Musings of a true 0–1 launch
Introduction:
In our pursuit of financial inclusion and addressing the challenges faced by potential borrowers in tier 4 and tier 5 cities, we embarked on a new initiative charter to explore innovative solutions. This article delves into our journey of implementing a gold loan product, utilizing a NoCode application, and the lessons we learned along the way.
🧑 🔧 Problem discovery exercise: As a part of month end workshop activity involving data, product team and LSP team, we were given a problem to solve collaboratively: “Identify good leads from A2 reject”
Confused?Let me explain this
See as a Lending platform we receive around “x” number of leads from various channel partners and marketplaces like paisabazaar,bankbazaar,our DSA team etc.
Now to weed out the junk leads we have put up strong guardrails at the top of funnel that we call as “Upfront rejection Check”.This essentially reduce our funnel to by y% as a substantial number of junk leads get rejected at this stage.**y** is a huge number.These are called A1 rejects
Post this step, we run our proprietary underwriting model on the credit and banking variables for the x(1-y%) leads which essentially ensures that terms are generaed only for creditworthy borrowers who has the lowest PoD(Probability of Default).This activty further reduces our funnel by z% which are known as “A2rejects”.
So essentially your “workable lead” funnel becomes very very thin: x(1-y%-z%)
Upon closer examination, we found that a considerable portion, around ‘t’% of leads, were actually potential good customers. The data analysis revealed that some of them had good CIBIL scores but were already availing loans from LK. Others lacked the required BRPs as they were involved in agri-business, which LK did not directly support.
Aha moment💡 : Additionally, some leads had both BRPs and good CIBIL scores but required short-term loans with a bullet repayment facility.”Bingo” ,let’s pursue them.
📝Hypothesis framed: A good percentage of potential leads from tier 4 and 5 cities with good CIBIL score needed a short term credit product with easy bullet repayment facility.
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👨 💻Solutionize the problem statement: The next step was to devise a solution to address the challenges of these potential borrowers.We decided to pilot a gold loan product, providing flexibility to customers and ensuring repayment certainty. Additionally we didn’t want to delve into another unsecured segment so we decided to go for a secured credit product in the form of gold loan
The pilot was launched in three locations in Andhra Pradesh.
NoCode platform to validate the PMF:To facilitate the gold loan process, we needed a user-friendly mobile app. Given time and resource constraints, we opted for a NoCode route using Appsheet to build a basic skeletal version of the app.Also we wanted to validate if the PMF exists for this use case or not so we decided not to build a full-fledged native mobile app.
GTM strategy: The onboarding process was designed to be seamless and efficient.
We partnered with a small SFB (Small Finance Bank) for financing the transactions, leveraging their tie-ups with jewelry shops to verify the purity of gold assets and also to proivde a place where our RM/AM can onboard customers. Our LK LSP (Lead Service Provider) team was responsible for lead generation and reaching out to eligible borrowers from the targeted areas. The identified borrowers were informed about their loan eligibility and the required documentation that would be needed to conlcude the entire journey.
Expanding Reach and Achieving Results:
Starting with four cities, we expanded our presence to 17 towns, including locations like Adoni,Bellary,Kurnool,Guntoor etc. Our current monthly run rate stands at 3.5 crore INR/month on a No-code platform.
Lesson learnt :
1) Limit your scope as far as MVP is concerned.While it should serve basic use case but not everything.(Partial release,collateral tracking software installation)
2) If you can manage it via NoCode platform,then do it.Before going big you want to validate your idea.
3) Not everything has to be automated in one go.We did KYC,Bank account verification manually as our NoCo app has limitations in terms of automating these process
4) Once you have validated,quickly transition as soon as you can because Noco platform are very bad at scaling.
I would love to hear your 0–1 implementation journey!
