August 2, 2024 • 56 mins
In this #fintech special episode, we dive deep into the world of lending - our in-house investors Sanjay Swamy and Shivani Kulkarni discuss the massive $500 Billion Dollar Credit opportunity for entrepreneurs to leverage.
Why Lending?
- #india is the 3rd largest Fintech ecosystem in the world (behind US, China); We have 10,000 fintech startups, in this pure-play lending startups are 2500 (25%)!
- Emergence of Co-lending as a business model will be a game-changer
- Digital public infrastructure like #aadhaar , #upi will help Indian entrepreneurs build large
- AI will enable new verticals to create several #unicorn like healthcare, travel, agriculture and many more
Listen/watch the podcast to learn more about:
0:00 - Opportunities and Challenges in Lending
7:43 - The Digital Infrastructure Revolution in India
15:33 - Segmentation and Opportunities in Fintech
26:29 - The Evolution of Co-Lending in India
34:16 - Opportunities in Lending and Finance
46:23 - Revolutionizing Fintech Infrastructure and Automation
Whether you're a fintech enthusiast, an entrepreneur, or just curious about how lending is evolving, this episode is packed with valuable insights you won't want to miss!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Sanjay Swamy (00:00):
Into entrepreneurs .
We are looking at a lot ofco-lending opportunities.
Shivani Kulkarni (00:04):
India is not just one India, but there are
several Indias in it, right so?
Sanjay Swamy (00:09):
you can pick any segment of users, and there's
100 million of them availablefor you to target.
Shivani Kulkarni (00:15):
Top 10 listed companies in India today.
Three of them are financialservices.
Sanjay Swamy (00:19):
It's not like people are not credit worthy,
it's just that you don't knowthat they are credit worthy.
Shivani Kulkarni (00:23):
There are just 40 million people who have
credit cards 530 billion dollarsof you know credit gap.
Sanjay Swamy (00:30):
That's there.
You know you can't throw moneyat the problem and say I'm just
going to get a big fast I thinkbanks are very keen to do
co-lending collections.
Shivani Kulkarni (00:38):
There is an intent issue and an ability
issue so banks lend out to nbfcs, nbfcs in turn may lend out to
fintechs, and fintechseventually reach the customer.
Sanjay Swamy (00:48):
We don't have audacious enough founders.
Shivani Kulkarni (00:55):
Hello and welcome to Prime Venture
Partners podcast.
I'm your host, shivani Kulkarni, and today I have with me our
partner, sanjay Swami, and weare going to talk about all
things lending.
Welcome, sanjay, to the podcast, and how should we start?
Sanjay Swamy (01:11):
Well, it's great to be welcomed back to our own
podcast.
But yeah, on a serious note,maybe I'll start with a question
for you, shivani, and it's beena couple of years now for you
here at Prime and, of course,you've been an investor in
Flipkart and earlier worked atEvendus as well, so you've seen
this industry a lot.
You know, as they say,certainly in fintech and
(01:34):
particularly in lending.
You know, a lot of people askis lending the only business
model?
You know, are all businessesreally just lending businesses?
And so, just curious, you know,as you've been spending a lot
of time with founders now oflate as well, and looking at
policy, looking at opportunitiesaround co-lending and whatnot,
what are your views on?
Where are some of theopportunities in the space?
(01:57):
And, you know, maybe just painta little landscape of the space
itself.
Shivani Kulkarni (02:00):
Sure, I mean happy to.
So maybe let me take a stepback before I get into FinTech
itself.
Right, and let me just talkabout financial services in
India, because that, of course,is the backbone, large
opportunity.
I mean, if you just see the top10 listed companies in India
today, three of them arefinancial services, or rather
banks.
So HDFC, icici, sbi, together,I think top three, I think in
(02:26):
the top five, these are one orthree of them and growing right,
like most of them grow at30-40% year on year.
So you can just see how largethe underlying opportunity is.
And yet when you just maybe digdeeper, you will see that there
is still so much underpenetration.
I mean, I'll just throw somenumbers, I'll try to give some
context as well.
(02:47):
But SME credit 500 billion plusof credit gap, like this is how
much you can actually lend tothe SMEs, but they are not
getting access to that credit.
If you talk from a consumerperspective, there are just 40
million people who have creditcards.
Maybe there are people like youand me who might have like five
, six credit cards.
Maybe there are people like youand me who might have like five
, six credit cards.
Okay, you don't have, I havethree, four, but yeah, I mean we
(03:11):
have access to a lot of thesethings, right, but if you take
the 1.4 billion today that wehave in India, only 40 million
have access to credit cards.
Similarly, personal loans andother products also only scratch
the top surface.
So I think there's tremendousopportunity here to build right
and I think fintechs over thelast 10-15 years have captured
(03:32):
some amount of it.
I would say they are also stillscratching the surface.
There's lots to do.
But if you just take from anumbers perspective again, india
is the third largest fintechecosystem today in the world
world after US and China, ofcourse and there are close to
10,000 startups.
Now you asked like is creditthe business model or not?
(03:55):
So of these, 2,500 are pureplay lending startups and rest
everybody, I think, whilelending may not be the primary
monetization model, but they dofind their ways and come to
lending, but 2500 are pure playlending.
Now maybe I can also get intothe various aspects or various
(04:15):
business models before we getinto specific questions on this
podcast.
In lending itself, I think twobroad categories in which people
are building today.
One is on the consumer lendingside.
So, again, people like you andme or people, general consumers,
right, that kind of creditproducts you can use to service
(04:37):
this segment.
So that forms one broadcategory and the second broad
category is on the sme side,that's on the business side.
Now, both these categories youcan service through secured and
unsecured lending products.
Secured just for our viewers tothrow some light.
It's whenever a bank gives youa loan against an asset or you
(04:58):
use something like maybe yourproperty or an asset as a
collateral.
That's when it's called securedlending or or a vehicle, for
example.
Vehicle, for example, like autodoes.
So that is one form, which issecured lending.
And then there is unsecured,where the customer, based on the
data itself, is gettingunderwritten.
So yeah, I mean just becauseyou asked me the landscape,
(05:20):
right?
These are the broad twocategories and I think today we
see startups building acrossthese segments.
So there are opportunities ineach of these.
Maybe, as we go deeper, we canexplore some of this yeah, I was
just going to say that.
Sanjay Swamy (05:32):
You know, when you were rattling off those numbers
around 40 million credit cardsand so on I've been a fintech
entrepreneur and later, you know, worked on adhar, and then
worked on india stack, and, and,and then, of course, been more
of a VC over the last decade orso.
Those numbers just don't seem tohave changed, although we know
we ourselves have got probably15, 20 companies in our
(05:54):
portfolio who are doingphenomenally well and, of course
, there has been a lot ofpenetration of at least digital
financial services UPI of coursebeing pervasive of at least
digital financial services UPIof course being pervasive.
From a demand gap perspective,it really doesn't seem like
we've moved the needle that muchand it's also a reflection of
(06:14):
the fact that there is a lotmore need for credit and a lot
more opportunity to deploycredit.
But I think if you're anentrepreneur looking at this
space, I would say there's nevergoing to be a winner takes all
in this particular space andopportunity.
I wouldn't say there are toomany opportunities that have
been spoken for entirely andthere will always be
(06:36):
opportunities, even now, forcompanies to come in.
Shivani Kulkarni (06:39):
One aspect that I wanted to touch upon,
right, and when you talk aboutneedle moving things, I think
this has been a key enabler forthis particular ecosystem, and
you have worked on the digitalpublic infrastructure yourself,
right, so would love tounderstand from your perspective
, what is the impact that someof these things like Aadhaar,
(06:59):
upi, what is it that you haveseen?
What has been your experienceon the impact that they have had
on not only financial services,but the larger ecosystem as
well?
Sanjay Swamy (07:08):
maybe we can start there yeah look, I was a
fintech entrepreneur before allthis existed.
Right, and part of the reasonstruggle to be a successful
entrepreneur was, amongst otherthings, it was impossible to
open a bank account.
It took three, four weeks forfrom filling an application form
to getting it approved, not tomention it was a process that
(07:28):
was fraught with the use ofpaper and probably a lot of
mistakes as well, right, andtherefore very expensive.
Fast forward to five yearslater, you know, and that was
part of the motivation to sortof be a player in the part of
the Aadhaar team.
You know, india suddenly had,you know, the foundations and,
of course, has grown, has builton it quite a bit, which is
(07:50):
something that most peoplearound the world would be
envious of, and I think ourentrepreneurs don't really
realize in some ways, because,you know, most of the youngsters
today have grown up in thepost-Aadhaar world, don't really
realize the luxury that we haveof this incredible digital
public infrastructurestarting-Aadhaar world, don't
really realize the luxury thatwe have of this incredible
digital public infrastructure,starting with Aadhaar, to do,
you know, authentication, aswell as electronic KYC e-sign
(08:15):
for documents, which is accepted, you know, in the court of law,
digilocker as a framework for,you know, storage of documents,
retrieval of authentic documents, so to speak.
Of course, we'll talk in moredetail later about account
aggregator, the consentframework, all of which are, you
know, really very importanttopics in themselves.
(08:36):
And India we've got, you know,state of the art and probably
you know, thought leadership inthis space, thought leadership
in this space and using these asthe foundational blocks.
If you layer on top of it,whether it's an ODAM ID for
small businesses, whether it isGST for understanding their
business flows or the cash flowsand, last but not least, on a
(09:00):
monster scale, upi, which makesmovement of money extremely
straightforward, right?
So all of these infrastructureelements did not exist 12 years
ago, right, and today they'rehere.
You know, we can't think oflife without them.
Just to give you some context,you know KYC.
I talked about paper.
One study that I had done atthe time was you know, the
(09:24):
telcos are, at the time, doingabout 1.5, 1.6 million kycs a
day.
Uh, which translates to about20 per second in a in a workday.
Right, it's one the time yousnap your fingers.
20 people in india got a newsim connection, but also, in the
process, they sadly cut down,you know, about a thousand trees
a day doing that, because thetree gives you about 80,000
(09:45):
sheets of paper if you do themath.
It's pretty scary actually as amillion trees in three years
that were being destroyed justdoing telecom KYC right.
So today you know, not only dowe have a better and more
accurate solution, right, it'salso ultra low cost and it has
helped bring a lot of peopleinto the financial system and be
(10:06):
able to serve them.
Just one other quick anecdotefor mutual funds, for example,
the commission used to be halfpercent, but the cost of KYC was
1500 rupees, which meant thatunless you invest 3 lakh rupees,
the commission is not paid off.
Now 4 million households inIndia can afford to invest 3
lakh rupees.
The commission is not paid offright.
Now 4 million households inIndia can afford to invest 3
(10:27):
lakh rupees a year.
But now with Aadhaar and witheKYC, all of a sudden you know
the cost of KYC is zero.
Suddenly a 10,000 rupee mutualfund investment is a very viable
product, right?
So the sort of saccharizationthat we saw the HULs doing with
shampoos and things like that isreally the biggest opportunity
(10:47):
facing financial services and Idon't think we have tapped that
yet.
We're still sort of just tryingto take the existing
opportunities and make them moredigital and try to make them
more accessible.
But you know, picture AbhiBaaki.
Shivani Kulkarni (11:01):
I think there's's a lot to be done yeah,
I think even on the paymentside, right, like just upi being
there, and with upi, auto payand few of these innovations, I
mean, if you think of just thelending flow itself,
disbursement and collections isso much more easier today.
I mean, a customer in a ruralarea may not have or may not
(11:22):
know net banking, cannot operateit, but with UPI and just the
amazing job that phone pays,google pays of the world have
done with the user interfaces,it's so easy to just set up an
auto pay and just get thecustomer to pay on time.
One aspect that you talked about, the KYC aspect.
But the second aspect that comeswhen actually in the lending
(11:44):
product specifically, isunderwriting and the
availability of data easily, andI think account aggregator
today is doing at least hasstarted to show some cost
cutting there in terms ofefficiencies there, because
account aggregator, if you thinkabout it, what it does is it
connects all the banks, mutualfund houses, pf, your PF
(12:08):
accounts, your LIC policies andthe data can be fetched if you
are an FIU or FIP and there arenuances there, right, but all
this data can be fetched veryeasily.
And think about it.
If you go to suppose, saytomorrow, any of the fintech and
want to apply for a loan, thefintech can easily fetch all
these details with your consent,and underwriting becomes that
(12:29):
much more easier.
So I think it's like you saidit's just the beginning right.
I think KYC was solved.
Now payments is solved with UPI, and I think this will also
solve, to a certain extent,underwriting or data issues as
well yeah, so I think, ifanything, that part has been a
little underwhelming in terms ofprogress.
