In an insightful conversation on ‘BFSI Mavericks’, KredX’s Chief Technology and Product Officer, Devang Mundhra shares his thoughts and perspective on how they have been building KredX and doing things at scale. Edited Excerpts:
Q. How have the developments been at KredX?
Devang: We started seven years ago and are India’s largest supply chain finance platform. We started on a niche product, ‘invoice discounting’, to provide working capital to businesses. Today we have other products, too, like channel financing, pay-later, global pay, and SaaS products to manage financial workflows.
Q. How have SMEs benefited from invoice discounting?
Devang: Banks and large corporates have been doing it for a long time, but it wasn’t available to small businesses. Many businesses have changed over a period and transformed completely through the internet. Working capital requirements have never been fully satisfied through formal channels of finance; with invoice discounting, companies get larger credit limits at reasonable rates. Also, tracking at a unit level is a much better product.
Invoice discounting helps business track their metrics better.
Q. How’s your customer profile?
Devang: We have customers across sectors, shapes and sizes. The starting point was customers with new business models like services companies, logistics companies, etc., who probably didn’t have much collateral to give to the bank. Today we are working with all kinds of sectors and sizes of customers, from textile to whitegoods to services,
Access to supply chain finance was available to large businesses only via large financial institutions. We aim to bring it to small and mid-size corporates as they develop their technologies with ERP adoption. Moreover, all this data in a structured and trustworthy format will help to end their working capital issues.
Q. How different is the pay-later option?
Devang: Pay-later is a solution which helps buyers get goods at credit at zero cost, and sellers can sell more goods. In a B2B transaction, there are two main elements, the first element is to get more customers and the second element is to collect money. About 95 per cent of B2B transactions happen on credit, which causes a challenge for companies to acquire new customers because they don’t know how they can evaluate the creditworthiness of their customers. They are not in the business of assessing credit risks but of providing goods and services.
At the same time, they cannot get more customers because trust is an issue; they can do it only after a long relationship is established. So a lot of energy is spent on follow-up on collections etc. Our Pay-later is aimed toward solving this problem. It helps businesses new customers and not worry about getting payments from new customers; hence it is a massive win for the sellers. At the same time, for buyers, it opens up avenues to buy goods from new sellers without having to pay upfront.
Q. How does the tech deployment look like?
Devang: We at KredX believe in deploying technology to provide innovative products and better customer services. More than one-third of our workforce is focused on technology, engineering and products. Although Tech has always been the backbone for our products, finance is a lot about scale and managing risk. The best way to get scale with managed risk is through technology.
Over the years, we have built a lot of processes, checks and balances to enable us to make faster decisions without compromising risk and quality.
Today from onboarding to disbursing, we can do that in two minutes. That’s possible only because we have been able to build the right tech and solution at scale. It is one of our biggest differentiators in the market.
