CEO Insights Magazine

The micro-business sector of India is projected to grow at a good pace in the coming decade with many emerging businesses which require working capital. India is currently standing at the threshold of a fintech revolution and targetted digital micro entrepreneur loans, with low friction will be an integral part of it. The country has recently witnessed the emergence of NBFCs that specialize in micro entrepreneur/ business loans and aim at upholding the MSME sector of the country. However, apart from microfinance, there hasn’t been much innovation in the industry over the last two decades. There needs to be more fluidity in credit approvals for the required candidates to make use of it and return their part to the economy of the country. This is exactly where Vijayakumar Vaidhyanathan’s FRIENDLOAN has come forward as a tech enabled lending platform directed towards the growth of the Micro Enterprise sector. The CEO Insights magazine engaged in a conversation with him in order to know more about his company and its contribution to the fintech economy.

Give us a brief account of your educational journey and professional experiences that inspired you to kickstart as an entrepreneur.
I am a computer science engineer from IIT Bombay. After college, I went to work for a US company for a very short time which was nearly a year and half. Having come from a family of entrepreneurs, I always wanted to start my own business. So, I came back to Chennai and started something very different. We started producing network accelerators. We built some of the best devices in the world. We were competing with the global market leader of this product both in performance and in sales. Markets changed and we ended up building technology for the finance sector for clients in NBFCs and Banks and gradually got about 40 clients. I spoke at a very close front with the management of those companies.

Gradually I got into the financial industry, lending in particular. Here, I realized that the real money for an NBFC was in the 'New To Credit' (NTC) segment. Once the credit is established for a customer, there was a price war between lending institutions to cater to him/her, leading to erosion of margins. In 2016, we built something called Socrates which was essentially a ML tool which could predict credit behaviour of NTC customers. That was a great success and eventually led us into starting FRIENDLOAN.

What is the success mantra that you follow while handling operations in the company?
One with considerable experience in this sector would understand that the market changes in a fluid manner and very fast. Evolution and capability to adapt is very critical for success. Small, continuous and predictable successes are the small steps that take a company to bigger success. One need to keep up with the changes and speed is of real essence. If you fail you have to recover fast.

Give us an overview on FRIENDLOAN and how is the company positioned in the fintech market of the country?
FRIENDLOAN Technologies is a cutting edge fintech platform. We are a fast evolving and frugal company with laser like focus. As a company, we are obsessed about the solution we give our customer. We are trying to create a niche in the Micro Entrepreneur segment within the current fiscal year. We want to create a larger market. There has been few fundamental innovation in the lending industry over the last few decades other than micro finance. There has been very less growth in fundamental innovation.

We want to build a business that is fundamentally different from the competition in the market. We have built a combination of regular lending, micro finance, and group lending into it. Customers can expect a higher approval rate, higher loan amount and the structure will be in such a way that our losses are lesser. That is the real innovation that we have created and we are using this innovation in the micro business sector.

Tell us a little bit about your leadership approach
My leadership approach has changed over time and with learnings. I always lead from the front and I tend to delegate as much as possible. I believe that everybody has the right to their fair share of mistakes.

I don't get very angry with people failing. I don't feel happy when people don't take initiatives. I encourage people to take bold steps and I stand by them. We encourage building a team of leaders who can go to any depth. The company is phenomenally benefitted because of that and that's the kind of leadership this company has.

What is the roadmap ahead for the company?
The companies who are at the top of the pyramid have access to a lot of credit. The middle and particularly the lower middle part of the pyramid are actually the functioning engines of our economy. MSME sector drives the country and not much credit penetration has happened in this sector. According to a report by a credit bureau, not even 20 percent have access to the credit they require. Especially the micro enterprise segment and that is why we have chosen it. Requirement in this segment is Rs. 4 lakh crore a year as of now for credible borrowers and over the next few years it is bound to grow to Rs 12 lakh crores a year.

Vijayakumar Vaidhyanathan, CEO, Friend Loan
Vijayakumar is a visionary entrepreneur and Founder and CEO of FRIENDLOAN Technologies. With a focus on bringing fair and formal credit to India's underserved population, he leverages tech and financial product innovation.With over a decade of experience, he has successfully co-founded and led companies such as 1 Hour Bazaar and Voice gear Network Technologies. Vijayakumar holds an M.Tech in Information Technology from the Indian Institute of Technology, Bombay, and is passionate about empowering individuals through his ventures.