How is Technology Transforming Rupeek to become India’s Largest Asset-backed Digital Lending Platform

Gold has been an integral part of Indians’ household wealth. Indians inherit, buy and hold Gold for financial security, social status, and cultural values. Indians own more than 1 trillion USD worth of Gold — with 2/3rd of the gold demand concentrated in rural areas. Due to the emotional value associated with Gold, people rarely sell their jewellery. Instead, they pledge their jewellery as collateral to get short-term secured loans to meet their financial needs.

What’s staggering is how large this market is. More than 300MM people in India hold gold-related assets! Many small and medium-sized business owners such as Kirana stores, farmers, fruits and vegetable vendors, and traders constantly need access to working capital due to fluctuations in incoming cash flow. Individual households also need access to money for their other financial needs such as education, medical bills, or simply to meet their ends. These people get loans against Gold through either organized or unorganized channels.

Traditional banks and NBFCs operate in the organized sector and have their own sets of challenges in terms of high interest rates, cumbersome processes, and delays in loan processing. Pawnbrokers operate in unorganized sectors, largely exploiting people by charging exorbitant interest rates and predatory practices, leading to a lack of trust and transparency, making it very stressful for people to avail loans.

Enter Rupeek.

Rupeek starts its Gold Loan Journey

Established by Sumit Maniyar, Rupeek started its journey in 2015. It was the first in India to disrupt the traditional gold loan industry by giving customers the convenience of doorstep gold loans. Rupeek built a technology platform enabling customers to get easy access to gold loans at the most competitive interest rates within hours of the customer’s request.

Customers use Rupeek’s platform to digitally request for a loan. Rupeek’s proprietary platform mobilizes its ground workforce to send agents to customers’ homes within an hour of the customer’s request, followed by an appraisal of the Gold at their home via state-of-the-art technology. Rupeek’s agents store the gold assets in smartDNA-technology-secured packets and safely transport them to Rupeek’s large vault network for secure storage.

In the background, Rupeek’s platform connects with a network of lenders, gets the best possible interest rate product, and instantly disburses money to the customer’s bank account before agents leave customers’ homes.

Rupeek’s platform makes it super easy for customers to do the following at a click of a button:

• Make repayments
• Renew their loan
• Release their Gold or
• Partially release their jewellery for occasions or festivals without having to restart a new loan.

So far, Rupeek has built an excellent platform that caters to more than 100K customers across 20+ cities and disburses loans over 300cr per month. However, this is just the beginning of the transformation in the Indian asset-backed lending space. To understand this better, we take a step back and look at the macro credit industry and the problem India faces.

The Big Picture: Credit gap in India

Credit is an essential aspect of a country’s economic growth. The more the credit, the more consumers spend, which requires more capital investment from the government and corporations, driving economic growth and higher per capita income. Although India has a population of more than a billion people, compared with the US, China, Japan, France, and Germany (some of the largest economies in the world), the credit penetration in India is quite low (as shown in the graph below).

While there is a tremendous need for credit among the large Indian population, only 70MM customers have some form of credit based on their credit score. Although the government has kick-started many initiatives where large and small fintech players give unsecured credit lines to people, this has only partially solved the problem. Unlike other big economies where you can issue larger unsecured credit lines relying on the wealth of consumer data, the availability of rich data is still scarce in India, mainly because India is still a cash-heavy economy. Based on my experience building unsecured lending products in the past, the moment you start issuing larger credit lines (about 15–20K rupees), the default rates start spiking.

How do we solve this problem then?

The interesting fact is that while Indians don’t have rich data, 95% of their wealth resides in some form of assets like Gold, Real Estate and Vehicles.

Despite holding a large amount of wealth, people are not able to get easy access to credit, slowing down consumption. The traditional gold loan industry has solved this problem to a certain extent. But, as mentioned earlier, it is still the tip of an iceberg. The majority of the people use their assets to get credit as a last resort, and there is a negative social stigma for that type of credit.

We are on a mission to change this perspective. We believe people can monetize their assets better. We believe people can put their assets to work by getting credit against their assets. If we offer a credit line to people against their assets, they can use the credit line for paying anything they want when they want — unlocking credit for millions of people in India whose 95% of net worth is in assets.

To do so, we must think beyond the doorstep gold loans — how to transform every Indian’s assets into credit, spurring the country’s massive economic growth?

We at Rupeek are innovating and building new financial products. We are building a solid technology-led platform to power a range of credit products. The platform we are building is backed by a bold technology vision.

Rupeek’s Technology Vision

“Build a highly scalable, configurable, resilient and secure, multi-asset backed lending platform with the largest network of lenders, merchants, and affiliates to serve credit needs of millions of customers.”

Each word in our vision statement has been carefully crafted and has specific significance to the mission Rupeek has embarked on.

First of all, since people hold many types of assets, we must build a multi-tenant platform that caters to different kinds of asset classes and not just Gold. Hence our platform needs to be multi-asset and be configurable.

Secondly, we need to expand to multiple cities and thousands of pin codes pan India. We need to provide the largest selection of credit products from banks and financial institutions across the country. We need to build multiple financial products that enable customers to consume credit across thousands of merchants across India. Therefore, our platform needs to scale to handle our expansion across all fronts.

And finally, reliability and security are important aspects for any financial platform. Our platform needs to integrate with multiple banks and financial institutions, many of which still run on legacy infrastructure and cannot keep up with the rising customer expectations. Therefore, we need to build a high degree of resiliency in our tech platform to shield customers from issues arising from the broader ecosystem. We also need to protect their data and them from fraud and abuse. Accordingly, we need to build the best in class resiliency and security in our platform.

In my experience, I have seen people rally behind the vision statement when it’s powerful yet simple and easy to understand. However, to put any vision into execution, you need to help teams visualize the north star and how to get there. Vision actualization happens only when a great team, a great culture and flawless execution strategy come together. In the next blog, I will talk about how we put our vision into execution at Rupeek.

Stay tuned!