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[The Turning Point] Why Paytm-backed CreditMate pivoted from bike loans to collections


Lending may be one of the most lucrative businesses in a market like India with numerous creditworthy individuals taking loans for the first time, but the sector faces one big problem: collections

This led Jonathan Bill, Swati Lad, Ashish Doshi, and Aditya S to change CreditMate’s model, pivoting from a bike loans startup to a digital collections platform

The founders had seen the fantastic results their inbuilt collections technology offered while running their bike loans service. The efficiency and optimisation were remarkable, especially when compared to the collections approach taken by other lenders. 

Turning Point - CreditMate

The CreditMate founding team



“Therefore, we decided to pivot into the collections software business and further build on the system we had created,” Jonathan says. 

Research has found that the process of collections in India is offline, fragmented, and archaic. It is predominantly dependent on humans who have gained knowledge from years of collections experience. 

When a lender starts operating in a new area/state, it needs to find an experienced collections team for that specific region. This results in a highly labour-intensive business. In addition, the borrower experience is also poor and dis-satisfactory. Lenders tend to attempt to solve problems for their specific portfolios, and there is no collective intelligence

“We came up with a smart, algorithmic platform, which automatically matches lenders to agencies across regions. It improves speed and security, and helps lenders track the collection process in real time with the help of live dashboards, data analytics, and insights,” Jonathan says. 

“If a lender is starting operations in a new region, the collections process can commence at the click of a button. Furthermore, automated billing and reconciliation help with overall efficiency,” Jonathan says. 

Lower repayment failure rates

The startup had built a reasonable bike loans business when it decided to shift focus. It disbursed close to $14 million in bike loans – mostly to blue-collar workers – and created a network of about 150 dealers across Mumbai and Gujarat.

With an average loan size of Rs 50,000, and a longer repayment cycle compared to peers, CreditMate claims to have brought down repayment failure rates to under 1 percent. There are 12 lenders on board, and it has recorded several million dollars in collections so far, with $8 million in June 2019 alone. 

The CreditMate Collect Network is operational in 20 Indian states at present. It consists of 3,120 tele collectors, 3,630 FOS collection agents, over 250,000 cash drop points, and 1,500 cash pickup agents.

There are multiple payment options, including cash, for borrowers. They can even book convenient cash pick-up slots. 

“We also make sure that our collection agents are vetted to ensure the highest level of data and cash security. Our technology has led to roughly 20 percent increased efficiency versus in-house collections, and is on track to fulfil its vision of empowering borrowers with better credit scores and lenders with improved lending performance,” Jonathan says. 

(Inputs by Sampath Putrevu) 

(Edited by Teja Lele Desai)

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