Written by BW CIOWorld
Capital Float is a digital platform that provides capital finance to SMEs in India. They offer short-term loans that can be used to purchase inventory, service new orders or optimize cash cycles. Vaibhav Singh, Associate Vice-President, Business Development, Capital Float, in a chat with BW CIOWorld shares some insights on e-commerce in India.
The e-commerce boom has birthed young entrepreneurs with limited transactional history that directly impacts their accessibility to credit. Capital Float has identified this opportunity and has launched new debt products to serve this rapidly growing segment. Most banks continue to implement underwriting models on online sellers which were originally designed to underwrite debt of offline sellers, argues Vaibhav.
“At Capital Float, we have built our underwriting model bottom-up based on evolving data and metrics to identify creditworthiness of online sellers. The approach is tailored to be more relevant to online businesses and offers more accurate results, says Vaibhav. Explosive growth in the e-commerce segment has overwhelmed traditional banking institutions and companies like us are able to share the burden of offering credit to unserved SMEs in the market.
E-Commerce platforms are attempting to standardize processes while increasing scope and scalability of existing sellers. This effort is likely to cause a churn in the seller e-community creating a metaphoric sieve through which sellers will be filtered. Consequently, the best performers will experience geometric growth, increasing competition between sellers in the space.
Building individual brand identity would be a challenge
The nature of the business fosters competition on the basis of pricing. In the attempt to offer best prices, sellers would be challenged to build their individual brand identity. Accessibility to credit through traditional channels will continue to remain a hurdle for e-commerce sellers in the foreseeable future, as conventional sources of credit begin to adapt to the dynamic capital environment. The fiery growth in the e-commerce segment can only be sustained if companies like us are able to share the burden of offering credit to unserved SMEs and ecommerce sellers in the market.
There will be a slow change in the mindset especially in a hitherto human-intensive space like lending. People have to become comfortable with trusting machines to do everything a man can do; stepping in only where expressly human traits of experience and intuition are needed, even if this means that at volumes approaching statistical significance, we let a few true-positives slip through in the interest of overall productivity. It’s about slowly giving up control and trusting technology to pick up the slack.
Algorithms and big data will drive eCommerce growth
Capital Float has used technology innovatively to ensure that seller in the ecommerce domain have access to collateral free working capital loans and enable business growth in a simple and efficient manner. Leveraging analytics, algorithms, big data and other disruptive technology trends to make lending decisions quickly based on verifiable data thereby ensuring efficient and fast turn-around time is the future. Technology has also enabled Capital Float to expand business faster and reach out and support the SME and seller community across India. The acceptance of new forms of technology would only fast forward the growth of facilities needed to continue the growth of ecommerce.
– See more at: http://bwcio.com/accelerating-the-growth-of-ecommerce-in-india/#sthash.zDdwY1Q3.dpuf
News piece sourced from BW CIO World. Read the full piece here
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Capital Float, the largest digital lender in India, has partnered with Payworld to provide kirana store owners with convenient financing options, enabling them to expand business operations. Small retailers are often underserved by traditional financial institutions because of their limited credit history. These retailers can now avail hassle-free working capital from Capital Float, which will help them manage inventory and cash flows with added scalability.
There are more than 12 million small retailers in India. Many of these businessmen put decision-making on hold because of traditional credit barriers. Through this partnership, Capital Float will provide small retailers with collateral-free loans, which will help to exponentially increase their capacity to do business on the Payworld platform. Once the loan is approved, the retailer can request for funds using the Capital Float mobile app and the funds are disbursed within 10 minutes.
“Due to the lack of established lending norms and consequent delay in financing activity, existing and new players in the retail space have lesser access to credit, which affects their growth and expansion plans”, said Gaurav Hinduja, Co-Founder, Capital Float. “With Payworld, we have simplified the lending process so that neighbourhood kirana stores are able to fulfil their financial needs and better service their customers,” he added.
With India becoming digital, Payworld helps customers in remote locations with limited access to electronic payment methods, perform daily transactions like booking bus tickets or paying mobile bills via Payworld’s network of retail points, which includes kirana stores. A proprietary algorithm developed by Capital Float uses non-traditional, surrogate data sources, including each retailer’s performance on the Payworld platform, to build a personalized credit profile and provide customized finance options to the retailer. In the long term, this will also develop an official credit profile for these retailers, thereby increasing their chances of availing credit products from traditional financiers.
