A few years ago, the fintech wave swept across India’s startup shores, with dozens of innovators creating products in lending, payments, budgeting, insurance, and more.
While almost every part of the financial services thread was taken over and upgraded with technology, there weren’t many solutions for one of the biggest problems for financial institutions – collections or loan collections.
Start-up based in Delhi was among those who picked up on this problem and considered automating a collection and debt collection pipeline for lenders, with SaaS.
Since its inception in 2018, the startup has created a collection management tool for banks, NBFCs (non-bank financial companies), and fintechs that allows them to streamline and manage their loan collection workflow, including disputes, billings, payments and collections. The tool also creates an effective communication channel with borrowers through technology and analytics, thereby increasing loan recovery rates and reducing collection costs.
“Collecting as a category has always been mostly manual. Several systems or software are deployed by banks, FIs or fintechs for collection and recovery, but they all operate in silos,” says co-founder and CTO Anand Agrawal. “There was a need for a unique technology solution to make this process efficient.”
Today, the platform has built 8 modules that lenders can choose according to their needs and integrate into their systems. Each module has been created over time to cover different processes/stages involved in the debt resolution journey, from the pre-maturity phase to account write-off.
Credgenics Founding Team
Start “legally”
Credgenics is the brainchild of IIT alumni Anand Agrawal, Rishabh Goeland Mayank Khera, who studied law at GGSIPU, Delhi. While Rishabh, the current CEO, worked in the financial sector for Deutsche Bank and BlackRock, Mayank is a practicing barrister in Delhi courts.
The trio started by creating a simple customer relationship management tool to help fintechs manage their loan disputes.
This involved tracking legal cases for courts and consumer forums, appointing and assigning cases to attorneys, sending legal notices (digital and physical) to borrowers, seeking and providing approvals , vendor billing tracking in addition to maintaining and tracking all case data and documentation. . Generally, the process is handled manually by lenders on excel sheets and no specialized tools are deployed.
“The initial idea was to have a CRM-like platform where lenders can get clear visibility of delinquent accounts, select them and have a digital notice sent in bulk, automatically, through different channels followed by follow-up “, explains Anand.
Some of the early customers included fintechs and NBFCs, which could integrate their systems with the Credgenics platform. Application programming interface software would store and manage information and handle processes, while internal teams communicate with borrowers.
By 2020, the team planned to digitize other parts of debt collection, while continuing to develop its platform and expand its offerings.
“It just wasn’t the legal aspect that needed to be resolved, but the entire end-to-end collection space, starting from the maturities where the default hasn’t yet occurred and where the reminders are sent, to customers missing their payments, and thereupon the last stage of the account being written off”, explains the co-founder.
“All these processes have been broken. Even the largest of the banks managed the collection systems manually,” he adds.
Interestingly, all the technology was built by the founders, with some of their juniors as interns, and the first external hire (a product manager) was made after 1.5 years.
Build the digital “boosts”
Given the complexity of financial processes, it was crucial for the team to understand their clients’ needs and co-create different modules for them. The collection strategy for a home loan for a bank could be very different from the requirements of a fintech lender offering small loans. Therefore, each required a different campaign and a mix of different modules to connect with the borrower.
The startup considered offering its platform primarily to fintechs during its first years of operation, as it provided them with greater space to experiment and deeply understand the key performance indicators (KPIs) they (the lenders) want to pilot. These can be costs, average resolution time, etc.
For this, they spoke with multiple credit players and built case studies before offering the tool to banks.
“There is a common collection model followed by credit players. There is a popular precept—collections aaise he hota hai (The collections take place in a defined manner). We started to think outside the box taking inspiration from the market. Can a rules engine be created for debt collections? Rishabh said.
Communication with borrowers occurs at different stages, usually before delinquency and delinquency. Now this can be done through multiple digital channels like SMS, WhatsApp, emails, IVR and calls.
The founders explain that the idea is to automate this communication where next steps and follow-ups are triggered automatically based on a borrower’s response to the previous step (event-based communication), covering the whole collection life cycle. This leaves it up to lenders how they want their communications/campaigns designed (how, what and when communications should be sent).
They can oversee, track, and make adjustments to these communications if they choose. The team continues to add new channels such as voice bots and AI-enabled chatbots to send payment reminders smoothly in different languages.
The call was introduced as a separate module due to its sensitive nature as it involves direct human-to-human interaction, the co-founders explain.
What Credgenics set out to build was the capabilities to transform a ‘cold call’ on call efficiently with the help of AI. For example, this particular module reviews loan details and the system triggers bulk calls to all cases through a round-robin method. With relatively lower call abandons and less time wasted on hold, agents can make more calls in the monitored time. This approach, according to their study, increases the effectiveness of the call.
The core analysis
Data analysis is an important part of the whole automation process that Credgenics has built.
In 2021, as it began to collect more customer data using payment history, CIBIL scores, and more, the platforms worked to create a “customer intelligence layer.” data” on top of its system, to provide behavioral insights to lenders.
This information can relate to a borrower’s intention to pay, the likelihood of successful payment, the categorization of borrowers (low, medium and high risk), etc. This allows lenders to identify and prioritize collection cases and also to make forecasts. He is working on a tool to recommend the best possible collection strategy for each case.
Development of new modules
Using the feedback loop, the 100-member team then created 8 different modules ranging from predictive dialing to dispute management to different communication engines, all serving one purpose, helping lenders better recover loans.
Currently, Credgenics manages approximately 2.2 crore loan accounts on its platform. According to the company, its customers were able to record a 20% increase in overall solve ratesand a 25% increase in the amount of recoveries, while the total cost of recoveries was reduced by 40%.
He incorporated more than 75 customers including ICICI Bank, Kotak Mahindra Bank, Yes Bank, IIFL Home Loan, Hero FinCorp, LoanTap, Reliance Asset Reconstruction and Tata Capital.
Recently, it introduced a payment module, Billzy Payments, which allows lenders to generate “borrower-specific” payment links, supporting multiple digital payment methods. Data in fields such as outstanding loan amount and loan number are automatically populated.
To streamline communication between collections managers and their agents in the field, the startups have also developed a mobile app that allows the former to assign tasks and track the latter while agents can map borrower/loan details. (month of award, DPD values, etc.) and schedule visits.
This brings us back to the “broken” management system among lending players and the proposal to create Credgenics. Since Credgenics connects multiple systems into one platform, a simple update regarding the loan process or a borrower’s behavior/action is updated at all levels, down to the agent from the field to the account write-off team in the back office, allowing everyone to operate as a single unit.
Replicate success
The platform has taken a hybrid cloud infrastructure approach and has never remained dependent on any particular cloud infrastructure other than investing heavily in the latest technologies from the start. This allowed him to evolve his system smoothly.
The startup is now looking to replicate its success in the Southeast Asian market, in addition to focusing on building R&D capabilities.
“Building a smart collection system is an ongoing process,” says Anand, as the founders wrap up their weekly catch-up meeting with customers to discuss metrics, performance, and features that could be added. “Eighty percent of our product is feedback-based. The majority of our features were built after such meetings. It is an exercise in co-construction.
(This story has been updated to correct the number of modules offered by the company.)
