KountMoney tackles India’s archaic credit rating system for loans, gets seed funding

In India, the banking system excludes large numbers of people from loans because eligibility criteria are archaic. Fintech is out to disrupt this by widening the circle of eligible borrowers through data analytics and algorithms for better risk-profiling. A new credit rating system can also reduce the costs of borrowing for creditworthy people.

The latest to tackle this widespread problem is Bangalore-based KountMoney. Today it announced an undisclosed amount of seed funding from angel investors, through TracxnSyndicate.

The online lending marketplace promises to make it easier and faster to get personal loans. Lending institutions can also use the data science capabilities of KountMoney for better risk analyses of borrowers and reduction in costs.

India’s loan market is growing at 20 percent and expected to cross US$300 billion next year; 20 percent of that is the unsecured loan segment that KountMoney is targeting. “Currently, the unsecured loan market is unorganized and credit underwriting of banks and financial institutions is not up to the mark,” says Abhishek Periwal, co-founder of KountMoney. An IIT Kanpur grad, Abhishek earlier worked as a data scientist for Mu Sigma and business analyst for Flipkart.

The KountMoney founding team.

Tech products to be the differentiator

On the KountMoney website, loan applicants are required to fill in their personal, professional, financial, and residential information. The KountMoney team then verifies the details and uses its algorithms to do an analysis of their ability to repay a loan.

Last month, a similar platform called IndiaLends set up in March announced a US$1 million funding round led by Singapore-headquartered DSG Consumer Partners.

“We are saying that all customer-level analytics – who you are, where you are studying or working, how much you are earning, what is the stability you have with regards to your home ownership, or your mobile bill repayment records – should come into somebody’s credit report and they should be offered a customized product. So anybody who is capable of repaying a loan, and has credentials to borrow, should get that loan he wants at the best possible rates,” IndiaLends co-founder Gaurav Chopra told Tech in Asia.

KountMoney’s Abhishek admits that its value proposition is similar to that of IndiaLends for now. “But going forward, there may be differentiating factors like new products,” he tells Tech in Asia. “In the future, we will be doing some B2B (business-to-business) tech tools for small NBFCs (non-banking financial companies) on a SaaS (software-as-a-service) model. Smaller NBFCs don’t have much tech mettle. We can provide them that. They can use our tech to punch in loans, do analysis, and so on.”

According to Neha Singh of Tracxn, “Kountmoney aims to make the money lending process more convenient for both borrowers and financial institutions. On the borrower side, they provide an online marketplace where institutional lenders can be accessed on a single platform. For the lenders, it provides data science capabilities for better risk assessment, thereby making loan disbursement simpler.”

The company was founded last month and claims to have processed 150 loan applications already.

See: IndiaLends formula for fintech disruption