Reported by: banking|Updated: April 20, 2018
OpenTap is an early stage AltFin company, serving the middle to low income groups and working towards financially including blue collar workers who have little or no accumulated savings. Senthil Natarajan, co-founder and CEO of the company, speaks about his vision and plans
Mohan: What differentiates OpenTap from other market players in this domain?
Senthil Natarajan: OpenTap has a 3-point differentiator from other players in the market – the target population, the product and the business model.
Which segment of the population is your main target audience? Why?
The underserved blue-collar workers are our main target audience. This segment of the population is not only underbanked, they are underserved as well. Within this population, the salary range varies vastly. The upper / higher range unfortunately is the basic criteria for several players to disburse loans. And oftentimes, when this population applies for a loan, they get sidelined or rejected. This is the population OpenTap is addressing. We have devised a methodology to analyze their creditworthiness and we are introducing them to the world of alternate finance – starting off with short-term personal loans.
How is your organizational structure devised to cater to the needs of this target audience?
OpenTap has very audacious goals to become the one-stop-shop for this segment of the population for all their financial needs. The organization structure has been designed to cater exactly to that requirement. We follow a hub and spoke model – satellite offices in target markets with all crucial support functions at head-office. We have also deployed technology to ensure that they work towards digitally including this population, which is currently vastly off-line. Financial inclusion will pave the way for digital inclusion.
How crucial is technology’s role in shaping P2P landscape in India?
Technology will play a very critical role in shaping the alternate finance landscape in India. This is mainly to address scale – the population needing to be financially included is that large. While it will address scale, it will also help increase turnaround times, reduce chances of error and make the entire process from application to collection user friendly and objective. All that said, technology will also hasten the pace of digital adoption / inclusion – which then will open a whole new world of products and services to this population.
How is risk mitigation taken care of? What about NPAs and their management?
OpenTap follows a unique strategy of pre-selecting a group of customers based on their employment to reduce risk. The first point of entry is a short-term personal loan, which helps the customer tide over a crisis or pressing requirement. The nature of the product and the reasoning reduce the risk of default and our track record proves that point. We try to avoid NPAs and when they do occur, it is solved by education and peer pressure.
Do you consider the recent regulations as helpful for P2P players?
The seal of approval and the credibility it brings is useful for P2P players, no doubt. That said, the 10-lakh limit for lenders if applied for institutional lenders also, is certainly an issue. As is the prevention of any cross selling. It doesn’t help end customers at all – unsecured personal loans is only one part of the story.
What will be the estimated size of the Indian P2P market in next 3 or 5 years?
As per a KPMG / NASSCOM report, the Indian P2P market would be anywhere between 4-5 billion by 2023.
How sustainable is the business model in the years to come? Who are the competitors and how evolved are the systems that can take on this competition?
Frankly, competition does not occupy too much of our mind space. When we are talking about financial inclusion, the more companies there are in the market, the merrier. There is just so much to do. That said, there are several companies that address similar requirements that OpenTap does, but not exactly in the same bucket. So, OpenTap occupies a position that is uniquely ours – from a target segment and services perspective.
As far as our business model goes, it is not static. It will evolve and adapt with the market and the requirements of our customers. Only players who are able to adapt will survive to make an impact.