Walmart-owned Indian ecommerce giant Flipkart is working on a video Know Your Customer (KYC) solution to offer instant credit to customers who buy through its platform, after Aadhaar-based eKYC for private entities was struck down by the Supreme Court last year.
Flipkart, whose plans to enter into digital financial services had been in a limbo for some time, had worked with smaller fintech partners to enable ‘cardless credit’ and checkout finance. However, it now plans to start lending again and underwrite customers to create a preapproved line of credit.
“I think applying for an NBFC licence is a natural progression to enable credit for our customers and we’re committed to moving in that direction,” said Ranjith Boyanapalli, vice-president of fintech and payments at Flipkart, without actually specifying whether it had applied for a non-banking finance company licence from the Reserve Bank of India.
Flipkart has started a pilot project for digital KYC with almost 10,000 customers. It will offer the service to more customers in the coming weeks, pending approvals from the RBI. “It’s still on a pilot basis for which we’ve opened it up to 10,000 users only, but in two to three weeks we should roll it out to the larger customer base on Flipkart,” said Suyash Motarwar, director — engineering at Flipkart.
“We have received an in-principle approval from the RBI and our lending partners are working very closely with the RBI to ensure we are compliant.” Flipkart’s push for an alternative to eKYC comes at a time when it wants to ramp up lending, mostly in a digital format. The company says it has already lent to 1.2 million customers through partners, and is looking to perfect its proprietary credit underwriting model that will largely utilise own customer data.
“We’re using data points from our platform and outside to act as a proxy for this information, allowing us to give you credit without actually having a credit history,” Motarwar said. The company is tracking 500 to 1,000 data points to gauge a customer’s ability and intent to repay loans, crucial factors to check delinquency. Kissht, which offers cardless EMIs to Flipkart customers, and ZestMoney, which offers EMI purchases during online transactions, are two of its major fintech partners.
“Flipkart has been looking to build up its lending business for quite some time; there is a high chance that once they get the licence and get their models in place they could try to do major part of the business themselves,” said a digital lending founder in the know of the matter. The company will drive credit adoption in three main ways, Boyanapalli said.
“We will work with partners, in some cases we will use shared data and in somecases we will want to go solo, the ultimate aim is to increase affordability for the customer.” Like other new economy firms, Flipkart is eyeing the headroom companies have in the digital lending space due to the fewer number of credit cards in the country. The total number of credit cards in India stands at 45 million, latest data from the RBI show. In contrast, India has 931 million debit cards.