Sanjay Swamy (12:49):
However, I think, from a startup perspective, it's
important to see that you knowif you just have access to the
same data that everybody elsehas got to me that doesn't feel
like a competitive advantage,right.
So I feel startups have to tryand figure out some proprietary
modes.
(13:10):
It's either access toproprietary data that, when
coupled with all the other datathat exists, will help them
underwrite better.
It's perhaps betterdistribution that will allow
them to access customers at alower cost access customers with
not just a lower cost, but alsowith some proprietary
information about them, and Ithink that's what startups
(13:31):
should strive to do.
Right, if everybody's going totry to do the same thing, at
some point the banks will win,because they do have the muscle
and the.
You know, if there is nothingproprietary about a startup,
then and that's actually where Ithink we struggle a lot when we
look at companies probablygetting a little ahead of
ourselves is what are theproprietary modes that companies
(13:52):
have built that, layered on topof the open, interoperable
rails that are there, will givethem an opportunity to grow
really, really fast, and andthat's what I would like
entrepreneurs to think aboutmaybe just building on that
right, like when a founder,maybe say a 25, 30 year old,
starts, he may not have accessto proprietary data or
(14:14):
distribution, right.
Shivani Kulkarni (14:15):
So how do you think an entrepreneur in this
segment should think aboutcreating some of these modes?
Sanjay Swamy (14:21):
because clearly, the simple answer entrepreneurs
wait till they're 50 years old.
Somebody would have created themode.
So it's the wrong answer, Iguess, of course no, but how do
you start thinking about like?
Shivani Kulkarni (14:32):
you start somewhere, right?
Uh?
How do you, I think, uh?
Sanjay Swamy (14:36):
first of all, you know, yes, we have 1.4 billion
people, but startups need tofigure out how are they going to
get to the first customer, thefirst, you know, if you're
talking consumers, uh, the firsthundred thousand customers, the
first, maybe one millioncustomers, right, and and turn
them into borrowers for aparticular product.
And if you start thinking inalong those lines, then you can
(14:59):
start thinking of what they call, you know, riches and niches.
Right, there are huge profitpools solving one problem for a
very small subsegment of thelarger population and because
you do that, actually very fewpeople are trying to solve the
same problem and you're likelyto win a disproportionate piece
of that market, right.
(15:21):
And when that happens, thatbecomes the foundation for how
you subsequently can become alarger company, right, and by
then expanding perhaps toadjacencies and so on, right.
So I kind of cringe whenfounders come and say well,
who's your customer?
Everybody can be my customer,right, that's the wrong answer.
It's true in all businessesnothing to do with fintech,
(15:41):
right.
So segmentation becomes veryimportant and when you're
focused on a very homogeneoussegment, then you'll start
finding a lot of sources forproprietary data.
You'll find a lot of you knowcommonality about that segment
where you can go and, you know,build some patterns around them
because you're targeting themvery in a very laser focused
(16:02):
manner.
So that, I think, is going to beimportant now the same thing,
the other thing that goes withthat is, even your go-to market
becomes very interesting,because you don't have to be
doing million dollar ipl ads andyou know sponsoring all the
teams because your customers are, you know, very well understood
by you, you know where they are, you know who they are
literally and and you know who,you know how to reach them.
(16:24):
So I think these are thingsthat startups have to do.
None of this is specific tolending or to fintech, but the
moment you can segment and andif you have a good, sizable
segment that is very homogeneous, a lot of these opportunities
will arise got it.
Shivani Kulkarni (16:39):
And uh, also, there are different types like
uh, I think Kishore Biani saysthis often right Like, india is
not just one India, but thereare several India's Bharats in
it.
Right Like, there are the top10 million, then there are like,
say, maybe 200, 300 million,and then there is the rest of
India.
So most of the fintechs, atleast in the last three, four
(17:00):
years that I have come across,tend to, most of them, tend to
target the top 10 million and,as a result, I think some stats
I can share.
Right Like, consumer credit hasbeen like this has been a
customer the top 10 million thathas been over-linked.
You will see in terms of theDPDs that they have, the number
of loans that they carry.
(17:25):
This has been a segment that hascredit cards, loans and 10
other type of loans.
So what would be your advice tofounders then, given that this,
obviously this segment is veryattractive, they earn a lot,
have the spending capability,should you go after that or do
you then target the lowersegments?
But then distribution and a fewother things might become
slightly more tricky?
So what would I mean?
Sanjay Swamy (17:46):
it's not one size fit all, but, if anything, that
you can suggest or yeah, I thinkyou know, as we have discussed
several times here, shivani, youknow the the opportunity that
has been created through thisdigital public infrastructure
that we've got is really to beable to reach, and the fact that
(18:06):
we have now what 700-800million Indians with smartphones
some huge number like that allof whom have Aadhaar, all of
whom can be technically KYC'dand issued a loan
instantaneously from any part ofthe country or to any part of
the country, instantaneouslyfrom any part of the country or
to any part of the country.
That's actually what hascreated the opportunity, right,
so you can pick any segment ofusers, and there's 100 million
(18:30):
of them available for you totarget Right now.
Every segment of users has gotgood people there, and you know,
the thing in India is, youactually have a problem of a
thin file, right, because thereisn't information.
It's not like people are notcredit worthy, it's just that
you don't know that they arecredit worthy, and now you need
to find other proxies, right?
(18:51):
So, yes, it's easy to lend tothe the upper 10 million, but,
frankly, that segment is notjust over lend to, they're also
fed up, right, so they're noteven looking for new products,
and you know the number of spamcalls that we all get you know,
offering us car loans when wedon't even have cars.
Um, you know, these are thingsthat uh, you know, I think this
(19:11):
segment is done with right now.
There will be an occasional, youknow innovator that will come
out and do something cute andyou know uh thing.
But if you are a startupstarting out, I think there's no
novelty in doing that.
I always tell founders, youknow, it's great to not succeed.
I hate to use the word failure,but you know, if you're not
successful attempting to solvesomething that nobody has ever
(19:31):
done, that's forgivable.
But imagine failing atsomething that five people have
shown you the right way tosucceed at right.
So I think, pick a problem thatis meaningful, where the
outcomes are going to have, youknow, a very strong upside, and
build moats around it.
Right, it's not meant to be easybeing an entrepreneur and
(19:54):
solving these problems, but ifyou solve the right problems for
customers for whom you're thefirst one solving them, you know
they will be loyal to you.
They're going're going to be,you know, and you can move up
the chain very quickly.
They will talk about your, yourproduct, to other peers of
theirs who they know probablybetter than you, then I think
there are tremendousopportunities here and I think,
(20:14):
if you look at some of ourportfolio companies have all
done that right, whether it isauto looking at leasing of two
wheelers, which is a hugesegment but the leasing product
never existed.
Or whether it's Finac going tosmall, medium retailers small
retailers, and you know, gettingthem in a working capital or
cashflow lending based on theirbusiness track record.
Companies like you know, navda,normata, finn, which is doing
(20:38):
solar rooftop financing formsmes, you know, moving them
directly from diesel to electric.
They're solving real problemsfor those customers and the
financial services are kind ofincidental to the business
problem that they're solving forthe user and I think most of
these apply to non-fintechcompanies or non-lending
(21:00):
companies as well.
Shivani Kulkarni (21:00):
Right, but when you specifically come to
lending companies, there mightbe certain things like
collections, maybe supply ofsupply of capital.
So any advice that you have forfounders about how do they go
about these things likecollections?
Sanjay Swamy (21:16):
yeah, so, first of all, you know when you're
dealing with money, particularlyother people's money, you're in
a regulated space.
Right now there may be uh thethe law allows for fintechs to
probably do five percent as fldgand partner with an nbfc or a
bank and things like that.
But make no mistake, you're inthe business of managing uh
(21:37):
money and from a governance andcompliance perspective, this
company is no different from ifyou were regulated, right.
I think that has to be themindset and, as we've talked
many times, you know, we alwayssay there's no concept of a gray
area in this business, right.
So conveniently interpretingthe fact that the regulator was
silent about something to say,okay, they didn't say we cannot
(21:59):
do it is a wrong way to go aboutbuilding a business.
Right, we have to look at itand say, okay, if they have not
said that you can do it, it'sprobably not allowed, right.
And so if you take the approachof in the scale of black, white
and gray in between, the onlything that you can do in the
financial services or fintechplays is it explicitly white.
(22:21):
Otherwise there's no gray area,it's just black, right.
If you have that discipline,then it's harder, but it's
actually easier because there'sno guesswork here, right?
So you clearly know what isallowed, what is not allowed and
you stick within the rails.
As you mentioned right at thebeginning, 530 billion dollars
(22:42):
of you know credit gap, that'sthere.
One doesn't have to do a lot ofmagic to become a big company
here.
One has to just be consistent,diligent and not try to grow
faster.
You know you can't throw moneyat the problem and say I'm just
going to get a big fast.
You have to actually put in thehard yards and you know build
up.
You have to see the cycles.
You have to see put in the hardyards and you know build up.
You have to see the cycles.
You have to see the like auto,for example.
(23:03):
You know it's a three-yearleasing product.
You know you can't say thatthis thing is working until
you've seen a few customerscomplete the three years.
Right.
So you can't just blindly scaleit in the first two years
saying, oh yeah, you know thismodel is going to work, so
things like that will make for awell thought out business.
Founders have to be patient,whether in your 20s or in your
(23:24):
50s, and you need to follow therules.
Right now.
The regulator.
You know, for all the cynicismthat the startup ecosystem
sometimes throws at them, thisregulator is actually very
forward thinking.
Of course they're first andforemost, they have to protect
the.
They have to make sure thatthings don't fall off the rails.
Secondly, they protect thecustomer, because it's their
(23:46):
money that we're talking aboutand safeguarding.
But outside of that, prettymuch the primary goal that the
regulator has in mind isinclusive growth.
Can we bring more people in astructured manner into the
formal economy?
Can we bring more people in astructured manner into the
formal economy?
You know, during the IndiaStacklaunch days, we used to have
this character called Rajini,who was a lady making pakodas,
(24:09):
who would borrow 900 rupees atthe start of the day and return
1,000 rupees at the end of theday and along the way, probably
make like 200 rupees of profit.
Right, that's an outrageous youknow, whatever.
What about 3600 percent ofinterest that she was paying?
But she didn't realize it.
But with adhar and ekic andesign and digilocker and upi,
(24:31):
for the entire part of thedisbursement, for payment
collection from customers andfor repayment, now, all of a
sudden, in a completely digital,this person could be eligible
for, you know, maybe not 8%, butcertainly a 15 to 18% rate of
interest loan and in the formaleconomy, and you can imagine
what an impact that would haveto such a person, right?
(24:53):
So that's the big opportunity,that and the dream that we've
all been working towards, and Ithink we're still only getting
started here.
Shivani Kulkarni (25:00):
And I think, just on the regulatory aspect
right, I think they have beenlike, while they have encouraged
renovation I mean there havebeen so many sandboxes, so many
new concepts coming from theregulator itself right they are
also very vigilant because, justlike I was talking about the
consumer credit example, right,like the recent regulations on
increasing the risk weights, Ithink is directed towards the
(25:24):
right end, like the end goalthat they have in mind is more
step.
Sanjay Swamy (25:27):
Can you elaborate a bit on that?
I think it's also an area thata lot of you've done some work
researching it, but be great foryou to talk about that.
Shivani Kulkarni (25:33):
Yeah, so I mean just to give some numbers.
There again, right, I thinkretail credit, especially
personal loan, and credit cardsthere again, right, I think
retail credit, especiallypersonal loan and credit cards
have the overall outstandingamount.
If you see balance outstanding,that has grown 30 40 percent
year on year over the last two,three years.
Now, what that this hasresulted into is, again, like
(25:53):
the top 40, 50 million customershave access to it.
But if you think about theirearning potential and how much
they can repay per month, right,their repayments have sometimes
exceeded the earning potentialand RBI has constantly seen this
.
Like you can see that, okay,this customer has overdue.
Like it reflects on your creditscore, right, it comes in your
(26:14):
credit report.
So if the customer has anoverdue and somebody else is
going and giving this customeranother loan, then that's not a
good sign.
It's obviously not a sign of astable economy.
So that's where I think theystarted noticing some of these
signs.
Last year, in September, octoberand in November they took the
decision to increase the riskweights.
(26:35):
What that essentially means isthat banks typically sources of
capital today in India are banks.
So banks lend out to NBFCs.
Nbfcs in turn may lend out tofintechs, and fintechs
eventually reach the customerright, unless the fintech itself
is an NBFC.
