 "L-R Ramki Gaddipati, Co-Founder and CTO, and Bhavin Turakhia, Co-Founder and CEO, Zeta")
Zeta, which provides next-gen banking technology to financial institutions globally, is launching a digital credit-as-a-service offering as part of its strategy to democratise credit.
SoftBank-backed Zeta’s offering is underpinned by the National Payments Corporation of India’s Credit Line on Unified Payments Interface (UPI) scheme.
Zeta estimates that the transaction volume on this scheme will exceed $1 trillion by 2030. It aims to capture 50 per cent of this market opportunity with its end-to-end solution that can help banks conceive and rapidly launch multi-form credit products.
“India is a highly underpenetrated market when it comes to credit. There are over 800 million credit-eligible adults in the country, and less than 30 per cent of them are adequately served when it comes to their credit needs,” said Bhavin Turakhia, co-founder and chief executive officer of Zeta, in an interview.
“We believe that with UPI, there is an opportunity to meaningfully increase this penetration. With this, India’s credit would reach about $1 trillion in annual spends by 2030, and we believe more than half or $500 billion spends would be operated on Zeta’s digital credit-as-a-service platform.”
India’s financial landscape today presents a unique dichotomy.
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TransUnion CIBIL has reported that more than 160 million Indians remain underserved by traditional credit channels. At the same time, banks have pre-approved credit for millions of customers but are unable to distribute loans to them efficiently.
Unlike traditional loans, credit products that leverage the Credit Line on UPI offer on-demand access through any PSP payment app, leveraging a fully digital-native experience, allowing consumers to borrow precisely how much they need, when they need it.
Calling the Credit Line on UPI “a credit distribution superhighway”, Ramki Gaddipati, co-founder and chief technology officer of Zeta, said this is an opportunity to change the credit inclusion landscape in India. He said Credit Line on UPI is completely changing the discovery, access, and cost mechanics of retail lending for banks. He said Zeta would enable banks to serve the credit needs of millions of customers in this completely real-time, digital-native ecosystem.
“So far, we were only selling software as a service to the banks, where we provided them technologies required for issuing credit products, UPI products, and loans,” said Gaddipati, in an interview. “We are now offering digital credit-as-a-service offering, where the bank can come up with their concept of the product, underwriting policy, and due diligence processes. The rest of the service would be taken from Zeta. The customer’s journey and association with the bank can be fully managed on the system. This allows the banks to make sure that they can get an accelerated start. They don’t have to implement a new set of software. They can focus on their product and portfolio management approach for that, and we handle the rest.”
Gaddipati highlighted the need for the banking ecosystem to prepare for hockey-stick growth in Credit Line on UPI, similar to what India experienced when UPI was first launched. Sounding a note of caution on banks’ preparedness for Credit Line on UPI volumes, he added, “We saw UPI volumes put a strain on core banking systems. We anticipate similar volumes on Credit Line on UPI before long, and this calls for population-scale banking infrastructure capable of processing hundreds of millions of credit accounts. We have pre-architected our solution for this from Day 1.”
With a vision of democratising access to banking, Zeta said it has built one of the most formidable teams in banking technology over the last decade and spent over $360 million in building next-gen banking platforms globally.
Its digital credit as a service offering provides a complete services and tech stack powered by Zeta’s Cloud-native and next-gen core banking and payments platform. This will enable banks to manage everything from originations to collections digitally.
Zeta’s digital credit as a service offering includes a wide range of product blueprints (EMI loans, merchant loans, agricultural loans, etc.). It also includes out-of-the-box capabilities for operations, compliance, and regulatory reporting. There is also process consulting support to integrate Credit Line on UPI with existing bank systems. Also, there is end-to-end programme management to guide banks at every stage of the journey.
The company said the offering, which completely reimagines credit distribution as a modern digital-native journey, co-exists with a bank’s existing products and systems. There is minimal disruption to ongoing systems and processes.
Zeta was founded by serial entrepreneurs Bhavin Turakhia and Ramki Gaddipati in 2015. It aims to disrupt the global banking technology sector by replacing 40-year-old banking and payment technology platforms with flexible and scalable modern systems.
Zeta already powers millions of payment cards from some of the world’s largest card issuers in six countries. It is currently expanding rapidly into the US card processing market.
