We will close this year by facilitating loans worth Rs 3,000 Cr: BankBazaar CEO Adhil Shetty
BankBazaar.com, owned and operated by Chennai-based A&A Dukaan Financial Services Pvt Ltd, specialises in providing instant quotes on bank loans. It has just received a Series B round of funding worth more than $13 million led by Sequoia Capital with participation from existing investor Walden International. In a chat with Techcircle.in co-founder and CEO Adhil Shetty talks about the company's offerings, growth prospects and future plans. Here are the edited excerpts:
There are quite a few online aggregators of financial products. How are you different?
BankBazaar is an online marketplace that provides instant customised rate quotes on loans and insurance products. One can instantly search for, compare and apply for loans, credit cards and insurance products on the site. Our key products are home and personal loans, followed by credit cards and car loans. The USP is that our offerings are deeply integrated with the partner banks' back-end system to make sure that the costumers get quick and efficient services. The borrowers get loan approvals within seven minutes, while it takes five-seven days in the offline world. Banks also find it cheaper to do business with us as they are now able to save a lot of time, cost and paper work. Here is how it works: if a person is looking for a home loan, he/she needs to upload certain data into BankBazaar.com. Based on it, we can give him/her five offers from various banks along with all the details, including maximum loan amount that can be borrowed, the EMIs, processing fee, and the pre-closure fee, if any. Once he/she applies for the loan and gets the approval, we can tell him/her when the loan will be disbursed. We have also appointed a relationship manager to deal with customers if they find any issues related to loan application process.
There are some companies like Apnapaisa and Apnaloans.in, which are following a referral model whereby they take the borrowers' phone numbers and give the data to five different agents. This not only takes time but end up reaching the borrowers' data in multiple hands. In our case, the data is safe and will be shared only with the bank that one has applied for the loan through our platform.
Besides using the money to create brand awareness, what other products are in the works?
Well, we have been experiencing a huge traction after we enhanced our technology whereby borrowers can get loans approval within seven minutes of applying, thanks to the integration of our products to the partner banks' back-end system. We are now looking to add more features to the technology, using which borrowers can take informed decisions when depositing their money in a bank. Last week, we launched a Fixed Deposit product. It has listed the services offered by our partner banks. This will help consumers compare the different FDs before investing their hard-earned money with a bank. We are also extending the service to Savings Bank accounts in the near future.
What is your revenue model? Is it advertising and lead generation or quote search on your site? People usually search online and then go to bank and apply for lonas. How do you track lead generation?
Our key revenue generators are home and personal loans. We charge a certain fee from our partner banks based on the service and don't charge borrowers. We are very particular about the fact that we will not run ads on our site. Our first and foremost objective is to provide good services quickly and efficiently.
It is true that a lot of people come to financial services sites, search for various products and then go to banks directly. But this number has come down. Indians are very savvy and will browse multiple sites before taking a decision. I have talked to hundreds of consumers and told them to go and check with a car dealer or builder before taking loans. These agents get huge commissions from banks and so they will provide only the details of the banks they have partnered with. Also, it takes days to complete the process and get loans. In our case, we have the full information on our site, and a borrower can compare the services and complete the processes in seven minutes.
We have partnered with nine major commercial lenders, including HDFC Bank, ICICI Bank, Axis Bank and Standard Chartered.
About 27 per cent of the total applications come from non-metro cities, mainly through mobiles, and we will aggressively look at this segment going forward.
We understand your net revenue doubled last fiscal to around Rs 18 crore with EBITDA loss of around Rs 2.7 crore, and net loss of Rs 2.9 crore. Also your topline has been growing briskly but losses, which came down momentarily, has increased since FY12. What is your timeline to come out of the red?
We have been doubling our revenues over the past couple of years, and will continue to do so in coming years as well. We are on track to achieve breakeven this financial year ending March 31, and we expect to be profitable next year.
I cannot share the product-wise details but all I can say is that we are looking to close this financial year with facilitating loan disbursals worth Rs 3,000 crore.
How did you spend the money you raised from Walden in 2011? When will the funding from the latest round be exhausted? When are you raising the next round of funding?
The capital raised from Walden was used to hire more financial services and technology experts. We have the best talent from various IITs and IIMs working for us. As for the latest round of funding, we are not a money-burning company. We have enough capital that can support the growth for some more years.
Are you also looking at inorganic expansion? Are there such opportunities at present? Are you also getting buyout calls from MNCs? As of now, our focus is to grow organically and we are not looking to acquire companies. I cannot comment on buyout offers.
How is the Indian online loans facilitation market growing?
In India, the offline loans are growing at 15-16 per cent per annum, while the online loans market is growing at 90 per cent. There is a huge uptake and more and more people are now aware of online loans market.
What other innovation can be brought into this segment? What are your expansion plans?
In my view, Aadhaar offers a massive opportunity for our company. Instead of paper-based KYC (know your customer) filing with banks, one can digitally do it that will help reduce paper work.
We have currently employed 160 people across our three offices in Bangalore and Mumbai, Chennai, of which 40 per cent are in the R&D department. Although the current focus is India, we will look at foreign expansion, depending on how the overseas markets open up. We are also planning to go aggressive on branding and partner with various ad agencies to make the brand more visible.
(Edited by Joby Puthuparampil Johnson)