In India, where part time jobs while studying are still not a norm, the only option students have to buy the important gadgets or equipments they need is to ask their parents for the money and then explain in detail the significance of their purchase – an experience which can be challenging at times. But SlicePay founders Rajan Bajaj and Deepak Malhotra are here to change that. After having faced the same issue of shortage of credit availability during their college years, the duo decided to come up with an innovative solution that they call SlicePay.
A micro lending platform, it came into being in the form of Buddy in November 2015. Slicepay offers credits to students without the need of any collateral guarantee. The ease with which it solves this complex problem makes Slicepay different from orthodox banks.
Rajan Bajaj explains, “The SlicePay process is actually quite easy. You fill in basic details, upload your college id & address proof and you get approved instantly for a limit through which you can make offline & online purchases today and pay back over a period of time. Currently, banks & NBFCs have a long tedious process for approving credit and students often miss out on their audience list. This is majorly because students who largely rely on their parents for most of their expenses do not form a credit history and hence are a risky segment. SlicePay, with its advanced risk assessment model which is based on non-traditional data points tends to better evaluate the risk on these students and close the gap by helping them build a credit score, which in turn helps them get approved for credit.”
While the idea is new to India, it has been running in countries like the US and China. Rajan tells us, “In India, there a few startups who are doing this but none of them are big enough to be on the map yet.
” Starting their operations with Rs 3 lakh capital, Slicepay has come a long way. “We have recent hit a run rate of $2mn and growing 50% MoM. We will be soon looking to expand in a few more cities and increase our product offerings,” reveals Rajan.
Offering an interest rate ranging from zero to 20 percent, Slicepay offers a credit of up to Rs. 60,000 for the students to buy products or use services. This amount can be paid back in a maximum of 18 months. Targeting the age group between 18 and 23 years, Slicepay is running a rigorous online ad campaign on Facebook and Google in order to increase their visibility.
Credit giving is a risky business even for well established banks, then how does Slicepay manage to minimize its defaults? Rajan calmly explains to us, “As already mentioned we rely on our advanced risk assessment system which relies on over 1200 metrics to take decisions pertaining to risk associated with any user. We have a badge system in place where people who fall in a lower risk profile tend to get higher approved limits and grow up on the badges higher than people with high risk. To back this up, we also have an army of college ambassadors spread across campuses to assist with risk & collection processes.”
Even though several provisions have been put into place, “the chance of default is something which can be minimised but not entirely eradicated,” accepts Rajan. He further tells us the reason behind this practice, “This is because it comes as a lesson that people who default have multiple reasons of failing to pay. If that reason is the intent of the user to not pay, then it is a flag. If a user is unable to pay on time because his pocket money was delayed once or there was some issue with his card, this tells us that there can be things which go wrong but the user does not intend it.”
Unlike other budding entrepreneurs, Rajan didn’t take long to come out of his comfortable high paying job and jump into the uncertain start-up world. On probing further, he revealed his thought process at that time, “It was not very difficult of a decision because after deciding about it I stopped thinking about it, and just went ahead & did it. While during the decision process, I evaluated the downside - and there is not much downside of leaving the job and starting up so my logic was why not? It seems interesting, why not try!”
For a company which is full time into credit offering business, getting Venture capitalists onboard could not have been an easy task, but they somehow managed to get them all onboard. Rajan lets us in on how it happened, “There were many concerns from our investors and lending partners from the start around the viability of the model since the market was pretty new and there was a pre conceived notion that this segment of customers would not repay you back if you give them credit. Having worked with the people from the industry and addressing their concerns have definitely helped us with investors and now there is enough confidence among them about the model & market. It was very different 1 year back, I would not say it was the most difficult part but it was certainly one of the most difficult parts.”
The students from colleges in tier – 2 cities can really do with a little help from the Slicepay’s credit services. And the company seems to be taking steps towards it now. Talking about the company’s expansion plans, Rajan tells us, “We are attempting to build a more advanced risk engine than anything that has been ever tried in India. With our offering of micro credit to college students we are able to assess them on various alternative data based risk models and test it out very quickly with minimal damage because of the ticket size of loans and tenure. In due time, with a robust risk model we will expand our product experience & offerings to young professionals and other working class people who lack these things today since banks are unable to serve many of their needs. We will also expand our product offerings to education loans, car loans, house loans in the long run in partnerships with other banks and NBFCs.”
Before taking a leave, Rajan expressed his praise about Brainbuxa and its initiatives. He said, “I really like the way you are building the ecosystem. All the best for the road ahead!”
If you think you have an equally inspiring story that can strike a chord with the readers and encourage them to aim for something bigger and more meaningful, you can write to us at Brainbuxa and we'll make sure that it reaches across the country.