Ours' is not a pay-and-spray business model: MoneyMantra.com MD

'We don't charge the customer anything; we are paid by the banks', said Raj Khosla

MoneyMantra.com is one of the largest financial marketplaces, with over 10 million customers across 200 cities, and 120-plus banking partners. In 2019 it had raised $15 million (Rs 104 crore) in funding from the Netherlands-based IFSD BV and Vaalon Capital. Over the past five years, it has originated more than $5 billion in financial services products through its platform. Raj Khosla, the firm’s founder and managing director, spoke to Raghu Mohan. Edited excerpts:

How has MoneyMantra.com been imagined?

We started in 1989 and there were several phases with an imagination of its own. Our first client for origination was Citibank — the pioneers in credit cards, personal and home loans — in the late 1980s, and we roared along with them. But they also made so many mistakes and we learnt from them. It was a great thing, twenty years ahead of its time. As a result, as the domain changed, so did our company’s imagination.

With the dot.com bubble of 2000, we realised that technology was coming into the game and we had to change again. In 2008, you had the global financial crisis, and we had to re-imagine ourselves as an open-architecture company dealing not only with Citibank, but with 125 other banks. And now, technology has taken a bigger leap (think of a Bankbazaar), and we are learning again.

Over the past couple of years, we have grown our volumes by over 250 per cent. We viewed Covid as an opportunity (never let a good crisis go waste), and concentrated on building our tech-capabilities and quintupling our geographic reach. We now service customers in over 300 locations on a pan-India basis. 

What is your revenue model and how different is your company from other originators?

We don’t charge the customer anything; we are paid by the banks. And just so that you know, ours’ is an end-to-end model — as in, it’s not about just creating the lead (for a customer relationship) and passing it on to the banks to fulfil. The distinction I am drawing here is that we are unlike a pure-play leads-led model. Like in the case of platforms which give a list of potential customers to multiple banks, and say, “you may contact them and see where it takes you; and good luck to you and good luck to the customer”. Or what are pay-and-spray models.

We, on the other hand, get and remain in touch with customers, and stay and assist them through the journey to fulfilment. The reality today is that aggregation is here to stay. A youngster may have a credit card from, say, HDFC Bank, but may well opt for a fintech to avail of a personal loan, and later shop for a home-loan from some other vendor. But I would also like to add here that I am unfortunately far out of date on another front — I don’t keep spending money just to show a turnover with no profitability at all. 

Where does all this place a financial vendor’s desire to cross-sell more of their suite to get a higher share of the customers’ wallet? Platforms like yours may be seen as an obstacle by them as the offers are there to be compared!

Well, it’s not that I am trying to decide for customers; it’s their preference and for them to decide after looking at the various offers. If I were a banker, I would actually create a pretty good cross-sell game out of this, because once a customer is already in my portfolio — let’s say, a credit card holder — I will be able to make an attractive cross-sell offer at a discounted rate of interest.

As I look at it, chances are that cross-sell offers from an existing bank will be hard to beat. Customers will compare them more favourably to an offer from a bank with whom they have no relationship. As for why cross-sell ratios are not impressive to begin with, for some reason, customers are basically saying that whatever is the thing you are trying to cross-sell, it doesn’t meet the specifications I am looking for in that product or service.

What’s your view on the issuance of first-loss default guarantees (FLDGs) by unregulated or relatively lightly regulated entities, to banks? Banks can get into trouble if some of these FLDGs are not honoured.

You can take FLDGs and build a programme around it. I think the way most of these programmes are run, the loss will not be with banks. If something were to go wrong, the loss will be with the entity which has extended it. FLDGs, as instruments, are of recent vintage, but I have not heard of banks having taken a hit due to them. Because the terms of the FLDGs, of the product and how it is to be administered, are always structured in a manner where banks don’t take a hit.

The essence of this product is that there is an unregulated entity which also has knowledge and experience (or has a good customer pool). And it is therefore happy to make some loans to them, and carry the risk of it thereafter, by issuing FLDGs.

Do you issue FLDGs?

No, absolutely not. We are on the side of the customers. We will do the best thing for them and leave it to the bank or non-banking financial company to take a credit call. If they like the customer, well, please go ahead. But I am not going to put forward any guarantee from my side on the goodness or badness of the credit-worthiness of customers!