"By adopting a differentiated approach to customer acquisition and underwriting, MyShubhLife is serving the financial needs of blue-collar and low-income self-employed workers in a cost effective manner. MyShubhLife acquires customers through it scoring model which helps them assess their financial health and nudges them towards better financial behaviours. Its low-ticket-size products, affordable pricing and mobile-led, local language model is uniquely tailored to the socio-cultural context of the Next Half Billion"
Ashok Kumar was trying to pay for his parents’ medical bills but was falling short by Rs. 46,000. On a tight deadline, his only options were to take a personal loan from a bank at high interest rates or get an unsecured loan. Reluctant to do either, he decided to try the MyShubhLife Loans app, recommended by a friend. He got the personal loan he needed quickly and at a reasonable interest rate which he could afford.
Many others like Ashok face such problems frequently when trying to avail of a loan from the formal banking system. All too often, discouraged by credit scores and reports they may not have or understand, borrowers in the middle and low-income segments turn to more ruinous options like local loan sharks or moneylenders, who can force people into a vicious circle of debt and repayment by charging astronomical interest rates, in an opaque system devoid of any regulation or redressal mechanisms. In such scenarios, for many in the Next Half Billion (NHB) population, accessing loans can be a seemingly daunting task. Further, only 8% of all available credit is accessible to this segment.
While financial inclusion in the Indian banking system is still a work-in-progress, the focus of most banks, NBFCs and fintech companies is often only on the reach and accessibility of loans. In addition to these, MyShubhLife is working on strengthening a different, critical pillar of the system, that of financial literacy and awareness.
One of the major reasons why financial institutions prefer lending to the ‘elite and affluent’, with an annual income of over Rs. 11 Lakhs ($15000) is that ‘creditworthiness’ for this segment can be determined through scores by credit rating agencies such as CIBIL based on their income, assets and credit history. But this becomes a major hurdle for applicants, especially from the NHB population who are engaging with banks and loans for the first time. They learn the hard way about the processes and requirements for credit when they try to get a loan, often in an emergency.
MyShubhLife seeks to remove this obstacle by providing easy and transparent access to credit while simultaneously educating consumers about financial health and prudence. The platform, built by Datasigns Technologies, is a local language, digital lending platform that serves customers with monthly incomes ranging between Rs 12,000 to Rs 37,000 by offering an average loan size of Rs 60,000 with an average tenure of 22 months.
Through its innovative credit scoring technology, the app creates an instant credit score on a scale of 100 and factors in parameters such as ‘intent-to-pay’ in addition to common criteria such as repayment ability. They have also contextualised for local nuances like using the more familiar percentage system for the score, which makes it and its full breakdown easy to understand for the user. Given that this is often the first credit assessment that this strata of customer has ever had, the app simplifies the process end-to-end, by explaining to its customers what a credit score is, and what patterns could be helpful or detrimental to the scores, hand-holding them through their journey of improving scores, thus nudging them towards better, more responsible fiscal behaviour. This helps customers align their fiscal behaviour to integrate with the banking system in the future.
A strong, skilled, impact-oriented team with CEO & Founder, Monish Anand at the helm combined with the company’s customer ownership approach, has helped MyShubhLife has the help bring a wide range of financial tool to the NHB. Through its Shubh Saathi Program, the platform is also helping blue collar workers to get access to mutual funds, bill payments, mini and micro loans, insurance, mutual fund SIPS, E Gold and E Tax filing service.
With its sharp focus on this critical segment and innovative model to democratize credit, we believe MyShubhLife will play a vital role in India’s journey towards financial inclusion