Manish Bhatia on Lendingkart's bid to transform into a technology company

Lendingkart has increasingly started to open up its technology engines and application programming interfaces (API) to external and offline players in the MSME lending space in India. In 2-3 years, the digital lending startup expects to complete the transition to a technology company from a digital-first company, a top company executive told TechCircle.  

“There is a difference between digital and... tech. When you talk about the Amazons, Flipkarts or the Facebooks of the world, you will never say they're a digital company. They're tech companies. Most of our banks and NBFCs when you converse with them, they would always say digital, so it's basically changing a form factor from what is physical. It’s a layer on top. How do I change that mental model?” Manish Bhatia, president of technology, analytics and capabilities, said in an interview. 

Bhatia, who reports into Lendingkart co-founder and CEO Harshvardhan Lunia, is responsible for all of the company’s data sciences, machine learning, and product functions. He joined the company in April last year and was previously CTO of Amazon Pay India.

The efforts so far have already contributed to 40% efficiency in day-to-day operations, and closer to the startup’s dream of into turning into a technology company. The Ahmedabad based startup is backed by investors such as Fullerton Financial Services, Bertelsmann India Investments, Sistema Asia Fund, Saama Capital and India Quotient. In May, it raised $42 million in an equity capital round led by some of its returning investors. 

The four pillars currently driving the efficiencies it has achieved so far are its proprietary zero-touch technology in lending, Xlr8 platform, 2gthr platform, and a machine-learning driven credit-engine. 

Last month, the company announced an extension of its zero-touch technology to offline direct selling agents (DSA) or referral agents on Xlr8. Launched in December 2020, the omnichannel partner platform lets an offline agent tap into Lendingkart’s MSME network locally.  

Xlr8’s API suite then prepares an online dashboard for MSMEs and agents to maintain, process, track relevant loan applications, scrapping the need for Lendingkart to worry about onboarding of consumers who are not digitally savvy. 

Currently Xlr8 has over 500 DSAs, who work on a commission-based model. Lendingkart wants to scale that to 1,500 by December, Bhatia said.  

With the demand side of the lending solved, supply is being solved for by Lendingkart itself and the new 2gthr platform. Launched in November 2020, the co-lending SaaS platform onboards financial institutions, including banks and NBFCs. With end-to-end funnel visibility and control, the partners can review and approve loans through a custom dashboard in order to onboard MSMEs within two weeks and provide unsecured loans. 

Bhatia said 2gthr currently has seven such partners, which includes the likes of Northern Arc, IDFC First Bank, U GRO Capital. Lendingkart wants to scale that to over 15-20 by December. 

“Being a digital company, there are various ways to get your source leads in. One is obviously performance marketing, word of mouth, organic, where customers actually find us, but what we actually figured out was for us to be able to actually reach and be more inclusive with our SMEs, we would want a platform that our last mile DSAs who actually help customers gather documentation, and use our platform,” he said. 

On the other hand, Lendingkart has also built a credit score engine that uses an algorithm to match MSME borrowers with the right lender from 2gthr. 

With little to no credit history available on an MSME’s ends, Lendingkart uses big data analytics and machine learning algorithms over 5,000 data points from various sources including bank statements to evaluate creditworthiness. 

“We've come up to a point where we are able to sort of bucket these customers in different risk categories, and actually give them the right rate, depending on the risk category. That is why this is our secret sauce. And that is why more and more seasoned banks would want to be a part of what we've built,” Bhatia said.

Apart from the four pillars in Lendingkart’s bid to become a technology company, which it will continue to invest into, it also has other “futuristic things,” that the company is working towards, Bhatia said, declining to disclose specifics.  

Read: Lendingkart to cull 200 jobs, cut leadership pay as Covid-19 affects business 

Bhatia also declined to provide any forward-looking targets that are expected to be derived from the current efficiencies generated. But it now takes 60 Lendingkart employees to process a set number of loans that initially took 100, Bhatia said, adding that the company has other aggressive targets for 2021 to build for efficiencies and seamless experiences across the board. 

“I would really love it, two-three years from now, when Lendingkart is thought about as a technology company, which, it's already started to do but really strong tech company versus a digital company,” he added. “One of the big things that I'm working on with my CTO very closely is how do I bring in tech efficiencies. I feel that there are so many low hanging fruits, if we actually really have the pipeline right, it would double or triple the developer efficiency anyhow... we are hiring but we're not going to hire a crazy number of engineers,” he said. 

A cultural change that Bhatia said is helping drive developer efficiencies is distinguishing employee perspective on technology roles. Engineers double as product managers, and work closely with actual product managers at technology companies, versus a service-based information and technology companies where requirements are relayed and met across teams with standalone roles. 

"The second piece is, throughout the process, how much manual testing do you have? How much of automation can you do? Is there a process where, as soon as the code is written, what is the safety net around different types of tests? … we're trying to improve operational efficiency, engineering efficiency.” 

The technology team at the company comprises over 150 professionals in the Bengaluru office, now spread across Indian cities thanks to Covid-19-led remote working.