So in this particular chain,given that banks are at the top,
what they said was that, okay,if you're lending out 100 rupees
(27:00):
to an NBFC, you need to havecertain reserves to protect
against any scenarios wherewhich can cause instability.
Right, so you need to.
The amount that you need tohave as a reserve is going to
increase by 25 percent.
So if you were to save 10rupees, you're going to now save
(27:20):
12.5 rupees.
So that is why the interestrates will then go up, because
on this 12.5, the bank is notearning anything, right?
So that's how they tried tocontrol the overall scenario,
and it's a very nuanced way ofdoing it, like slowly sucking
out liquidity from the market,instead of doing it overnight or
, you know, not allowing certaintype of models.
Sanjay Swamy (27:41):
So I think they have the responsible thing to do
is correct.
Shivani Kulkarni (27:44):
Exactly, it's a responsible thing to do.
It's a very responsible thingto do and over time, obviously
things will cool down and youknow these customers who have
been over lent they'll also cometo a certain uh equilibrium and
then you can again start thegrowth Very good.
Sanjay Swamy (28:00):
So one area you and I have been working on and
maybe it'd be good for you tosort of explain to the audience,
is this whole space ofco-lending right?
I mean, we have both NightFinTech in our portfolio, which
is sort of at the infrastructurelevel, enabling this for banks
and NBFCs, and then, of course,we have know navdhan and metafin
(28:22):
, that are nbfcs in ourportfolio, that are, uh,
leveraging co-lending be youknow, as a huge trend moving
forward.
Be good for you to uh, you know, since you've researched this
at a more fundamental level, youknow structurally what has
changed and why is it sosignificant got it.
Shivani Kulkarni (28:41):
So yeah, I think the into entrepreneurs.
Sanjay Swamy (28:45):
We are looking at a lot of co-lending options yeah
, we are.
Shivani Kulkarni (28:50):
Uh, so, in case you're building, you know
where to come.
Uh, so, yeah, just elaboratingon that, right?
Um, so there is this commonmisconception that NBFCs get
valued on their books, right,and they have only whatever a
certain amount of capital thatthey can have access to.
(29:10):
So if you have raised 100crores in equity, you can
probably raise, say, 200 croresin debt and lend out a total of
300 crores, right, I mean, I'mjust doing some quick, simple
math here.
But when you use co-lending,this entire constraint gets
opened up.
Like you can actually lend alot more and build a lot bigger
(29:32):
books.
You can service a lot morecustomer segments without taking
necessarily the risk on yourown books.
So here the way it works is thatyou have banks at the backend
who become your partners in this, and co-lending is essentially
a risk sharing model.
So you take 20% of the risk andthe bank takes 80% of the risk.
(29:54):
So in this way, if you put in,say, 100 bucks, the bank will
put in 400 bucks and overall youcan create a pool of 500 and
lend to the customer.
So this is how it like even theclassic fldg models.
Like, like earlier, before theagain regulation came in, people
used to have 10 20 in fldg and,like, we used to be okay with
(30:17):
it, given that you know this issome sort of skin in the game
for the startup.
And then obviously, banks andnbfc's at the back end come lend
.
This is no different than aclassic fldg model and here
again, you are putting in 20 andthe banks are putting in 80,
right, so you can actually goout and build a large, scalable
(30:37):
company without essentiallyraising too much equity.
So that's how co-lending worksand that is a mechanism right
now.
Sanjay Swamy (30:44):
This segment for this is the big nuance.
Difference, of course, is fldgis sort of a default guarantee,
whereas in co-lending you areputting up 20 percent of the
money as a part of the loan andthe bank is putting in 80
percent, whereas in the past itused to be you have to raise
that money as equity capital andput up the entire 100% right.
So suddenly for an NBFC you'resaying they don't have to raise
(31:07):
a lot of equity for them to beable to serve the customer.
Now, obviously they'll begetting lesser ROE on the 80%,
but they'll be getting theirfull ROE on the 20%.
Shivani Kulkarni (31:20):
Correct, but then ROE actually will be higher
, because then it is actuallyROE will be higher because
return on equity or equity basisremaining the same, but you're
making some money on the 80%that the bank is lending because
you are taking care of, say,distribution collections.
So you're providing a serviceto the bank, right, and
obviously there is a tech layer,with somebody like a night
fintech today is doing so.
(31:42):
Yeah, and one more thing hereuh, I think if in the priority
sector, right, like that's thesme, women entrepreneurs, I
think banks are very keen to doco-lending, because for them as
well, they want to enable thisparticular segment and they
necessarily don't have theirdistribution reach all the time,
right, and some of the fintechscan specifically, like you said
(32:03):
, like take a niche and solvesomething for them, so the
fintechs can actually solve forthis segment and the banks will
be more than happy to partner.
So I think it's a very, uh,very attractive area for
somebody to build?
Sanjay Swamy (32:14):
wonderful?
No, because I think, uh,historically we used to always
wonder about whether nbfs wereventure fundable.
But suddenly, with theco-lending model, especially if
you can leverage one is to threeor one is to five at some point
all of a sudden it becomes avery attractive value
proposition.
And the other nice thing aboutit is you're now a first class
citizen with a regulator.
(32:35):
You are yourself regulated, youare yourself regulated, and so
there's no sort of overhang of.
Will the give routine come downsomeday and chop off my
business right?
What are some of the?
We talked a little bit aboutIndiaStack.
I was looking at some numbers Ithink it is extraordinary to
(32:57):
think about.
I was there when the firstAadhaar was distributed and the
first authentication was doneand obviously we were in the
first upi transaction was doneand you know it felt like, oh my
gosh, this thing is actuallyworking and the excitement of
almost being like anentrepreneur and seeing some of
this stuff.
But today we are talking about,you know, hundreds of millions
(33:19):
of authentications being doneevery day, literally on adhar.
You know billions of.
You know 10, 12 billion upitransactions a month going on
india's leapfrog.
I remember as a founder of oneof the first mobile payments
companies you know well, beforepaytm actually.
Uh, it felt like, you know, weare so far behind china, we
(33:39):
should read about alipay and youknow, vay and all these things
going on, and all of a suddenwe've leapfrogged everyone,
right.
So, as the younger crowd youknow, who sort of grew up in
this environment, right, andreally you probably don't have
too many memories of apre-Aadhaar or pre-digital India
world.
How do the younger populationlook at some of these things?
(34:01):
Here and when you traveloverseas, you know, and and
visit and see the crazy use ofcash over there compared to
India, right, what?
What does it mean for Indiansto to look at this
infrastructure we've got?
And you know any.
Any comments on that?
Shivani Kulkarni (34:16):
both I get at an emotional level as well as a
practical level yeah, I'll tellyou one thing that that you know
I am always very happy about.
So I have these friends and soI did my engineering from Peset,
bangalore, right, and so wewere there from 2012.
Back then, aadhar I mean sorry,upi was not that prevalent UPI
(34:36):
was 2016 correct.
So then we graduated in 2016, somost of these guys just went
off to us and now they visit uhevery year in summers or
sometime, when they come and weare at a restaurant and the bill
comes and I just open my app, Ipay using upi and they have to
(34:57):
then uh, like while going backhome.
They have to then, like, whilegoing back home, they have to
literally count the cash thathas to be given to the auto
dealer because the UPA doesn'twork for them, which, by the way
, we are solving currently.
I think there is a.
So, guys, next time you come toIndia, there is a solution for
you.
Sanjay Swamy (35:11):
By the way, if you are building a solution we are
looking to fund also.
Shivani Kulkarni (35:13):
Yeah, as an entrepreneur here, or if you
guys want to come back to Indiaand solve the problem, yeah,
talk to Shivani, yeah, but Imean I'm just very happy to see
when I probably just use UPI andit's so seamless, and these
guys say, oh wow, we don't haveanything like this in the place
that we stay.
I think it's just a proud,proud moment and it's just
(35:37):
ubiquitous, right Likeeverywhere, right From a
paanwala to the biggest high-endrestaurant, everybody has it
and everybody's using it.
So, yeah, I think just prideand hopefully, given that now we
are taking UPI global, which Ithink you can share a bit more
about, hopefully we'll be ableto go out and also pay with
these instruments.
Sanjay Swamy (35:57):
Yeah, absolutely.
I think in the first phase it'ssort of UPI for Indians being
accepted and interconnected with, you know, systems like NETS
and you know, in the UAE and inFrance and things like that.
But I think what would bereally powerful is if other
countries adopt UPI right, justas they adopted the card system
(36:17):
from Visa and MasterCard and soon, system from Visa and
MasterCard and so on.
If UPI itself becomes thebackbone, and you know that
might hopefully create a lot ofopportunity for the Indian
technology companies, for thecompanies that have actually
built on top of these rails, tobe able to just take it and port
it into other parts of theworld.
So you know, I remember when Imean I guess I'm young enough to
(36:40):
remember when Maruti first cameinto India, long before most of
you were born, and you know, atthat time the Japanese brought
everything.
They brought their paintcompany, they brought their tire
company, they brought their,you know, speedometer company,
brought the whole works.
That was the whole.
Kiritsu gets exported to otherparts of the world and creates
(37:04):
more than just sort ofdiplomatic opportunities for us
and actually creates businessopportunities as well.
But talking about opportunities, right, let's talk a little bit
about some of the segments thatyou're excited about, where you
see opportunities and if you'reentrepreneurs listening where
you see opportunities and youknow if if your entrepreneurs
listening to the show what.
What are the areas that arestill sort of largely untapped?
Shivani Kulkarni (37:29):
one space that I have been very excited about
and not I haven't necessarilyseen too many companies, though
is again in the is the wholesecured lending space itself,
but the infrastructure and, ofcourse, distribution layer of it
, which is the lending againstproperty and lending against
security.
I mean lending against anyasset.
(37:50):
Now think about it Today thereare so many people who have DMAT
accounts, who have mutual fundaccounts.
The deposits in India areactually going down because
there's so much money that'sflowing into the mutual fund
industry.
The deposits in India areactually going down because
there's so much money that'sflowing into the mutual fund
industry, the equity markets.
So how do you tap into that toactually improve, like increase
(38:11):
the number of people you canlend to, to improve inclusion?
So I think it's what is requiredis just the rails to first
understand and get theinformation about what are the
assets that the person owns andalso create awareness, education
about this particular product.
So if a customer today is thinfile or a new to credit customer
(38:33):
, right, he may not get loan set, or at least unsecured loans at
lower rates, but instead if hesays that, ok, I am new to
credit, but I have beeninvesting in stocks or mutual
funds for the last three yearsand I have this corpus and I can
pledge that right at least forthe first credit card or the
first loan.
Then the rates that he'll getwill also be less.
This will help build his fileand I think in general is much
(38:57):
better for the customer as well,right?
So just creating those railsand enabling distribution I
think is a big opportunity.
Sanjay Swamy (39:04):
Actually, in the US it's called a home equity
line of credit right for ifyou're borrowing against houses,
and that's a huge business, andso it's.
I mean, we've seen a fewstartups here and there trying
to solve this problem, but Ithink, yeah, it's still largely
an unsolved problem.
I think.
What else?
Shivani Kulkarni (39:26):
No, I think the same, extending to exactly
right like LAP, which is loanagainst property.
I think land records aregetting digitized now, so that
will, like several states rightAndhra, karnataka are at the
forefront, tamil Nadu, so onceand this process is going to
happen all over the country.
So what are the opportunitiesthat come up?
It's largely how do you like?
(39:48):
Once a property is online, it'sdigital.
Once the records are digital,you can easily pledge it, the
banks can verify it, value itand it unlocks a whole other
cash flow, right For SMEsspecifically.
I think this is huge.
So somebody who's againcreating that infrastructure
definitely is another trendwhich I briefly touched upon,
(40:09):
and this is not really relatedto lending directly, but is
related to the fixed incomemarket, which is in the bond
side.
So one thing that banks are veryconcerned about is that they
are not getting deposits againbecause the money is flowing
elsewhere.
But people are investing inbonds.
People are investing incorporate bonds.
They are investing in even someof the startup bonds, right,
(40:30):
like oxizo and a few others.
Uh, how do you democratize thislike?
How do you again educate peopleand get distribution?
For this, you may have topartner with the brokers you may
have to partner with others,but somebody who can build in
this layer.
I think over the next 10 years.
It's a big, big opportunitybecause banks will want to work
with you.
Either you get them deposits oryou just work, uh, and get like
(40:54):
bond issuances can be doneright, like bond ncds etc can be
issued.
So how do you democratize?
This is another big opportunitythat I think I'm very excited
about.
