Co-lending is designed to primarily cater to the priority sector by bringing together the capital availability of large banks and the physical reach and proximity with customers of the NBFCs.

The company continue to innovate platform towards the current needs in the lending ecosystem and try to remain state-of- the-art, Stated Krishnan Iyer.

Finezza

Uniquely positioned in the growing credit ecosystem, Finezza is a homegrown B2B Lending Lifecycle Management (LLM) solution provider to help its clients assess an applicant’s creditworthiness to reduce incidence of bad credit and streamline the lending process from start to finish. It is founded by Industry Professionals who carry between them long experience in BFSI, software product development, productmanagement, and enterpeise sales and marketing.

Having formally come into existence in 2019 — a time when democratization of credit was an all-pervading topic and electronic payments infrastructure (NEFT, RTGS, IMPS, NACH), PAN, UIDAI, GSTN, and UPI were already set up — Finezza helps fintech’s, loan originators, aggregators, and lenders utilize its platform (available under SaaS, private cloud, and on-premise deployment models) with secure APIs for credit evaluation, credit underwriting, risk management, workflows, decision making, and loan management.

The platform is designed to manage the entire lifecycle of a loan: from loan enquiry through its retiral -managing the intermediate stages like lead, loan application, loan proposal, loan sanction, loan set-up (distinct loan record with its repayment schedule), loan management (management of inflows, dues, overdues, accounting, bureau reporting), and collections.

Krishnan Iyer, CEO & Co-founder, Finezza has been with the software industry for over two decades. He has worked in organizations such as Talisma Corporation, Microsoft Corporation, and IBM. In his last stint, Krishnan was managing IBM’s India Softwarebusiness.Krishnan is a post graduate in computer science and he holds a PhD in Marketing from the Indian Institute of Management (IIM) Indore. His research was focused on organizational buying model ofradical software innovations about which, not much was known. Krishnan’s research paper was accepted and published by the Journal of Business and Industrial Marketing, USA. He possesses deep domain knowledge across the BFSI sector having worked on client projects in banks, mutual funds, and securities companies. Krishnan is known for his relationship buildingcapabilities and his ability to craft, and close large deals.In his role as the CEO of Finezza, Krishnan is primarily responsible for the marketing direction, clientacquisitions, and client relationships.

Q1 How Finezza is transforming the traditional lending institutions through technology in the new-age digital lending ecosystem.

 Today, lending is standing at the confluence of need for scale, faster introduction of loan products, ecosystem integrations by the lenders, the need for faster turnaround and convenient access to credit by customers, and availability of third party and government data pools to digitally identify, analytically personify a loan applicant, and underwrite a loan.

The government, RBI, and think-tanks have collectively done a great service to the citizens and the financial ecosystem by putting the rails for the digital financial services (especially lending) bandwagon to run. Think of UIDAI, e-Sign, V-KYC, UPI, Account Aggregator, GSTN, and the credit bureaus

The traditional lenders have generally remained technology starved because providers have focused only on the top 5% of the lenders who provide 80% of the loans. At Finezza, we understood that because of their scale, large fixed costs cannot be borne by the traditional lenders. At the same time, the scale will again be a hindrance on variable pricing because the supplier won’t find it attractive. Therefore, for traditional lenders, we have come up with a fixed price model for implementation as well as platform subscription that is affordable for them, and that allows us to partner with them in their growth stage so that they become our large subscribers later. This offering is available to all lenders who will lend not more than INR 500 Crore cumulatively in three years.

Q2 How your Co-lending solution will help Banks and NBFC to cater the lending in priority sector?

Co-lending is designed to primarily cater to the priority sector by bringing together the capital availability of large banks and the physical reach and proximity with customers of the NBFCs. An NBFC that caters to the affordable housing segment in the semi urban or rural locations, can serve the market at a larger scale when a large bank is ready to fund 80% of the principal such that the loans are co-lent by the NBFC and the Bank while the customer relationship is managed by the NBFC. While the idea is simple to understand, operationalizing it is laced with challenges. " The NBFC and the Bank will have different rates of interest whereas the customer will get a loan at the bended rate. Therefore, a single loan needs to have three schedules – the 100% one for everyone, the 20% one for the NBFC, and the 80% one for the Bank. Moreover, when the instalments will start coming in, the money will have to be distributed between the NBFC and the Bank not simply as 20% and 80% which will be only for the principal, but with the terms of lending like interest rate, delayed payment charges, penal interest, delayed interest, and so on, as agreed between the NBFC and the Bank.

Finezza’s co-lending platform will automate the entire processing of co-lent loans by managing the three schedules of the loans, help set up and manage the terms of engagement between the NBFC and the Bank, and help account for the loan inflows based on the agreed terms.

Q3 Could you please elaborate on your latest offering that will address the current estimated credit gap in the MSME sector in India.

The MSME sector is one of the most underserved segments in lending. Moreover, their biggest problem has been accessing  loans because they are spread wide and deep in geographical terms. Access to credit for this sector will be a key driver for the economic growth of the country because the MSME sector is also the biggest employment generator.

MSMEs are key players in any supply chain. They need short term credit to maintain working capital in order to keep operating smoothly, and concomitantly, the smooth functioning of the supply chains they are part of the industry ecosystem, MSMEs are associated with large organizations (ancillary suppliers to a large automobile manufacturer or suppliers on a large market place). It is in the interest of the large organizations as well that their MSME partners are well capitalized. If we have to see this as an ecosystem, the large organization will be the anchor, the MSMEs associated with it will be the borrowers, and the providers of credit will be the lending partners. For any company, be it a fintech or a lender, operationalizing supply chain financing will need management of limits at the Anchor, lending partner, and borrower levels and allow lending within these limits while also replenishing the limits when repayments happen. Also, in certain cases, the large organizations allow for interest subvention.

Finezza’s offering for the lenders and fintechs in the supply chain financing sector operationalizes limit management at all levels – anchor, partner, and borrower, allows for configuring different products in the limit like B2B BNPL, ability to convert bullet payment in instalments on the due date, fixed date repayment, fixed term repayment, and such which is a big challenge for the lenders and fintech players.

Q4 Please highlight the developments and future plans of the organization?

Finezza is focused on building the digital lending infrastructure for its customers. We continue to innovate our platform towards the current needs in the lending ecosystem and try to remain state-of-the-art. This is evident from our staying with the curve on line-based credit and co-ending. Further, as an organization, we are working closely with the Account Aggregator framework.

India, in a way, is pioneering digital lending with focus coming from the government, Banks, NBFCs, Fintechs, and different data and API plays. As is the case with any story, there needs to be a common thread that brings all the beads together. Our endeavour is to be, like that thread, be the platform that brings together the different current and upcoming capabilities that are and that will be parts of the digital lending rails, and operationalize digital lending.

We have reached a certain scale on our own. To pursue further growth, we will be very soon meeting investors for our Series A fund raise.