Seoul and Gurugram-headquartered lending app is the latest player to enter the neobanking space. The app, which offers small-ticket loans to blue and grey-collar workers, as well as the gig-economy workforce, plans on expanding its suite of services to the 18-20 age group, new-to-credit customers as well.
The SoftBank-backed company, owned and operated by BalanceHero, also plans on acquiring a small finance bank licence in the second half of 2022 to fuel its ambitions to grow its financial services vertical, Charlie Lee, Co-founder and CEO of BalanceHero, tells YourStory.
“We are more focused on the micro-loans for the coming year and will roll out our neobank as it is a natural need of our users. They want to enjoy all financial services with a single client. We will also raise a round of equity capital to grow our neobank domain aggressively,” said Charlie Lee. The company had last raised $28 million in an equity round from SoftBank Ventures Asia, BonAngels, and others in 2020.
True Balance raised nearly $55 million in debt in 2021 from the likes of Northern Arc, Hinduja, and others, for its lending operations, which is the largest business for the company. The company claimed to have disbursed Rs 600 crore across loans for the calendar year 2021.
Charlie said the requirement for small-ticket loans had grown on the platform, averaging at Rs 7,000 ticket size, in keeping with predictions for the market.
According to a report by TransUnion CIBIL and Google, personal loans of less than Rs 25,000 grew by 23X from 2017 to 2020 and nearly 73 percent of these loans originated beyond Tier 1 cities.
In case of True Balance’s customer base, a significant portion comes from the Rs 10,000 to Rs 40,000 per month income bracket. Apart from this, the company has also seen its user base in the new-to-credit segment grow.
“When we talk about neobank, we are talking about the neobank for the next billion,” said Souparno Bagchi, COO of BalanceHero India.
True Balance
Founded in 2014 for consumers to check their mobile top-up plans or pre-paid balance, True Balance offers small ticket loans and utility bill payment services to its customers. The financial services layer will put it in competition with well-funded companies in the neobanking space including the likes of Accel and Lightrock backed and fintech veteran Jitendra Gupta led .
True Balance is looking to offer services including bank account, insurance, wealth management, and money transfer to its target user base. The new lines of business will also help add to the revenue stream, said Charlie. Apart from other neobanks, the new lines of business will also pitch them in competition with the likes of savings app and small-ticket insurance offered by payments companies like , as well as specialised insurance players like .
The company plans on leveraging the Account Aggregator (AA) Framework set up by the RBI and the Open Credit Enablement Network (OCEN) to grow its financial services business. While the AA network allows banks to share transaction data or bank statements of an individual consenting to it, this is aimed to improve access to loans for individuals. OCEN developed by iSPIRT aims to connect multiple stakeholders in the lending space digitally, minimising the time needed for loan approval and disbursal.
The startup also claims to have broken even financially for the calendar year 2021. Charlie said the company registered 2x growth year-on-year from 2019 over the subsequent years, despite the impact of the pandemic.
“This year we are planning to grow around five-times over the previous year,” he added, referring to the calendar year 2022.
According to data available with the Registrar of Companies, BalanceHero India clocked losses of Rs 56.7 crore for FY 2020-21, a 31 percent decrease from losses recorded in the previous financial year at Rs 82.3 crore. The revenue from operations stood at Rs 63.3 crore for FY 2020-21 as compared to Rs 35 crore in the previous financial year.
Edited by Megha Reddy