Sanjay Swamy (41:04):
Cool, cool, but those are still opportunities
that are like the top of thepyramid, focused right for the
most part, before you actuallysee the ability to come down.
But they are, I guess you know,untapped opportunities for sure
.
Shivani Kulkarni (41:22):
Now on, but they are, I guess you know,
untapped opportunities for sure.
Now, on the lap and last side,though, it is not just the top
10 million, right, because theyanyways have the access I think
it will lead to a lot morepeople in the middle.
What I'm saying is if you're ahomeowner.
Sanjay Swamy (41:35):
Yeah, right now, then you're in a fairly that
that where you can borrowagainst your home.
It's a small correct?
Uh, it is definitely the top100 million, right?
May not be the top 10 million,you're right there.
Shivani Kulkarni (41:46):
But I think there is one more.
Sanjay Swamy (41:47):
I think you have a lot of, so I'm very passionate
about a different segmentCorrect which I think has got to
be brought into the system, andevery time I look at MyGate,
which is a company that webacked a while back.
You know they were in 20 gatedcommunities at the time.
(42:08):
They're now in 25,000 gatedcommunities, so seeing like
thousand X growth is likephenomenal.
One of the things the founderhad shown us on the day when we
first met them was thedigitization of the attendance
records of everybody that workedin the community and in Mumbai.
(42:34):
I was told later that there isa segment called the ABCD
segment, which is I Abide CookDriver, iibuy CokeDriver, and
I've been longing to leveragethis data to try to build credit
to the segment, and I just notmet anybody that really does a
great job of it.
There are a few companies.
Almost everyone seems to insistthat the right thing to do is to
(42:56):
go open market, and there thecost of credit and, you know,
lack of proprietary data becomesa challenge, whereas here we
have an opportunity withprobably about 7, 8 million
domestic people on the platform,probably at least a couple of
million active on a daily basiswho you know, for whom.
We have, you know, very highquality attendance information,
(43:17):
and attendance is just a proxyfor credit worthiness in many
ways, because attendance leadsmeans that you're working, which
means you're going to get paid.
You know broadly the by zipcode or pin code.
You probably know what themedian salaries are in the
segment and there is actuallyprobably an employer is willing
to even vouch for this person.
That probably even is a moneylender already to the segment,
(43:41):
right.
So I think this is onespectacular opportunity that we
would love to see anyentrepreneurs reach out to us
for.
But this is just one example.
There's the whole manufacturingsegment.
People are working in thatsegment.
There's the logistics segment,where there are millions of
people that drive around thatjust don't get access to fair
credit and that can betransformative of lives.
(44:03):
It's one of these fewsituations where I feel you can
make money by doing good andimproving people's lives and
livelihoods.
So this alignment of the heartand the brain, as I call it.
So these are some opportunitiesthat I think that are still
completely untapped and waitingto be grabbed.
Shivani Kulkarni (44:21):
Yeah, I agree, and I think, just building on
the logistics part, themanufacturing part, right, I
think, each of these verticals,you can just go deeper like just
taking health care as anexample right, if you get into a
hospital, you can startcatering to the vendors, to the
pharma supply chain there.
If you, I think in buildingintelligence or proprietary data
(44:41):
, when you're serving a vertical, itself becomes a correct mode
and and.
Sanjay Swamy (44:46):
And this is where uh, you know I was just going to
say that you know we talkedabout proprietary data and modes
.
This is exactly what that comes.
And now, if you bring on top ofit, you know the whole ai layer
, that's coming about right.
Uh, this is yet another, youknow, huge glutton for data.
The compute power is gettingreally extraordinary now and I
(45:08):
think the combination you knowwe now have sort of this perfect
storm situation right where thegovernment rails or the public
infrastructure rails of identityand KYC and things like that,
are very robust, very mature.
Moving money around isessentially free and it is
programmable money in that sense.
And now, as we see these streamsof data coming in, the compute
(45:30):
power that's there to do theanalysis of the data and the
whole generative AI segmentwhere we are going to move from
this industry history of beingone size fits all right, you
have a bank account, I have abank account.
The UX is going to look exactlythe same it doesn't matter what
you do with your bank accountor what I do with mine To a one
(45:52):
size fits one, which is likeultra personalization.
There is no need for all of usto have fifth of the month as
our repayment date.
If I get paid on the seventh ofthe month, maybe the eighth of
the month should be my repaymentdate.
Right, this flexibility in theinfrastructure that's there, the
personalization and hyperpersonalization, I think, is
going to create massiveopportunities here and I think
(46:14):
that's the really exciting partof where we are going to reap
the benefits of the last 10, 15years and, uh, sort of help
leaprog.
Shivani Kulkarni (46:23):
I think one interesting thing that, like as
you were saying that I was justreflecting, I think India, at
least in the fintech and I thinkyou have, like we have
discussed this once India in thefintech space specifically, is
looked at the as a premier place, right like where people know
how to build, people have built,like large, scalable businesses
, infrastructures.
So I think, with AI coming in,there is a lot of opportunity to
(46:48):
export and sorry, this is notat the lending level, but this
is at an infrastructure,software level thing that we can
do right, build a lot, buildfor verticals which are large,
not only in India but globally,and you'll be able to sell
software elsewhere.
Like you'll be able to sellsoftware elsewhere, you'll be
able to give solutions elsewhere.
So I think this is again anopportunity, specifically in
(47:08):
fintech infra, that founders candefinitely explore.
Sanjay Swamy (47:13):
Yeah, absolutely, I think.
Another related area we didn'ttalk much about, collections,
which I personally am a littlecynical about, because I feel,
with all of the access todigital payments and the freedom
to move money around,collections, there is an intent
issue and an ability issue.
Right, if you don't have theability to repay, then you're
(47:35):
not going to repay, even if you,you know, even if you intended
to right and intent to me, youknow, I think, once to right and
intent to me, you know, I thinkonce people are educated enough
to realize that paying on timeis to their benefit, not paying
on time is to their detrimentfrom a future borrowing
perspective, right, right now,we might be in this transitory
(47:55):
phase where people are touchingcredit for the first time and
thinking, oh, I can run awaywith it, right, but once they
realize that they have more togain back to the being good
citizens and repaying, then Ithink this collections problem
goes away, because then the onlypeople who won't be repaying
are either people who areforgetful or people who don't
have the ability to repay.
Right, so that that is my viewon it.
(48:17):
I could be completely wrong andI know there are large
companies being built as wespeak, but the the other one,
that is that is interesting hereis sort of this new age of
completely personalizedconversational, you know, doing
things on whatsapp and thingslike that and and really sort of
tailoring the, the experiencesas well.
(48:39):
Um, what are some things youhave seen in this space?
Shivani Kulkarni (48:44):
so I think two , three uh examples right like
one is obviously just thecustomer experience side, uh,
like how can you give hyperpersonalized experience to the
customer?
They I mean whatever they ask,you know what they're saying and
give the responses appropriateto that.
But the second thing which isI'm personally very excited
(49:04):
about is on the RPA side, thatis, process automation side,
collections as an example.
In insurance it is again claimsprocessing as an example.
It requires a lot of justprobably reading an email,
reading an SMS and filling upsome data and some software
right, and these are processesthat take like seven, eight days
(49:25):
.
Like if you ever have claimedinsurance, you know that it
takes time, because the guy willask you to send 10 documents on
email, then some of it will bePDF, some of it will be just
screenshots and then he has togo sit and print it out in
triplicate.
Yeah, then I mean, with aicoming in, I think this entire
process itself can get digitized.
(49:47):
Like they can read, it can reademails, it can just extract
whatever information it requiresfrom the image.
Fill out the thing.
The entire workflow can beobviously automated, so a lot of
efficiencies come in right.
Sanjay Swamy (50:01):
Uh, and the second thing that I have efficiencies
with compliance actually so youneed to make the job of the
regulator uh, and a lot easierthe ability for a provider to be
compliant and the ability forthe regulator to verify that
they are indeed compliant.
Shivani Kulkarni (50:15):
Right that correct compliance is a big part
of it, right.
And the second one, I thinkeven on the underwriting side
right, like while people havetons of data but the models etc
get uh, I mean get fine-tunedover years.
But here I think, with now, uh,chat, gpt and you can create
(50:37):
your own models on top of it,all you have to be careful a bit
about is data privacy and justsecurity.
Sanjay Swamy (50:44):
But apart from that, I think these are all
solved problems, but you have tobe vigilant about them.
Shivani Kulkarni (50:47):
Just be vigilant about it, but the
potential is immense.
So I think, underwritingprocess automation and,
obviously, customer experience,these three are at least my
picks.
Sanjay Swamy (50:58):
Awesome.
So let me ask you one lastquestion, an out-of question.
If you're going to sit here inthree, five years and say, man,
we all completely missed theopportunity.
It was such a great opportunityand it just never happened,
right what?
What would have happenedbetween now and then?
Wow I told you it was an out ofsyllabus question.
(51:20):
I don't know the answer.
That's why I happily asked thequestion Should we take to a
commercial break?
Yeah, we should do a commercialbreak here.
Shivani Kulkarni (51:31):
Can you repeat the question?
Sanjay Swamy (51:32):
No, I'm just saying, look, this is such an
obvious, monstrous opportunityhere, right?
And yet you know, it might nothappen over the next five years,
we may just, you know, solve 1%of this opportunity or 5% of
this opportunity, right, whichwould be a shame, right?
And so I was just sort ofbrainstorming here.
I didn't have an answer myself,so I thought I'll just ask you
(52:00):
To me, I think it will be if wedon't have audacious enough
founders, right, I think peoplesolving incremental and not
thinking about the opportunitiesthat we have here, uh, and, and
you know, not being stuck inthe snapshot of saying, okay, a
chat, gpd4 does this and let mebuild on top of this, right,
because those infrastructureplatforms are going to grow by
leaps and bounds.
(52:21):
We've just seen what hashappened in the last 12 months
or 15 months.
Can you imagine how it's goingto look five years from now?
And people, I think people are.
We've seen many times in thisindustry, people tend to think
incremental, but I think we havean opportunity to think
revolutionary.
And I think that's my firstthought of where, even if you're
(52:43):
not aiming and cannot visualizesomething, then you know you
will never achieve it, right?
So that that was what wascoming to my mind, but I'm sure
you have some thoughts as well.
Shivani Kulkarni (52:53):
Would be great to hear yeah, I think for me
right, I think one key lever,like if you see the adoption
curves right, like obviouslythere are smartphones, there are
, there is internet to certainextent and payments maybe, say,
media, all of it is slightlylagging behind.
I think, if we can, if thatcurve doesn't follow the entire
(53:16):
smartphone adoption, digitaladoption, a lot of the
assumptions that we are makingtoday in terms of cost to serve
on like data that we can have onthese customers, to underwrite,
because for me, if you are totruly succeed in the next five
years, it needs to be with, like, say, 200, 300 million people
having like complete access tocredit, at least at the bare
(53:37):
minimum.
And for that to happen, I thinkit's just the penetration, I
mean just the adoption, has tobe keep up with that pace.
And there were months or yearswhere we saw, given the economy
and the place we are in, it'sgrowing brilliantly.
But I think if it justcontinues the growth, it will
happen.
Uh, but yeah, I think for methat is the variable that is
(53:58):
most important I think relatedto that too.
Sanjay Swamy (54:01):
You know, it feels like if the incumbents don't
adopt the technology at the pacethat the startups are
attempting to do, because thestartups will still be a very
small piece one in 25, one in 50might actually succeed to get
to a large scale, right, butreally it's about how the
incumbents also leverage thisnew infrastructure and
(54:21):
technology stacks that arecoming out, that I'm just before
this meeting actually, I had togo and some, you know, re-kyc
had to be done for one of ourcorporate bank accounts and all
of us four people, signatorieshad to do like seven, 26
signatures each on paper, right,and I was cringing, saying,
(54:42):
okay, why can't all of this justbe one electronic signature and
with one electronic document?
I was just counting.
Going back to counting thetrees, in fact I told our admin
let's make one donation todayfor one tree, because we just
cut that tree today doingsignatures.
So I think it just does botherme that the incumbents have in
(55:03):
theory accepted and enabled, butthey've really not adopted
wholeheartedly and I think thatthat will be a risk in the, in
this ecosystem.
So hopefully the next fiveyears will be quite different in
that, uh, from from the pastfive years yeah, I think we have
seen adoption right like withnight wind tech itself.
There are at least on thelending a lot of the public
(55:23):
sector banks, interestingly,have been thought leaders here,
so hopefully that trendcontinues.
Shivani Kulkarni (55:30):
Great thanks, sanjay.
Thank you so much.
