution is the key to lending, then we might already have a clear winner around the block 👑
Our last month's newsletter around account aggregators created quite a stir and we were showered with praises. As promised, in this edition we shall visualise a use case of Account Aggregators (AA) and its impact on real-life.
Lending through Whatsapp!
Whatsapp has over 400 Million users in India and is seamlessly integrated into our daily lives. Whatsapp is like your doorknob, they are significant yet invisible and they give you access to the world outside the home. WhatsApp has become the face of many relationships we share in daily life. Not just interpersonal relationship but also businesses relationships.
Our on-ground research with Kirana stores tells us that shop owners use WhatsApp for everything from placing a purchase order to delivering goods to a customer. WhatsApp has also become the primary source of information for SME owners to update themselves about the latest trends in their business via merchant association groups. It’s only fair that we coined the term 'Whatsapp University' :)
Few snippets from D91 Lab’s Kirana Chronicles which illustrates the above points
I don’t really go out looking for vendors as such. I am a part of certain groups on WhatsApp where other wholesalers and manufacturers are present. This helps me network and create links that help me grow my business.
“I am a part of this medical association group on WhatsApp from where I get my updates about what’s going on in this market, what’s new, etc. I get to know about this through the group sometimes. Otherwise, the suppliers convey it to me directly. In this business, you have to know your schemes and discounts well, to give the most attractive offers to earn more customers.”
“My business happens on WhatsApp only. I do marketing on WhatsApp. All of the dealers in Bangalore are on a group. If we post things on it we get calls and they’ll come and pick up the products and go.”
Today, an SME owner receives an invoice for the purchased goods on WhatsApp and jumps between multiple touchpoints to pay the invoice. The un-fairy tale experience of an SME merchant borrowing a short term loan looks like this.
With the advent of account aggregators, an SME owner would be able to receive the invoice, borrow credit and payback to the vendor, all inside WhatsApp.
Lending journey via Whatsapp:
(Please note, this is a mock prototype designed for educational purposes only)
The merchant receives a payment request against an invoice from the vendor via Whatsapp.
When the merchant taps ‘Pay’, they get an option to either pay via UPI or an option to borrow ‘Credit’ against the payment request.
On selecting 'Borrow Credit', a list of banking institutions is populated (these could be the list of banks that the merchant has already interacted with or could be direct integration with WhatsApp)
The merchant starts the loan process in the lender’s chat window by surfacing their details. This loan journey considers a repeat NBFC customer, thereby eliminating the KYC flow.
(Heads up! The below is a gif and might take few seconds to load)
At this stage, the merchant shares his bank statement digitally to the lender using account aggregators and the loan offers are being shown.
Once the merchant accepts the loan offer, they sign the loan agreement digitally using OTP and the loan amount is disbursed to the merchant’s bank account.
Post the money hitting the merchant’s bank account, they go back to the vendor chat to pay the invoice through UPI.
And thus a complete digital loan journey is executed on WhatsApp. Though this prototype looks futuristic, account aggregators, KYC digitization and UPI mandate could bring this dream closer than they might appear. After all its 2020 and anything could happen.
Watch the entire prototype video on youtube
Written by Dharmesh Ba
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About D91 Labs
D91 Labs is a user research lab, sponsored by Setu.co that specialises in financial inclusion research in India. D91 Labs aims to bridge the empathy gap between the fintech organisations and the last mile India through human-centred design methodologies. We conduct in-depth qualitative research to document the financial journeys of Indians across various socio-economic segments and publish them under open-source licenses for the fintech community to consume.