In an interaction with Dataquest, Loan Frame Founder and CEO, Shailesh Jacob talks about the company’s idea, technology SMEs and loan algorithm. Jacob divulges the current scenario of finance in the industry and what Loan Frame looks for in a skilled candidate.
Kindly put some light on Loan Frame and the idea behind it.
Loan Frame is a leading fintech company that is committed to solving the financing problem for millions of small and medium enterprises (SME) in India. Its vision is to be the country’s largest and most preferred technology enabled SME lending marketplace.
We provide a technology enabled platform where bankers and borrowers can connect and the best possible loan products can be offered to the borrower at the most competitive interest rate and in a very fast and efficient manner.
We have created highly differentiated technology and algorithms that offer customized loan solutions for SMEs. The entire loan process takes only a few days versus traditional financing solutions that would take many months.
What are your expectations from the Fintech vertical?
Fintech companies are evolving rapidly, gaining foothold and disrupting traditional firms that resist adaptation. India has experienced the emergence of numerous FinTech start-ups, accelerators and incubators over the last few years. India has everything going for it to establish itself as a global FinTech hub with a large market of underserved or un-served customers, increasing mobile penetration, favorable demographics, an active start-up ecosystem and a large technology talent pool.
Additionally, the Central Government under the able leadership of PM Narendra Modi has been rolling out campaigns that are designed to increase digital financial transactions in India. Initiatives such as ‘Digital India’ and the recent move of demonetization have been a boon for the Indian fintech space.
We believe, we are at an inflexion point and the future will be extremely exciting for fintech players in India.
Where do you see Loan Frame five years down the line and how?
In the next five years, we would ideally like to reach out and touch over 500,000 SMEs. Our objective is to build the largest SME lending marketplace in the country. We want to be the preferred choice for SMEs seeking finance, irrespective of their location, the industry that they operate in and the product they require. We want to give SME loan borrowers the much-needed transparency in their borrowing choice, and make availing business finance a more pleasant experience.
What were the challenges you faced in business and what technology you applied to solve it?
The biggest challenge for us is that Indian SMEs are at the bottom of the rung when it comes to credit disbursal from banks. The operational cost of underwriting SME clients is a big deterrent for banks. At Loan Frame, we have tried to minimize these costs for banks by providing them with pre-matched business loan applications. We know the detailed business loan policies of all the banks on our platform. Our Lender Match algorithm helps us in assigning an application to the bank which is most suited to process and disburse a SME’s loan. So, rejection rates of our applications with lenders are much lower than market and we have a lot more satisfied customers.
How does Loan Frame churn out the best candidates during the recruitment process?
Loan Frame hires from the best undergraduate and post graduate schools in India. We look for candidates who have demonstrated a strong ability to excel in very challenging situations and unchartered territories. We stress on case based interviews and gauge a candidate’s problem solving and critical thinking abilities.
How would you rate the financial academics scenario in India and does it seem to enhance your business in long term?
Financial literacy is improving in India because more and more SMEs are going digital. They are transacting online and are also looking for solutions online. SMEs are no longer wary of reaching out to online brands for their financing needs. We believe that fintech companies with skilled professionals will play an important role in shaping the future of the new ‘Digital India’.
How is the company planning to use technology and IT to its benefit for business?
Technology is the centerpiece of Loan Frame. We have tried to merge world-class technology, processes of global financial institutions with deep Indian SME lending experience. We receive business loan applications from our website or mobile apps, following which we can digitally verify their details using integrations with various agencies. Our proprietary, Lender Match algorithm can score various lenders on our platform for each business loan application. This removes human judgments from lender selection process and makes lending on our platform very transparent and quick.