It was wonderful chatting withyou and again thanking you for
being on your own podcast andhey, entrepreneurs, you know,
reach out to us, we love to chatwith you.
Sanjay Swamy (55:44):
Uh and uh, you know, looking for people who are
continuously looking to solvethese monster opportunities that
we've got in india.
Prime Venture Partners (55:51):
So reach out to us and uh, all the best
cheers dear listeners, thank youfor listening to this episode
(56:14):
of the podcast.
Subscribe now on your Thank you.
You get your podcasts.
Then hit subscribe and if youhave enjoyed the show, we would
be really grateful if you leaveus a review on Apple podcast.
To read the full transcript,find the link in the show notes.
Into entrepreneurs .
We are looking at a lot ofco-lending opportunities.
Shivani Kulkarni (00:04):
India is not just one India, but there are
several Indias in it, right so?
Sanjay Swamy (00:09):
you can pick any segment of users, and there's
100 million of them availablefor you to target.
Shivani Kulkarni (00:15):
Top 10 listed companies in India today.
Three of them are financialservices.
Sanjay Swamy (00:19):
It's not like people are not credit worthy,
it's just that you don't knowthat they are credit worthy.
Shivani Kulkarni (00:23):
There are just 40 million people who have
credit cards 530 billion dollarsof you know credit gap.
Sanjay Swamy (00:30):
That's there.
You know you can't throw moneyat the problem and say I'm just
going to get a big fast I thinkbanks are very keen to do
co-lending collections.
Shivani Kulkarni (00:38):
There is an intent issue and an ability
issue so banks lend out to nbfcs, nbfcs in turn may lend out to
fintechs, and fintechseventually reach the customer.
Sanjay Swamy (00:48):
We don't have audacious enough founders.
Shivani Kulkarni (00:55):
Hello and welcome to Prime Venture
Partners podcast.
I'm your host, shivani Kulkarni, and today I have with me our
partner, sanjay Swami, and weare going to talk about all
things lending.
Welcome, sanjay, to the podcast, and how should we start?
Sanjay Swamy (01:11):
Well, it's great to be welcomed back to our own
podcast.
But yeah, on a serious note,maybe I'll start with a question
for you, shivani, and it's beena couple of years now for you
here at Prime and, of course,you've been an investor in
Flipkart and earlier worked atEvendus as well, so you've seen
this industry a lot.
You know, as they say,certainly in fintech and
(01:34):
particularly in lending.
You know, a lot of people askis lending the only business
model?
You know, are all businessesreally just lending businesses?
And so, just curious, you know,as you've been spending a lot
of time with founders now oflate as well, and looking at
policy, looking at opportunitiesaround co-lending and whatnot,
what are your views on?
Where are some of theopportunities in the space?
(01:57):
And, you know, maybe just painta little landscape of the space
itself.
Shivani Kulkarni (02:00):
Sure, I mean happy to.
So maybe let me take a stepback before I get into FinTech
itself.
Right, and let me just talkabout financial services in
India, because that, of course,is the backbone, large
opportunity.
I mean, if you just see the top10 listed companies in India
today, three of them arefinancial services, or rather
banks.
So HDFC, icici, sbi, together,I think top three, I think in
(02:26):
the top five, these are one orthree of them and growing right,
like most of them grow at30-40% year on year.
So you can just see how largethe underlying opportunity is.
And yet when you just maybe digdeeper, you will see that there
is still so much underpenetration.
I mean, I'll just throw somenumbers, I'll try to give some
context as well.
(02:47):
But SME credit 500 billion plusof credit gap, like this is how
much you can actually lend tothe SMEs, but they are not
getting access to that credit.
If you talk from a consumerperspective, there are just 40
million people who have creditcards.
Maybe there are people like youand me who might have like five
, six credit cards.
Maybe there are people like youand me who might have like five
, six credit cards.
Okay, you don't have, I havethree, four, but yeah, I mean we
(03:11):
have access to a lot of thesethings, right, but if you take
the 1.4 billion today that wehave in India, only 40 million
have access to credit cards.
Similarly, personal loans andother products also only scratch
the top surface.
So I think there's tremendousopportunity here to build right
and I think fintechs over thelast 10-15 years have captured
(03:32):
some amount of it.
I would say they are also stillscratching the surface.
There's lots to do.
But if you just take from anumbers perspective again, india
is the third largest fintechecosystem today in the world
world after US and China, ofcourse and there are close to
10,000 startups.
Now you asked like is creditthe business model or not?
(03:55):
So of these, 2,500 are pureplay lending startups and rest
everybody, I think, whilelending may not be the primary
monetization model, but they dofind their ways and come to
lending, but 2500 are pure playlending.
Now maybe I can also get intothe various aspects or various
(04:15):
business models before we getinto specific questions on this
podcast.
In lending itself, I think twobroad categories in which people
are building today.
One is on the consumer lendingside.
So, again, people like you andme or people, general consumers,
right, that kind of creditproducts you can use to service
(04:37):
this segment.
So that forms one broadcategory and the second broad
category is on the sme side,that's on the business side.
Now, both these categories youcan service through secured and
unsecured lending products.
Secured just for our viewers tothrow some light.
It's whenever a bank gives youa loan against an asset or you
(04:58):
use something like maybe yourproperty or an asset as a
collateral.
That's when it's called securedlending or or a vehicle, for
example.
Vehicle, for example, like autodoes.
So that is one form, which issecured lending.
And then there is unsecured,where the customer, based on the
data itself, is gettingunderwritten.
So yeah, I mean just becauseyou asked me the landscape,
(05:20):
right?
These are the broad twocategories and I think today we
see startups building acrossthese segments.
So there are opportunities ineach of these.
Maybe, as we go deeper, we canexplore some of this yeah, I was
just going to say that.
Sanjay Swamy (05:32):
You know, when you were rattling off those numbers
around 40 million credit cardsand so on I've been a fintech
entrepreneur and later, you know, worked on adhar, and then
worked on india stack, and, and,and then, of course, been more
of a VC over the last decade orso.
Those numbers just don't seem tohave changed, although we know
we ourselves have got probably15, 20 companies in our
(05:54):
portfolio who are doingphenomenally well and, of course
, there has been a lot ofpenetration of at least digital
financial services UPI of coursebeing pervasive of at least
digital financial services UPIof course being pervasive.
From a demand gap perspective,it really doesn't seem like
we've moved the needle that muchand it's also a reflection of
(06:14):
the fact that there is a lotmore need for credit and a lot
more opportunity to deploycredit.
But I think if you're anentrepreneur looking at this
space, I would say there's nevergoing to be a winner takes all
in this particular space andopportunity.
I wouldn't say there are toomany opportunities that have
been spoken for entirely andthere will always be
(06:36):
opportunities, even now, forcompanies to come in.
Shivani Kulkarni (06:39):
One aspect that I wanted to touch upon,
right, and when you talk aboutneedle moving things, I think
this has been a key enabler forthis particular ecosystem, and
you have worked on the digitalpublic infrastructure yourself,
right, so would love tounderstand from your perspective
, what is the impact that someof these things like Aadhaar,
(06:59):
upi, what is it that you haveseen?
What has been your experienceon the impact that they have had
on not only financial services,but the larger ecosystem as
well?
Sanjay Swamy (07:08):
maybe we can start there yeah look, I was a
fintech entrepreneur before allthis existed.
Right, and part of the reasonstruggle to be a successful
entrepreneur was, amongst otherthings, it was impossible to
open a bank account.
It took three, four weeks forfrom filling an application form
to getting it approved, not tomention it was a process that
(07:28):
was fraught with the use ofpaper and probably a lot of
mistakes as well, right, andtherefore very expensive.
Fast forward to five yearslater, you know, and that was
part of the motivation to sortof be a player in the part of
the Aadhaar team.
You know, india suddenly had,you know, the foundations and,
of course, has grown, has builton it quite a bit, which is
(07:50):
something that most peoplearound the world would be
envious of, and I think ourentrepreneurs don't really
realize in some ways, because,you know, most of the youngsters
today have grown up in thepost-Aadhaar world, don't really
realize the luxury that we haveof this incredible digital
public infrastructurestarting-Aadhaar world, don't
really realize the luxury thatwe have of this incredible
digital public infrastructure,starting with Aadhaar, to do,
you know, authentication, aswell as electronic KYC e-sign
(08:15):
for documents, which is accepted, you know, in the court of law,
digilocker as a framework for,you know, storage of documents,
retrieval of authentic documents, so to speak.
Of course, we'll talk in moredetail later about account
aggregator, the consentframework, all of which are, you
know, really very importanttopics in themselves.
(08:36):
And India we've got, you know,state of the art and probably
you know, thought leadership inthis space, thought leadership
in this space and using these asthe foundational blocks.
If you layer on top of it,whether it's an ODAM ID for
small businesses, whether it isGST for understanding their
business flows or the cash flowsand, last but not least, on a
(09:00):
monster scale, upi, which makesmovement of money extremely
straightforward, right?
So all of these infrastructureelements did not exist 12 years
ago, right, and today they'rehere.
You know, we can't think oflife without them.
Just to give you some context,you know KYC.
I talked about paper.
One study that I had done atthe time was you know, the
(09:24):
telcos are, at the time, doingabout 1.5, 1.6 million kycs a
day.
Uh, which translates to about20 per second in a in a workday.
Right, it's one the time yousnap your fingers.
20 people in india got a newsim connection, but also, in the
process, they sadly cut down,you know, about a thousand trees
a day doing that, because thetree gives you about 80,000
(09:45):
sheets of paper if you do themath.
It's pretty scary actually as amillion trees in three years
that were being destroyed justdoing telecom KYC right.
So today you know, not only dowe have a better and more
accurate solution, right, it'salso ultra low cost and it has
helped bring a lot of peopleinto the financial system and be
(10:06):
able to serve them.
Just one other quick anecdotefor mutual funds, for example,
the commission used to be halfpercent, but the cost of KYC was
1500 rupees, which meant thatunless you invest 3 lakh rupees,
the commission is not paid off.
Now 4 million households inIndia can afford to invest 3
lakh rupees.
The commission is not paid offright.
Now 4 million households inIndia can afford to invest 3
(10:27):
lakh rupees a year.
But now with Aadhaar and witheKYC, all of a sudden you know
the cost of KYC is zero.
Suddenly a 10,000 rupee mutualfund investment is a very viable
product, right?
So the sort of saccharizationthat we saw the HULs doing with
shampoos and things like that isreally the biggest opportunity
(10:47):
facing financial services and Idon't think we have tapped that
yet.
We're still sort of just tryingto take the existing
opportunities and make them moredigital and try to make them
more accessible.
But you know, picture AbhiBaaki.
Shivani Kulkarni (11:01):
I think there's's a lot to be done yeah,
I think even on the paymentside, right, like just upi being
there, and with upi, auto payand few of these innovations, I
mean, if you think of just thelending flow itself,
disbursement and collections isso much more easier today.
I mean, a customer in a ruralarea may not have or may not
(11:22):
know net banking, cannot operateit, but with UPI and just the
amazing job that phone pays,google pays of the world have
done with the user interfaces,it's so easy to just set up an
auto pay and just get thecustomer to pay on time.
One aspect that you talked about, the KYC aspect.
But the second aspect that comeswhen actually in the lending
(11:44):
product specifically, isunderwriting and the
availability of data easily, andI think account aggregator
today is doing at least hasstarted to show some cost
cutting there in terms ofefficiencies there, because
account aggregator, if you thinkabout it, what it does is it
connects all the banks, mutualfund houses, pf, your PF
(12:08):
accounts, your LIC policies andthe data can be fetched if you
are an FIU or FIP and there arenuances there, right, but all
this data can be fetched veryeasily.
And think about it.
If you go to suppose, saytomorrow, any of the fintech and
want to apply for a loan, thefintech can easily fetch all
these details with your consent,and underwriting becomes that
(12:29):
much more easier.
So I think it's like you saidit's just the beginning right.
I think KYC was solved.
Now payments is solved with UPI, and I think this will also
solve, to a certain extent,underwriting or data issues as
well yeah, so I think, ifanything, that part has been a
little underwhelming in terms ofprogress.
Sanjay Swamy (12:49):
However, I think, from a startup perspective, it's
important to see that you knowif you just have access to the
same data that everybody elsehas got to me that doesn't feel
like a competitive advantage,right.
So I feel startups have to tryand figure out some proprietary
modes.
(13:10):
It's either access toproprietary data that, when
coupled with all the other datathat exists, will help them
underwrite better.
It's perhaps betterdistribution that will allow
them to access customers at alower cost access customers with
not just a lower cost, but alsowith some proprietary
information about them, and Ithink that's what startups
(13:31):
should strive to do.