“In keeping with our business philosophy of ‘Making Life Simple’, we have partnered with Capital Float to provide the retailers in our network the support they require to boost their business. This is critical in building retailer loyalty to our platform, giving them the confidence to increase the number of transactions, positively impacting revenues for them and us” said Praveen Dhabhai, COO , Payworld.
Click here to read the full press release on The Economic Times
Oct 24, 2018
“A global economy is characterised not only by the free movement of goods and services but, more importantly, by the free movement of ideas and of capital.” ~ George Soros
As a fully digitized lending platform, Capital Float provides flexible credit products to small and medium enterprises that are working towards achieving business growth. The Great Indian Finance Festival (GIFF) has been initiated to add further impetus to this objective. Organised in the Q2 of every financial year, this exclusive SME loan carnival brings opportunities for SMEs to get Capital Float’s business loans at reduced interest rates. This helps SMEs in procuring adequate capital to prepare for the festive season in India when the retail industry has maximum revenue-generating opportunities.
GIFF is driven by the vision that in a huge and culturally-diverse country like India, it is significant to fuel growth and entrepreneurship by providing access to finance to high potential, but traditionally under-served SMEs.
Building on Government initiatives
The launch of government-backed schemes such as Pradhan Mantri Jan-Dhan Yojana led to a considerable increase in the number of bank accounts, but reportedly only about 15% of adult customers used these accounts to receive or make payments. Furthermore, as per a study by the Ministry of Micro, Small & Medium Enterprises, only 6% of small businesses obtain finance from organised lenders, hinting at the challenges for SMEs in getting loans¹. To sustain an economic growth rate of 7% to 8% per annum, there has to be a focus on widening the scope of financial institutions.
“A survey involving 540 SMEs by the Firstbiz and Greyhound Knowledge Group in 2016 revealed that over 90% of the SMEs in India found ‘lack of easy finance and credit instruments’ to be their most critical challenge.“
With a deep understanding of the market, Capital Float has consistently worked to provide easier access to loans to SMEs when compared to traditional banking channels. We bring you customized working capital solutions, borrower experience enhanced by technology and convenient processes to power your journey. Our objective is to enable SMEs in India to #BreakLimits and realize their true business potential.
The Indian SME is becoming a digital entity
A big change in the credit market comes from the digital lifestyle of Indian consumers. Currently, India is the second largest smartphone market with a user base of over 230 million. Moreover, an increasing number of SMEs are operating online by partnering with ecosystem juggernauts like Amazon, Flipkart, Alibaba, etc. Post demonetization in November 2016, a significant number of enterprises installed POS terminals at their stores, through which consumers could engage in cashless transactions. The Government has digitized data through initiatives like AADHAAR and GSTN, which can be used by Fintech lenders like Capital Float to assess and underwrite borrowers with higher levels of accuracy.
Capital Float has emerged a market leader in this environment by establishing itself as an online lending platform that offers customized working capital solutions. We have tailored a wide SME loan portfolio to ensure that we have a loan for every kind of SME and micro-entrepreneur in the country. For instance, we provide Online Seller Finance for e-commerce sellers operation on leading online marketplaces, and also service retailers using POS machines from the likes of Pine Labs, Mswipe, ICICI Merchant Cash Services, etc.
By using Capital Float services during GIFF, business credit seekers can get loans from ₹1 lakh to ₹100 lakhs starting from 16%. This is coupled with our BAU processes to enhance borrower experience in the form of live chats, knowledge centres and means to track loan application status online.
GIFF welcomes businesses from across the country to empower their journey for the festive season in 2017. Capital Float is ready to take quick and accurate lending decisions for them. We have comprehensive credit packages unfettered by restrictive lending policies, inflexible collateral requirements and slow disbursals times. SMEs can apply for loans online in ten minutes, upload the documentation required and receive funds in their account within three days.
In a phase where banks have tightened their purse strings to deal with bad loans, NBFCs are coming up with new strategies to spark up the investment drive. Capital Float is leading the initiative through GIFF, thereby contributing to the growth of SMEs in India. Providing cutting-edge working capital solutions for the SME sector is our organisation’s raison d’etre, and we have planned our policies accordingly.
Know more about the Great Indian Finance Festival 2017 at https://www.capitalfloat.com/giff
Oct 24, 2018