India Archives - Lend Academy

Small Business Lender Kabbage Expanding to India

The company is one of a handful of fintechs that have expanded internationally and the only US company to our knowledge planning to tackle the Indian market.

January 29, 2019 By Ryan Lichtenwald 1 Comment

When we talk to domestic fintech companies and ask them about international expansion the response most often is that they see the opportunity so great here in the US that they are not looking to expand overseas. There have been a few exceptions of course, with companies opening offices in countries where there are less barriers to entry like Canada, the UK or Australia. The latest announcement from Kabbage breaks that mold as they have expanded their small business lending operation to India. To our knowledge Kabbage is the first US-based lender to enter the Indian market.

Kabbage has opened an office in Bengaluru (formerly Bangalore) and plans to have 125 employees by year end. For comparison, the company has about 350 employees in their Atlanta headquarters. Kabbage co-founder and CEO Rob Frohwein gave us a glimpse of the team and office last week in a LinkedIn post.

According to a Business Standard article, the India team is operating as a captive technology unit for now and is still waiting to officially begin offering small business loans in India.

Frohwein told Business Standard:

We love the market…but there are certain things that you need to ensure when you go in. One is to obviously get a full feel of the landscape. You have to understand the regulatory makeup which includes understanding the non-banking financial company (NBFC) makeup.

Frohwein also shared that there are only two markets that Kabbage is looking at and India was one of them. He is aware of the challenges they will face in both acquiring and servicing their customers and that they need to find partners to leverage data in order to officially enter the Indian market. This has been Kabbage’s key to success here in the US.

There are many things working in Kabbage’s favor as the Central Bank is looking to modernize the country. One of the most well known initiatives is Aadhaar, a universal identification system. Once Kabbage is able to officially launch they still will face competition from Indian based companies such as Lendingkart, Capital Float and Flexiloans.

Conclusion

Kabbage is one of the great fintech success stories here in the US and it’s going to be interesting to see if they can do the same in a very different market. While some fintech companies are operating in multiple countries it is rare to see anyone operating at scale across geographies. Kabbage has raised a huge amount of money, close to $500 million in equity to date, so they are well positioned as they move forward with their plans.

Amazon and Their Push Into Fintech

A new report from CB Insights catalogs all the recent moves Amazon has made into financial services

June 26, 2018 By Peter Renton Leave a Comment

Last week CB Insights released this really interesting report titled, Everything You Need To Know About What Amazon Is Doing in Financial Services. While Amazon has already made some moves in fintech is a huge amount of speculation as to what they will do next. This report covers both what Amazon has done and also speculates as to where they might be going.

The report provides an in depth look at the moves Amazon has made in payments, lending, the new Amazon Cash program and also takes a look at how the company has been developing fintech programs internationally.

Amazon Cash For The Unbanked Consumer

While I was most interested in the lending section before I get to that I want to talk about Amazon Cash. I have paid little attention to this product since it launched in April 2017 but the more I think about it the more I see a product that could move the needle for the unbanked in this country and possibly around the world.

Simply put Amazon Cash bridges the offline and online worlds by allowing anyone to shop on Amazon with cash. The way they do this is through partners like Western Union, MoneyGram and Coinstar. Consumers can bring in cash and deposit it into an Amazon “account”. They can then shop on Amazon and use this balance on this account to pay for Amazon products.

It doesn’t take much imagination to see where Amazon could take this. By the simple addition of a debit card, Amazon could move the unbanked into a quasi bank account that could be used at places beyond Amazon. Many surveys have said how much the public trusts Amazon and they could really make a difference for financial inclusion by developing this product.

Amazon Lending: Lots of Potential But Not Much Activity So Far

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P2P Lending and the Indian Market

We hear from a p2p lending leader in India to learn more about the industry there.

May 20, 2016 By Ryan Lichtenwald 1 Comment

[Editor’s Note: This is a guest post from Rajat Gandhi. Rajat is the Founder and CEO of India’s largest P2P platform, Faircent.]

The thing about disruptive technology is that one does not know what to expect and where it will go. The Internet is a great example. It was science at the hand of academics and researchers, but became technology once computer companies got involved and various applications and usage spun out if it.

This means regulations and often usage of such technology plays the catch up game. It is often many years after a disruptive technology comes into picture that we can truly enjoy its benefits or iron out the gray areas.

We can easily state that this decade is about financial technology. Traditionally, the domains of big banks and deep pockets, startups and smart individuals are driving a paradigm shift in the sector today. From something as revolutionary as Bitcoin and the Block chain technology, to innovations like crowdfunding and peer-to-peer lending, the sector has been abuzz with change. [Read more…]

Microfinance Goes Bad in India

January 26, 2011 By Peter Renton 10 Comments

The microfinance movement began in south Asia when Muhammad Yunus started Grameen Bank in Bangladesh in the 1970’s. He was awarded a Nobel Prize for his efforts in helping bring women out of poverty in that country. It has been a successful experiment in social lending extolled by the likes of Bill Clinton, Kofi Annan and many other world leaders.

These days, however, microfinance is starting to lose its luster. In the last month there have been several news stories on the dark side of microfinace. There was this story on NPR, the New York Times and Vator.tv and many others. The basic problem is this. The interest rates charged by lenders in these countries are exorbitant and they are given to poor people who typically have little or no business experience. It has become a huge business, particularly in India, run by large corporations focused on short term financial results. Sounds like a recipe for disaster and that is what is happening. All this negative news prompted this response from Yunus in the New York Times last week.

In the Indian state of Andhra Pradesh, home to 75% of the microfinance companies in India, the state legislature has passed a new law that will likely send most microfinance companies out of business. Of course, like any industry there are many reputable companies that have been caught in the crossfire, and there have certainly been many success stories. But with many women being driven to suicide because of their mounting debts something had to be done. [Read more…]