Right, if everybody's going totry to do the same thing, at
some point the banks will win,because they do have the muscle
and the.
You know, if there is nothingproprietary about a startup,
then and that's actually where Ithink we struggle a lot when we
look at companies probablygetting a little ahead of
ourselves is what are theproprietary modes that companies
(13:52):
have built that, layered on topof the open, interoperable
rails that are there, will givethem an opportunity to grow
really, really fast, and andthat's what I would like
entrepreneurs to think aboutmaybe just building on that
right, like when a founder,maybe say a 25, 30 year old,
starts, he may not have accessto proprietary data or
(14:14):
distribution, right.
Shivani Kulkarni (14:15):
So how do you think an entrepreneur in this
segment should think aboutcreating some of these modes?
Sanjay Swamy (14:21):
because clearly, the simple answer entrepreneurs
wait till they're 50 years old.
Somebody would have created themode.
So it's the wrong answer, Iguess, of course no, but how do
you start thinking about like?
Shivani Kulkarni (14:32):
you start somewhere, right?
Uh?
How do you, I think, uh?
Sanjay Swamy (14:36):
first of all, you know, yes, we have 1.4 billion
people, but startups need tofigure out how are they going to
get to the first customer, thefirst, you know, if you're
talking consumers, uh, the firsthundred thousand customers, the
first, maybe one millioncustomers, right, and and turn
them into borrowers for aparticular product.
And if you start thinking inalong those lines, then you can
(14:59):
start thinking of what they call, you know, riches and niches.
Right, there are huge profitpools solving one problem for a
very small subsegment of thelarger population and because
you do that, actually very fewpeople are trying to solve the
same problem and you're likelyto win a disproportionate piece
of that market, right.
(15:21):
And when that happens, thatbecomes the foundation for how
you subsequently can become alarger company, right, and by
then expanding perhaps toadjacencies and so on, right.
So I kind of cringe whenfounders come and say well,
who's your customer?
Everybody can be my customer,right, that's the wrong answer.
It's true in all businessesnothing to do with fintech,
(15:41):
right.
So segmentation becomes veryimportant and when you're
focused on a very homogeneoussegment, then you'll start
finding a lot of sources forproprietary data.
You'll find a lot of you knowcommonality about that segment
where you can go and, you know,build some patterns around them
because you're targeting themvery in a very laser focused
(16:02):
manner.
So that, I think, is going to beimportant now the same thing,
the other thing that goes withthat is, even your go-to market
becomes very interesting,because you don't have to be
doing million dollar ipl ads andyou know sponsoring all the
teams because your customers are, you know, very well understood
by you, you know where they are, you know who they are
literally and and you know who,you know how to reach them.
(16:24):
So I think these are thingsthat startups have to do.
None of this is specific tolending or to fintech, but the
moment you can segment and andif you have a good, sizable
segment that is very homogeneous, a lot of these opportunities
will arise got it.
Shivani Kulkarni (16:39):
And uh, also, there are different types like
uh, I think Kishore Biani saysthis often right Like, india is
not just one India, but thereare several India's Bharats in
it.
Right Like, there are the top10 million, then there are like,
say, maybe 200, 300 million,and then there is the rest of
India.
So most of the fintechs, atleast in the last three, four
(17:00):
years that I have come across,tend to, most of them, tend to
target the top 10 million and,as a result, I think some stats
I can share.
Right Like, consumer credit hasbeen like this has been a
customer the top 10 million thathas been over-linked.
You will see in terms of theDPDs that they have, the number
of loans that they carry.
(17:25):
This has been a segment that hascredit cards, loans and 10
other type of loans.
So what would be your advice tofounders then, given that this,
obviously this segment is veryattractive, they earn a lot,
have the spending capability,should you go after that or do
you then target the lowersegments?
But then distribution and a fewother things might become
slightly more tricky?
So what would I mean?
Sanjay Swamy (17:46):
it's not one size fit all, but, if anything, that
you can suggest or yeah, I thinkyou know, as we have discussed
several times here, shivani, youknow the the opportunity that
has been created through thisdigital public infrastructure
that we've got is really to beable to reach, and the fact that
(18:06):
we have now what 700-800million Indians with smartphones
some huge number like that allof whom have Aadhaar, all of
whom can be technically KYC'dand issued a loan
instantaneously from any part ofthe country or to any part of
the country, instantaneouslyfrom any part of the country or
to any part of the country.
That's actually what hascreated the opportunity, right,
so you can pick any segment ofusers, and there's 100 million
(18:30):
of them available for you totarget Right now.
Every segment of users has gotgood people there, and you know,
the thing in India is, youactually have a problem of a
thin file, right, because thereisn't information.
It's not like people are notcredit worthy, it's just that
you don't know that they arecredit worthy, and now you need
to find other proxies, right?
(18:51):
So, yes, it's easy to lend tothe the upper 10 million, but,
frankly, that segment is notjust over lend to, they're also
fed up, right, so they're noteven looking for new products,
and you know the number of spamcalls that we all get you know,
offering us car loans when wedon't even have cars.
Um, you know, these are thingsthat uh, you know, I think this
(19:11):
segment is done with right now.
There will be an occasional, youknow innovator that will come
out and do something cute andyou know uh thing.
But if you are a startupstarting out, I think there's no
novelty in doing that.
I always tell founders, youknow, it's great to not succeed.
I hate to use the word failure,but you know, if you're not
successful attempting to solvesomething that nobody has ever
(19:31):
done, that's forgivable.
But imagine failing atsomething that five people have
shown you the right way tosucceed at right.
So I think, pick a problem thatis meaningful, where the
outcomes are going to have, youknow, a very strong upside, and
build moats around it.
Right, it's not meant to be easybeing an entrepreneur and
(19:54):
solving these problems, but ifyou solve the right problems for
customers for whom you're thefirst one solving them, you know
they will be loyal to you.
They're going're going to be,you know, and you can move up
the chain very quickly.
They will talk about your, yourproduct, to other peers of
theirs who they know probablybetter than you, then I think
there are tremendousopportunities here and I think,
(20:14):
if you look at some of ourportfolio companies have all
done that right, whether it isauto looking at leasing of two
wheelers, which is a hugesegment but the leasing product
never existed.
Or whether it's Finac going tosmall, medium retailers small
retailers, and you know, gettingthem in a working capital or
cashflow lending based on theirbusiness track record.
Companies like you know, navda,normata, finn, which is doing
(20:38):
solar rooftop financing formsmes, you know, moving them
directly from diesel to electric.
They're solving real problemsfor those customers and the
financial services are kind ofincidental to the business
problem that they're solving forthe user and I think most of
these apply to non-fintechcompanies or non-lending
(21:00):
companies as well.
Shivani Kulkarni (21:00):
Right, but when you specifically come to
lending companies, there mightbe certain things like
collections, maybe supply ofsupply of capital.
So any advice that you have forfounders about how do they go
about these things likecollections?
Sanjay Swamy (21:16):
yeah, so, first of all, you know when you're
dealing with money, particularlyother people's money, you're in
a regulated space.
Right now there may be uh thethe law allows for fintechs to
probably do five percent as fldgand partner with an nbfc or a
bank and things like that.
But make no mistake, you're inthe business of managing uh
(21:37):
money and from a governance andcompliance perspective, this
company is no different from ifyou were regulated, right.
I think that has to be themindset and, as we've talked
many times, you know, we alwayssay there's no concept of a gray
area in this business, right.
So conveniently interpretingthe fact that the regulator was
silent about something to say,okay, they didn't say we cannot
(21:59):
do it is a wrong way to go aboutbuilding a business.
Right, we have to look at itand say, okay, if they have not
said that you can do it, it'sprobably not allowed, right.
And so if you take the approachof in the scale of black, white
and gray in between, the onlything that you can do in the
financial services or fintechplays is it explicitly white.
(22:21):
Otherwise there's no gray area,it's just black, right.
If you have that discipline,then it's harder, but it's
actually easier because there'sno guesswork here, right?
So you clearly know what isallowed, what is not allowed and
you stick within the rails.
As you mentioned right at thebeginning, 530 billion dollars
(22:42):
of you know credit gap, that'sthere.
One doesn't have to do a lot ofmagic to become a big company
here.
One has to just be consistent,diligent and not try to grow
faster.
You know you can't throw moneyat the problem and say I'm just
going to get a big fast.
You have to actually put in thehard yards and you know build
up.
You have to see the cycles.
You have to see put in the hardyards and you know build up.
You have to see the cycles.
You have to see the like auto,for example.
(23:03):
You know it's a three-yearleasing product.
You know you can't say thatthis thing is working until
you've seen a few customerscomplete the three years.
Right.
So you can't just blindly scaleit in the first two years
saying, oh yeah, you know thismodel is going to work, so
things like that will make for awell thought out business.
Founders have to be patient,whether in your 20s or in your
(23:24):
50s, and you need to follow therules.
Right now.
The regulator.
You know, for all the cynicismthat the startup ecosystem
sometimes throws at them, thisregulator is actually very
forward thinking.
Of course they're first andforemost, they have to protect
the.
They have to make sure thatthings don't fall off the rails.
Secondly, they protect thecustomer, because it's their
(23:46):
money that we're talking aboutand safeguarding.
But outside of that, prettymuch the primary goal that the
regulator has in mind isinclusive growth.
Can we bring more people in astructured manner into the
formal economy?
Can we bring more people in astructured manner into the
formal economy?
You know, during the IndiaStacklaunch days, we used to have
this character called Rajini,who was a lady making pakodas,
(24:09):
who would borrow 900 rupees atthe start of the day and return
1,000 rupees at the end of theday and along the way, probably
make like 200 rupees of profit.
Right, that's an outrageous youknow, whatever.
What about 3600 percent ofinterest that she was paying?
But she didn't realize it.
But with adhar and ekic andesign and digilocker and upi,
(24:31):
for the entire part of thedisbursement, for payment
collection from customers andfor repayment, now, all of a
sudden, in a completely digital,this person could be eligible
for, you know, maybe not 8%, butcertainly a 15 to 18% rate of
interest loan and in the formaleconomy, and you can imagine
what an impact that would haveto such a person, right?
(24:53):
So that's the big opportunity,that and the dream that we've
all been working towards, and Ithink we're still only getting
started here.
Shivani Kulkarni (25:00):
And I think, just on the regulatory aspect
right, I think they have beenlike, while they have encouraged
renovation I mean there havebeen so many sandboxes, so many
new concepts coming from theregulator itself right they are
also very vigilant because, justlike I was talking about the
consumer credit example, right,like the recent regulations on
increasing the risk weights, Ithink is directed towards the
(25:24):
right end, like the end goalthat they have in mind is more
step.
Sanjay Swamy (25:27):
Can you elaborate a bit on that?
I think it's also an area thata lot of you've done some work
researching it, but be great foryou to talk about that.
Shivani Kulkarni (25:33):
Yeah, so I mean just to give some numbers.
There again, right, I thinkretail credit, especially
personal loan, and credit cardsthere again, right, I think
retail credit, especiallypersonal loan and credit cards
have the overall outstandingamount.
If you see balance outstanding,that has grown 30 40 percent
year on year over the last two,three years.
Now, what that this hasresulted into is, again, like
(25:53):
the top 40, 50 million customershave access to it.
But if you think about theirearning potential and how much
they can repay per month, right,their repayments have sometimes
exceeded the earning potentialand RBI has constantly seen this
.
Like you can see that, okay,this customer has overdue.
Like it reflects on your creditscore, right, it comes in your
(26:14):
credit report.
So if the customer has anoverdue and somebody else is
going and giving this customeranother loan, then that's not a
good sign.
It's obviously not a sign of astable economy.
So that's where I think theystarted noticing some of these
signs.
Last year, in September, octoberand in November they took the
decision to increase the riskweights.
(26:35):
What that essentially means isthat banks typically sources of
capital today in India are banks.
So banks lend out to NBFCs.
Nbfcs in turn may lend out tofintechs, and fintechs
eventually reach the customerright, unless the fintech itself
is an NBFC.
So in this particular chain,given that banks are at the top,
what they said was that, okay,if you're lending out 100 rupees
(27:00):
to an NBFC, you need to havecertain reserves to protect
against any scenarios wherewhich can cause instability.
Right, so you need to.
The amount that you need tohave as a reserve is going to
increase by 25 percent.
So if you were to save 10rupees, you're going to now save
(27:20):
12.5 rupees.
So that is why the interestrates will then go up, because
on this 12.5, the bank is notearning anything, right?
So that's how they tried tocontrol the overall scenario,
and it's a very nuanced way ofdoing it, like slowly sucking
out liquidity from the market,instead of doing it overnight or
, you know, not allowing certaintype of models.
