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When Credit Gets You Cash

CASE FLYER, BANKING & FINANCIAL SERVICES
ET Cases, 5 Pages
AUTHOR(S) : Bala Bharathi Yelamanchi and Dr. Nagendra V. Chowdary
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When Credit Gets You Cash

Expected Learning Outcomes

• Understand the emerging ecosystem of Indian Fintech and discuss on how the new-age Fintech companies can impact the Indian Banking Industry
• Understand the need and importance of credit scores from the retail banking point of view and discuss the role of Fintech companies in augmenting and increasing the penetration of credit to rural and semi-urban Indian customers
• Discuss CreditMantri’s business model and debate on the impending challenges in scaling up its business

I. Emerging Fintech Ecosystem in India

1. What according to you is Fintech?

2. Who are the constituents/stakeholders of Fintech ecosystem in India?

3. What according to you would be the key growth drivers and critical success factors for Fintech growth in India?

4. Of late, several technologies including AI, IoT, analytics, etc. have been extensively used in the Fintech space. Can you name few instances where AI is used in banking?

5.................

II. Need and Importance of Credit Scores

1. What is credit and why is it important? What makes up for the credit score? How is credit score calculated?

2. What are the various qualified credit bureaus in India?

3. What are the differences between credit rating and credit score? Who issues the rating and how is it calculated?

4. ...................................

Teaching Note Preview

When Credit Gets You Cash

Synopsis

This Case Flyer sparked the participants to understand CreditMantri’s business model in the light of emerging Fintech ecosystem in India. Founded by 3 ex-bankers in 2012, CreditMantri leverages data and technology to change the way credit was being delivered in India. This Case Flyer enabled a debate on the way emerging Fintech players are complementing or competing with traditional financial services providers. Discussion on the case flyer also dealt in detail about the business model of CreditMantri which assists in building credit scores for even credit challenged consumers. It concluded by highlighting the way forward for CreditMantri to achieve faster and farther growth.

Prerequisite Conceptual Understandings

Participants should be encouraged to have a basic knowledge of the following topics to enable better classroom participation and effective learning.

• Global Fintech Landscape
• Loan Approval Process
• Credit Scoring System

Case Positioning and Setting

This Case Flyer can be used in the following programs:

MBA Program/MDPs: Retail Banking – to understand the emergence of Fintech ecosystem in India and also to analyze the modus operandi of Fintech startups like CreditMantri who can change the banking landscape in India.

Preamble to this Case Flyer Analysis

This Case Flyer enabled a discussion on phenomenal growth of Fintech companies in the recent past. It highlighted aspects such as how new-age Fintech firms have been disrupting the way traditional financial services were being delivered.

The classroom discussion was orchestrated accordingly [Exhibit (TN)-I]............

Case Flyer Analysis and Discussion

I. Emerging Fintech Ecosystem in India

The discussion on this section began with analyzing the global Fintech Landscape and then moved ahead with topics like emerging Fintech ecosystem in India, reasons for the growing appetite and technologies used in the Fintech space, etc.

a. Global Fintech Momentum

Given the backdrop of case flyer, classroom discussion kickstarted with the instructor questioning on the global scenario of Fintech investments. Discussion highlights were as following:

• According to Accenture analysis, Global investment in Fintech ventures reached another all-time high in 2017, buoyed by a surge in funding for startups in the United States, United Kingdom and India [Exhibit (TN)-II]......

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Exhibits

Exhibit (TN)-I: Classroom Discussion Dashboard

Exhibit (TN)-II: Global Fintech Financing Momentum

Exhibit (TN)-III: Fintech Ecosystem

Exhibit (TN)-IV: Emerging Fintech Technologies of Most Interest in Next 3 Years

Exhibit (TN)-V: Credit Bureaus in India

Exhibit (TN)-VI: Reasons for Poor Credit Scores

Exhibit (TN)-VII: Details Used by Bureau(s) for Credit Scoring

Exhibit (TN)-VIII: Sources of Alternate Data

Exhibit (TN)-IX: CreditMantri’s Offerings to Credit Seekers

Exhibit (TN)-X: Credit Mantri’s Success Factors

Exhibit (TN)-XI: CreditMantri’s Competitive Positioning

Exhibit (TN)-XII: Credit Penetration in India Remains the Lowest

Exhibit (TN)-XIII: Focus Areas for Future Growth

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Abstract

This Case Flyer1 can be used to understand CreditMantri's business model in the backdrop of evolutionary Fintech ecosystem in India. Buoyed by the 3 As - Accessibility, Artificial Intelligence and Analytics, several new-age Fintech startups have been redefining Indian Banking system. Fintech is a rapidly evolving segment of the financial services sector where tech-focused startups and other new market entrants are disrupting how the financial services industry traditionally operates. With a large market of underserved/unserved customers, increasing mobile penetration, favorable demographics, an active startup ecosystem and a large technology talent pool, India has a potent opportunity that is waiting to be seized in the Fintech space. In the last few years, the Indian economy, which is significantly cash-driven, has taken advantage of the Fintech opportunity. With a range of options, including e-wallets, lending and insurance, the variety of services provided in this sector are immense and have changed the way consumers carry out their daily transactions.

The financial services market in India has largely been untapped to rural and semi-urban geographies, with 40% of the unprivileged population having no association with any bank and more than 80% of the transactions carried out through cash. This represents an opportunity for Fintech startups to massively spread their wings in different segments. Founded by 3 ex-bankers in 2012, CreditMantri intends to change the way credit is delivered in India by harnessing the power of technology and digital platform. CreditMantri helps users build their credit profiles, understand where they stand and unlock their credit potential. On the CreditMantri website (www.creditmantri.com), users can begin building their credit profiles with data from Equifax. This is then further enhanced with data from alternate data sources. Its unique model is built on the premise that when information is transparently made available to both borrowers and lenders, decision making is simple and noise-free. Borrowers gain by having a better control over their credit health and thereby make an informed product choice. Also, borrowers benefit by applying only to those lenders, who are willing to lend them and they can as well opt for credit products, credit improvement services at price points acceptable to them. Lenders gain by not having to waste time and energy sifting through the applications that don’t match their lending criteria. What is CreditMantri’s business model? How does it make money? What are the challenges in increasing the credit penetration? Can CreditMantri shift the power of influencing from credit bureaus to credit scores?

Pedagogical Objectives

(a) To understand the emerging ecosystem of Indian Fintech and discuss on how the new-age Fintech companies can impact the Indian Banking Industry

(b) To understand the need and importance of credit scores from the retail banking point of view and discuss the role of Fintech companies in augmenting and increasing the penetration of credit to rural and semi-urban Indian customers

(c) To discuss CreditMantri’s business model and debate on the impending challenges in scaling up its business

Case Positioning and Setting


This Case Flyer can be used for the following:

MBA Program/MDPs: Retail Banking - to understand the emergence of Fintech ecosystem in India and also to understand Fintech startups like CreditMantri who can change the banking landscape in India

1 Based on "When Credit Gets You Cash", Economic Times, Brand Equity, March 28th 2018, Page 2


This Case Pack Includes:
- Abstract
- Case Flyer
- Analysis


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