 "Faircent breaks into a new market, builds a brand")
Faircent, a two-year-old online peer-to-peer lending (P2P) platform, has become the only alternative lending medium to secure a place in the 2016 Interbrand list of breakthrough brands, an annual compilation of new-economy or start-up brands that the agency has been putting together for the past three years. Faircent is one of the three Indian brands to make it to the list. The other two are Zomato and Paytm.
Jez Frampton, global CEO of Interbrand, said in the report, "We're celebrating a new breed of upstarts and challengers, the next generation of brands that are reshaping the market and embody a critical characteristic - growth." Released last month, the report is a joint effort of Interbrand, Facebook, Ready Set Rocket and the New York Stock Exchange.
How did Faircent make the cut? Both Zomato and Paytm are better known brands and also more visible in traditional media and their inclusion has not raised as many eyebrows as Faircent's has because few know the platform or the business opportunity that it is so keen to exploit. The report says that it looks for brands' ability to "leverage current technology, prepare for change and balance innovation with core values". And it says, "Faircent has revolutionised access to credit in India and elsewhere." Similar work is being done by lending platforms such as Kiva, a San Francisco-based non-profit and Blender Global, an Israeli community lending platform.
Faircent is the only P2P lending firm on the Interbrand list. Rajat Gandhi, founder and chief executive officer, Faircent, said, "The innovative offerings and our investment in technology have helped secure a place when there are about 5,000 players across the world."
The industry is still nascent in India although the past year has seen a boom with close to 20 new online platforms coming up. Currently, there are around 30 P2P lending companies in India. JM Financial holds a 9.84 per cent stake in Faircent, which was formed in 2014, and has disbursed Rs 6.5 crore to 26,000 borrowers so far. Gandhi said that now on a daily basis, the platform is adding about a hundred borrowers and is disbursing close to Rs 1 crore worth of loans. "Moreover, in India considering that we were among the first few players we have also helped in building and driving the entire ecosystem," he added.
Interbrand looks at three core principles or values. Brands with promise and the ability to stand apart from the rest, visual design and aesthetic values that help consumers connect with an emerging brand better and brand marketing and awareness programmes. Faircent made the cut on all counts.
Till now the company has relied only on word-of-mouth as a marketing tool. Speaking to the media at special conferences about P2P lending helped as did the fact that borrowers spoke to their families and friends and they in turn spread the word further around. "Apart from this we also focused a lot on search engine optimisation and content creation around this whole space which also helped to pull in more customers," explained Gandhi.
Trust is a big factor in winning over consumers and has, thus far, been one of the big reasons for customer wariness about such platforms. But with the industry set to come under the purview of the Reserve Bank of India, customers will be more willing to experiment with online community lending ventures.
As the sector booms, Faircent believes it has the upper hand, given its familiarity with the market and the presence of a loyal set of customers that are also its brand ambassadors. And as it gets ready to advertise via traditional media, it is sure brand awareness and business will rise to higher levels.
KEEPING AN ACCOUNT
What is P2P lending?
Peer-to-peer lending allows individuals/ firms to lend/borrow money to/from other unrelated individuals without assistance from any financial intermediary. This is mainly done via an online platform that connects lenders and borrowers.
Advantage: Itdemocratises access to credit and encourages entrepreneurship.
Disadvantages: It's risky, interest rates are high and it is unregulated. But, the Reserve Bank of India (RBI) is stepping in now with a regulatory framework, though grievance redressal is still an issue.
How big is the market?
According to an RBI consultation paper on P2P lending platforms, cumulative lending through such platforms globally, at the end of Q4 of 2015, was £4.4 billion. Growth has been quite dramatic, from £2.2 million in 2012 to £4.4 billion in 2015. However, some countries such as Israel and Japan have banned these platforms.
Who is the target customer?
Those who find it difficult to get loans from traditional channels; individuals and several small and medium enterprises.
What are the interest rates like?
Rates vary between zero and 36 per cent and the tenure between three months and three years. Typically, the maximum loan that one can avail via this channel is Rs 5 lakh.