Sanjay Swamy (27:41):
So I think they have the responsible thing to do
is correct.
Shivani Kulkarni (27:44):
Exactly, it's a responsible thing to do.
It's a very responsible thingto do and over time, obviously
things will cool down and youknow these customers who have
been over lent they'll also cometo a certain uh equilibrium and
then you can again start thegrowth Very good.
Sanjay Swamy (28:00):
So one area you and I have been working on and
maybe it'd be good for you tosort of explain to the audience,
is this whole space ofco-lending right?
I mean, we have both NightFinTech in our portfolio, which
is sort of at the infrastructurelevel, enabling this for banks
and NBFCs, and then, of course,we have know navdhan and metafin
(28:22):
, that are nbfcs in ourportfolio, that are, uh,
leveraging co-lending be youknow, as a huge trend moving
forward.
Be good for you to uh, you know, since you've researched this
at a more fundamental level, youknow structurally what has
changed and why is it sosignificant got it.
Shivani Kulkarni (28:41):
So yeah, I think the into entrepreneurs.
Sanjay Swamy (28:45):
We are looking at a lot of co-lending options yeah
, we are.
Shivani Kulkarni (28:50):
Uh, so, in case you're building, you know
where to come.
Uh, so, yeah, just elaboratingon that, right?
Um, so there is this commonmisconception that NBFCs get
valued on their books, right,and they have only whatever a
certain amount of capital thatthey can have access to.
(29:10):
So if you have raised 100crores in equity, you can
probably raise, say, 200 croresin debt and lend out a total of
300 crores, right, I mean, I'mjust doing some quick, simple
math here.
But when you use co-lending,this entire constraint gets
opened up.
Like you can actually lend alot more and build a lot bigger
(29:32):
books.
You can service a lot morecustomer segments without taking
necessarily the risk on yourown books.
So here the way it works is thatyou have banks at the backend
who become your partners in this, and co-lending is essentially
a risk sharing model.
So you take 20% of the risk andthe bank takes 80% of the risk.
(29:54):
So in this way, if you put in,say, 100 bucks, the bank will
put in 400 bucks and overall youcan create a pool of 500 and
lend to the customer.
So this is how it like even theclassic fldg models.
Like, like earlier, before theagain regulation came in, people
used to have 10 20 in fldg and,like, we used to be okay with
(30:17):
it, given that you know this issome sort of skin in the game
for the startup.
And then obviously, banks andnbfc's at the back end come lend
.
This is no different than aclassic fldg model and here
again, you are putting in 20 andthe banks are putting in 80,
right, so you can actually goout and build a large, scalable
(30:37):
company without essentiallyraising too much equity.
So that's how co-lending worksand that is a mechanism right
now.
Sanjay Swamy (30:44):
This segment for this is the big nuance.
Difference, of course, is fldgis sort of a default guarantee,
whereas in co-lending you areputting up 20 percent of the
money as a part of the loan andthe bank is putting in 80
percent, whereas in the past itused to be you have to raise
that money as equity capital andput up the entire 100% right.
So suddenly for an NBFC you'resaying they don't have to raise
(31:07):
a lot of equity for them to beable to serve the customer.
Now, obviously they'll begetting lesser ROE on the 80%,
but they'll be getting theirfull ROE on the 20%.
Shivani Kulkarni (31:20):
Correct, but then ROE actually will be higher
, because then it is actuallyROE will be higher because
return on equity or equity basisremaining the same, but you're
making some money on the 80%that the bank is lending because
you are taking care of, say,distribution collections.
So you're providing a serviceto the bank, right, and
obviously there is a tech layer,with somebody like a night
fintech today is doing so.
(31:42):
Yeah, and one more thing hereuh, I think if in the priority
sector, right, like that's thesme, women entrepreneurs, I
think banks are very keen to doco-lending, because for them as
well, they want to enable thisparticular segment and they
necessarily don't have theirdistribution reach all the time,
right, and some of the fintechscan specifically, like you said
(32:03):
, like take a niche and solvesomething for them, so the
fintechs can actually solve forthis segment and the banks will
be more than happy to partner.
So I think it's a very, uh,very attractive area for
somebody to build?
Sanjay Swamy (32:14):
wonderful?
No, because I think, uh,historically we used to always
wonder about whether nbfs wereventure fundable.
But suddenly, with theco-lending model, especially if
you can leverage one is to threeor one is to five at some point
all of a sudden it becomes avery attractive value
proposition.
And the other nice thing aboutit is you're now a first class
citizen with a regulator.
(32:35):
You are yourself regulated, youare yourself regulated, and so
there's no sort of overhang of.
Will the give routine come downsomeday and chop off my
business right?
What are some of the?
We talked a little bit aboutIndiaStack.
I was looking at some numbers Ithink it is extraordinary to
(32:57):
think about.
I was there when the firstAadhaar was distributed and the
first authentication was doneand obviously we were in the
first upi transaction was doneand you know it felt like, oh my
gosh, this thing is actuallyworking and the excitement of
almost being like anentrepreneur and seeing some of
this stuff.
But today we are talking about,you know, hundreds of millions
(33:19):
of authentications being doneevery day, literally on adhar.
You know billions of.
You know 10, 12 billion upitransactions a month going on
india's leapfrog.
I remember as a founder of oneof the first mobile payments
companies you know well, beforepaytm actually.
Uh, it felt like, you know, weare so far behind china, we
(33:39):
should read about alipay and youknow, vay and all these things
going on, and all of a suddenwe've leapfrogged everyone,
right.
So, as the younger crowd youknow, who sort of grew up in
this environment, right, andreally you probably don't have
too many memories of apre-Aadhaar or pre-digital India
world.
How do the younger populationlook at some of these things?
(34:01):
Here and when you traveloverseas, you know, and and
visit and see the crazy use ofcash over there compared to
India, right, what?
What does it mean for Indiansto to look at this
infrastructure we've got?
And you know any.
Any comments on that?
Shivani Kulkarni (34:16):
both I get at an emotional level as well as a
practical level yeah, I'll tellyou one thing that that you know
I am always very happy about.
So I have these friends and soI did my engineering from Peset,
bangalore, right, and so wewere there from 2012.
Back then, aadhar I mean sorry,upi was not that prevalent UPI
(34:36):
was 2016 correct.
So then we graduated in 2016, somost of these guys just went
off to us and now they visit uhevery year in summers or
sometime, when they come and weare at a restaurant and the bill
comes and I just open my app, Ipay using upi and they have to
(34:57):
then uh, like while going backhome.
They have to then, like, whilegoing back home, they have to
literally count the cash thathas to be given to the auto
dealer because the UPA doesn'twork for them, which, by the way
, we are solving currently.
I think there is a.
So, guys, next time you come toIndia, there is a solution for
you.
Sanjay Swamy (35:11):
By the way, if you are building a solution we are
looking to fund also.
Shivani Kulkarni (35:13):
Yeah, as an entrepreneur here, or if you
guys want to come back to Indiaand solve the problem, yeah,
talk to Shivani, yeah, but Imean I'm just very happy to see
when I probably just use UPI andit's so seamless, and these
guys say, oh wow, we don't haveanything like this in the place
that we stay.
I think it's just a proud,proud moment and it's just
(35:37):
ubiquitous, right Likeeverywhere, right From a
paanwala to the biggest high-endrestaurant, everybody has it
and everybody's using it.
So, yeah, I think just prideand hopefully, given that now we
are taking UPI global, which Ithink you can share a bit more
about, hopefully we'll be ableto go out and also pay with
these instruments.
Sanjay Swamy (35:57):
Yeah, absolutely.
I think in the first phase it'ssort of UPI for Indians being
accepted and interconnected with, you know, systems like NETS
and you know, in the UAE and inFrance and things like that.
But I think what would bereally powerful is if other
countries adopt UPI right, justas they adopted the card system
(36:17):
from Visa and MasterCard and soon, system from Visa and
MasterCard and so on.
If UPI itself becomes thebackbone, and you know that
might hopefully create a lot ofopportunity for the Indian
technology companies, for thecompanies that have actually
built on top of these rails, tobe able to just take it and port
it into other parts of theworld.
So you know, I remember when Imean I guess I'm young enough to
(36:40):
remember when Maruti first cameinto India, long before most of
you were born, and you know, atthat time the Japanese brought
everything.
They brought their paintcompany, they brought their tire
company, they brought their,you know, speedometer company,
brought the whole works.
That was the whole.
Kiritsu gets exported to otherparts of the world and creates
(37:04):
more than just sort ofdiplomatic opportunities for us
and actually creates businessopportunities as well.
But talking about opportunities, right, let's talk a little bit
about some of the segments thatyou're excited about, where you
see opportunities and if you'reentrepreneurs listening where
you see opportunities and youknow if if your entrepreneurs
listening to the show what.
What are the areas that arestill sort of largely untapped?
Shivani Kulkarni (37:29):
one space that I have been very excited about
and not I haven't necessarilyseen too many companies, though
is again in the is the wholesecured lending space itself,
but the infrastructure and, ofcourse, distribution layer of it
, which is the lending againstproperty and lending against
security.
I mean lending against anyasset.
(37:50):
Now think about it Today thereare so many people who have DMAT
accounts, who have mutual fundaccounts.
The deposits in India areactually going down because
there's so much money that'sflowing into the mutual fund
industry.
The deposits in India areactually going down because
there's so much money that'sflowing into the mutual fund
industry, the equity markets.
So how do you tap into that toactually improve, like increase
(38:11):
the number of people you canlend to, to improve inclusion?
So I think it's what is requiredis just the rails to first
understand and get theinformation about what are the
assets that the person owns andalso create awareness, education
about this particular product.
So if a customer today is thinfile or a new to credit customer
(38:33):
, right, he may not get loan set, or at least unsecured loans at
lower rates, but instead if hesays that, ok, I am new to
credit, but I have beeninvesting in stocks or mutual
funds for the last three yearsand I have this corpus and I can
pledge that right at least forthe first credit card or the
first loan.
Then the rates that he'll getwill also be less.
This will help build his fileand I think in general is much
(38:57):
better for the customer as well,right?
So just creating those railsand enabling distribution I
think is a big opportunity.
Sanjay Swamy (39:04):
Actually, in the US it's called a home equity
line of credit right for ifyou're borrowing against houses,
and that's a huge business, andso it's.
I mean, we've seen a fewstartups here and there trying
to solve this problem, but Ithink, yeah, it's still largely
an unsolved problem.
I think.
What else?
Shivani Kulkarni (39:26):
No, I think the same, extending to exactly
right like LAP, which is loanagainst property.
I think land records aregetting digitized now, so that
will, like several states rightAndhra, karnataka are at the
forefront, tamil Nadu, so onceand this process is going to
happen all over the country.
So what are the opportunitiesthat come up?
It's largely how do you like?
(39:48):
Once a property is online, it'sdigital.
Once the records are digital,you can easily pledge it, the
banks can verify it, value itand it unlocks a whole other
cash flow, right For SMEsspecifically.
I think this is huge.
So somebody who's againcreating that infrastructure
definitely is another trendwhich I briefly touched upon,
(40:09):
and this is not really relatedto lending directly, but is
related to the fixed incomemarket, which is in the bond
side.
So one thing that banks are veryconcerned about is that they
are not getting deposits againbecause the money is flowing
elsewhere.
But people are investing inbonds.
People are investing incorporate bonds.
They are investing in even someof the startup bonds, right,
(40:30):
like oxizo and a few others.
Uh, how do you democratize thislike?
How do you again educate peopleand get distribution?
For this, you may have topartner with the brokers you may
have to partner with others,but somebody who can build in
this layer.
I think over the next 10 years.
It's a big, big opportunitybecause banks will want to work
with you.
Either you get them deposits oryou just work, uh, and get like
(40:54):
bond issuances can be doneright, like bond ncds etc can be
issued.
So how do you democratize?
This is another big opportunitythat I think I'm very excited
about.
Sanjay Swamy (41:04):
Cool, cool, but those are still opportunities
that are like the top of thepyramid, focused right for the
most part, before you actuallysee the ability to come down.
But they are, I guess you know,untapped opportunities for sure
.
Shivani Kulkarni (41:22):
Now on, but they are, I guess you know,
untapped opportunities for sure.
Now, on the lap and last side,though, it is not just the top
10 million, right, because theyanyways have the access I think
it will lead to a lot morepeople in the middle.
What I'm saying is if you're ahomeowner.
Sanjay Swamy (41:35):
Yeah, right now, then you're in a fairly that
that where you can borrowagainst your home.
It's a small correct?
Uh, it is definitely the top100 million, right?
May not be the top 10 million,you're right there.
Shivani Kulkarni (41:46):
But I think there is one more.
Sanjay Swamy (41:47):
I think you have a lot of, so I'm very passionate
about a different segmentCorrect which I think has got to
be brought into the system, andevery time I look at MyGate,
which is a company that webacked a while back.
You know they were in 20 gatedcommunities at the time.
(42:08):
They're now in 25,000 gatedcommunities, so seeing like
thousand X growth is likephenomenal.
One of the things the founderhad shown us on the day when we
first met them was thedigitization of the attendance
records of everybody that workedin the community and in Mumbai.
(42:34):
I was told later that there isa segment called the ABCD
segment, which is I Abide CookDriver, iibuy CokeDriver, and
I've been longing to leveragethis data to try to build credit
to the segment, and I just notmet anybody that really does a
great job of it.
There are a few companies.
Almost everyone seems to insistthat the right thing to do is to
(42:56):
go open market, and there thecost of credit and, you know,
lack of proprietary data becomesa challenge, whereas here we
have an opportunity withprobably about 7, 8 million
domestic people on the platform,probably at least a couple of
million active on a daily basiswho you know, for whom.
We have, you know, very highquality attendance information,
(43:17):
and attendance is just a proxyfor credit worthiness in many
ways, because attendance leadsmeans that you're working, which
means you're going to get paid.
You know broadly the by zipcode or pin code.
You probably know what themedian salaries are in the
segment and there is actuallyprobably an employer is willing
to even vouch for this person.
That probably even is a moneylender already to the segment,
(43:41):
right.
So I think this is onespectacular opportunity that we
would love to see anyentrepreneurs reach out to us
for.
But this is just one example.
There's the whole manufacturingsegment.
People are working in thatsegment.
There's the logistics segment,where there are millions of
people that drive around thatjust don't get access to fair
credit and that can betransformative of lives.
(44:03):
It's one of these fewsituations where I feel you can
make money by doing good andimproving people's lives and
livelihoods.
So this alignment of the heartand the brain, as I call it.
So these are some opportunitiesthat I think that are still
completely untapped and waitingto be grabbed.
Shivani Kulkarni (44:21):
Yeah, I agree, and I think, just building on
the logistics part, themanufacturing part, right, I
think, each of these verticals,you can just go deeper like just
taking health care as anexample right, if you get into a
hospital, you can startcatering to the vendors, to the
pharma supply chain there.
If you, I think in buildingintelligence or proprietary data
(44:41):
, when you're serving a vertical, itself becomes a correct mode
and and.
Sanjay Swamy (44:46):
And this is where uh, you know I was just going to
say that you know we talkedabout proprietary data and modes
.
This is exactly what that comes.
And now, if you bring on top ofit, you know the whole ai layer
, that's coming about right.
Uh, this is yet another, youknow, huge glutton for data.
The compute power is gettingreally extraordinary now and I
(45:08):
think the combination you knowwe now have sort of this perfect
storm situation right where thegovernment rails or the public
infrastructure rails of identityand KYC and things like that,
are very robust, very mature.
Moving money around isessentially free and it is
programmable money in that sense.
And now, as we see these streamsof data coming in, the compute
(45:30):
power that's there to do theanalysis of the data and the
whole generative AI segmentwhere we are going to move from
this industry history of beingone size fits all right, you
have a bank account, I have abank account.
The UX is going to look exactlythe same it doesn't matter what
you do with your bank accountor what I do with mine To a one
(45:52):
size fits one, which is likeultra personalization.
There is no need for all of usto have fifth of the month as
our repayment date.
If I get paid on the seventh ofthe month, maybe the eighth of
the month should be my repaymentdate.
Right, this flexibility in theinfrastructure that's there, the
personalization and hyperpersonalization, I think, is
going to create massiveopportunities here and I think
(46:14):
that's the really exciting partof where we are going to reap
the benefits of the last 10, 15years and, uh, sort of help
leaprog.
Shivani Kulkarni (46:23):
I think one interesting thing that, like as
you were saying that I was justreflecting, I think India, at
least in the fintech and I thinkyou have, like we have
discussed this once India in thefintech space specifically, is
looked at the as a premier place, right like where people know
how to build, people have built,like large, scalable businesses
, infrastructures.
So I think, with AI coming in,there is a lot of opportunity to
(46:48):
export and sorry, this is notat the lending level, but this
is at an infrastructure,software level thing that we can
do right, build a lot, buildfor verticals which are large,
not only in India but globally,and you'll be able to sell
software elsewhere.
Like you'll be able to sellsoftware elsewhere, you'll be
able to give solutions elsewhere.
So I think this is again anopportunity, specifically in
(47:08):
fintech infra, that founders candefinitely explore.
Sanjay Swamy (47:13):
Yeah, absolutely, I think.
Another related area we didn'ttalk much about, collections,
which I personally am a littlecynical about, because I feel,
with all of the access todigital payments and the freedom
to move money around,collections, there is an intent
issue and an ability issue.
Right, if you don't have theability to repay, then you're
(47:35):
not going to repay, even if you,you know, even if you intended
to right and intent to me, youknow, I think, once to right and
intent to me, you know, I thinkonce people are educated enough
to realize that paying on timeis to their benefit, not paying
on time is to their detrimentfrom a future borrowing
perspective, right, right now,we might be in this transitory
(47:55):
phase where people are touchingcredit for the first time and
thinking, oh, I can run awaywith it, right, but once they
realize that they have more togain back to the being good
citizens and repaying, then Ithink this collections problem
goes away, because then the onlypeople who won't be repaying
are either people who areforgetful or people who don't
have the ability to repay.
Right, so that that is my viewon it.
(48:17):
I could be completely wrong andI know there are large
companies being built as wespeak, but the the other one,
that is that is interesting hereis sort of this new age of
completely personalizedconversational, you know, doing
things on whatsapp and thingslike that and and really sort of
tailoring the, the experiencesas well.
(48:39):
Um, what are some things youhave seen in this space?
Shivani Kulkarni (48:44):
so I think two , three uh examples right like
one is obviously just thecustomer experience side, uh,
like how can you give hyperpersonalized experience to the
customer?
They I mean whatever they ask,you know what they're saying and
give the responses appropriateto that.
But the second thing which isI'm personally very excited
(49:04):
about is on the RPA side, thatis, process automation side,
collections as an example.
In insurance it is again claimsprocessing as an example.
It requires a lot of justprobably reading an email,
reading an SMS and filling upsome data and some software
right, and these are processesthat take like seven, eight days
(49:25):
.
Like if you ever have claimedinsurance, you know that it
takes time, because the guy willask you to send 10 documents on
email, then some of it will bePDF, some of it will be just
screenshots and then he has togo sit and print it out in
triplicate.
Yeah, then I mean, with aicoming in, I think this entire
process itself can get digitized.
(49:47):
Like they can read, it can reademails, it can just extract
whatever information it requiresfrom the image.
Fill out the thing.
The entire workflow can beobviously automated, so a lot of
efficiencies come in right.
Sanjay Swamy (50:01):
Uh, and the second thing that I have efficiencies
with compliance actually so youneed to make the job of the
regulator uh, and a lot easierthe ability for a provider to be
compliant and the ability forthe regulator to verify that
they are indeed compliant.
Shivani Kulkarni (50:15):
Right that correct compliance is a big part
of it, right.
And the second one, I thinkeven on the underwriting side
right, like while people havetons of data but the models etc
get uh, I mean get fine-tunedover years.
But here I think, with now, uh,chat, gpt and you can create
(50:37):
your own models on top of it,all you have to be careful a bit
about is data privacy and justsecurity.
Sanjay Swamy (50:44):
But apart from that, I think these are all
solved problems, but you have tobe vigilant about them.
Shivani Kulkarni (50:47):
Just be vigilant about it, but the
potential is immense.
So I think, underwritingprocess automation and,
obviously, customer experience,these three are at least my
picks.
Sanjay Swamy (50:58):
Awesome.
So let me ask you one lastquestion, an out-of question.
If you're going to sit here inthree, five years and say, man,
we all completely missed theopportunity.
It was such a great opportunityand it just never happened,
right what?
What would have happenedbetween now and then?
Wow I told you it was an out ofsyllabus question.
(51:20):
I don't know the answer.
That's why I happily asked thequestion Should we take to a
commercial break?
Yeah, we should do a commercialbreak here.
Shivani Kulkarni (51:31):
Can you repeat the question?
Sanjay Swamy (51:32):
No, I'm just saying, look, this is such an
obvious, monstrous opportunityhere, right?
And yet you know, it might nothappen over the next five years,
we may just, you know, solve 1%of this opportunity or 5% of
this opportunity, right, whichwould be a shame, right?
And so I was just sort ofbrainstorming here.
I didn't have an answer myself,so I thought I'll just ask you
(52:00):
To me, I think it will be if wedon't have audacious enough
founders, right, I think peoplesolving incremental and not
thinking about the opportunitiesthat we have here, uh, and, and
you know, not being stuck inthe snapshot of saying, okay, a
chat, gpd4 does this and let mebuild on top of this, right,
because those infrastructureplatforms are going to grow by
leaps and bounds.
(52:21):
We've just seen what hashappened in the last 12 months
or 15 months.
Can you imagine how it's goingto look five years from now?
And people, I think people are.
We've seen many times in thisindustry, people tend to think
incremental, but I think we havean opportunity to think
revolutionary.
And I think that's my firstthought of where, even if you're
(52:43):
not aiming and cannot visualizesomething, then you know you
will never achieve it, right?
So that that was what wascoming to my mind, but I'm sure
you have some thoughts as well.
Shivani Kulkarni (52:53):
Would be great to hear yeah, I think for me
right, I think one key lever,like if you see the adoption
curves right, like obviouslythere are smartphones, there are
, there is internet to certainextent and payments maybe, say,
media, all of it is slightlylagging behind.
I think, if we can, if thatcurve doesn't follow the entire
(53:16):
smartphone adoption, digitaladoption, a lot of the
assumptions that we are makingtoday in terms of cost to serve
on like data that we can have onthese customers, to underwrite,
because for me, if you are totruly succeed in the next five
years, it needs to be with, like, say, 200, 300 million people
having like complete access tocredit, at least at the bare
(53:37):
minimum.
And for that to happen, I thinkit's just the penetration, I
mean just the adoption, has tobe keep up with that pace.
And there were months or yearswhere we saw, given the economy
and the place we are in, it'sgrowing brilliantly.
But I think if it justcontinues the growth, it will
happen.
Uh, but yeah, I think for methat is the variable that is
(53:58):
most important I think relatedto that too.
Sanjay Swamy (54:01):
You know, it feels like if the incumbents don't
adopt the technology at the pacethat the startups are
attempting to do, because thestartups will still be a very
small piece one in 25, one in 50might actually succeed to get
to a large scale, right, butreally it's about how the
incumbents also leverage thisnew infrastructure and
(54:21):
technology stacks that arecoming out, that I'm just before
this meeting actually, I had togo and some, you know, re-kyc
had to be done for one of ourcorporate bank accounts and all
of us four people, signatorieshad to do like seven, 26
signatures each on paper, right,and I was cringing, saying,
(54:42):
okay, why can't all of this justbe one electronic signature and
with one electronic document?
I was just counting.
Going back to counting thetrees, in fact I told our admin
let's make one donation todayfor one tree, because we just
cut that tree today doingsignatures.
So I think it just does botherme that the incumbents have in
(55:03):
theory accepted and enabled, butthey've really not adopted
wholeheartedly and I think thatthat will be a risk in the, in
this ecosystem.
So hopefully the next fiveyears will be quite different in
that, uh, from from the pastfive years yeah, I think we have
seen adoption right like withnight wind tech itself.
There are at least on thelending a lot of the public
(55:23):
sector banks, interestingly,have been thought leaders here,
so hopefully that trendcontinues.
Shivani Kulkarni (55:30):
Great thanks, sanjay.
Thank you so much.
It was wonderful chatting withyou and again thanking you for
being on your own podcast andhey, entrepreneurs, you know,
reach out to us, we love to chatwith you.
Sanjay Swamy (55:44):
Uh and uh, you know, looking for people who are
continuously looking to solvethese monster opportunities that
we've got in india.
Prime Venture Partners (55:51):
So reach out to us and uh, all the best
cheers dear listeners, thank youfor listening to this episode
(56:14):
of the podcast.
Subscribe now on your Thank you.
You get your podcasts.
Then hit subscribe and if youhave enjoyed the show, we would
be really grateful if you leaveus a review on Apple podcast.
To read the full transcript,find the link in the show notes.
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