Tashwinder Singh (Niyogin) on Building India's Next Fintech Giant, Beyond UPI
With over two decades of experience, Tashwinder Singh, a seasoned professional in the financial services industry and the Managing Director of Niyogin. shares invaluable insights into the evolution of fintech in India and how he has navigated challenges to build a successful business.
Check out the video of the conversation here or read on for insights.
📈 The Rise of Private Credit in India
The growth of private credit in India has been nothing short of remarkable. Until 2018, the private credit market was on an upward trajectory, primarily driven by sectors such as real estate. Developers were keen to secure financing at rates reaching as high as 20%, making private credit an attractive option for funding development projects.
"The private credit market was booming, and two segments that were particularly thriving were real estate financing and construction finance."
This trend showcased a shift in how businesses approached funding, leveraging private credit solutions to fill gaps left by traditional banks. However, this growth wasn't without its challenges, particularly in the wake of the ILFS crisis and the pandemic, which reshaped the landscape of private credit.
📊 Understanding the Dynamics of Private Credit
Private credit operates in a unique space between traditional bank lending and equity financing.
"I actually think of private credit as a mezzanine solution between equity and debt. A private credit player will never be able to compete with a bank on financing for pure debt."
This positioning allows private credit to offer tailored solutions that can meet specific needs of businesses, particularly those unable to secure traditional bank loans. The flexibility and speed of private credit providers often give them an edge in rapidly changing market conditions.
"In India, senior credit typically ranges from 9% to 11%, while mezzanine financing can command returns between 12% to 18%."
🏦 Understanding Banking Structures
To comprehend the rise of private credit, it's essential to understand the underlying banking structures in India. Banks are fundamentally divided into two major streams: corporate investment banking and consumer banking.
"At a very basic level, you can break a bank into these two buckets because the product set required by these two segments are very different."
Corporate investment banks focus on serving the needs of companies, while consumer banks cater to individual customers. This division influences how financial products are developed and delivered, shaping the overall landscape of banking in India.
🔍 The Role of Product Management in Banking
Product management plays a critical role in both corporate and consumer banking. Tashwinder explains that a product manager in a bank acts like the CEO of a specific product:
"Product managers look at how to ensure that customers are using this product and that it is the best in class in terms of service delivery and profitability."
This approach is akin to product management in tech startups, where the focus is on user engagement and optimizing the product for customer satisfaction. In banking, this means creating products that not only meet regulatory standards but also address the evolving needs of clients.
🏢 Tashwinder's Journey at Citibank
Tashwinder's career in banking began at Citibank, where he spent nearly two decades. He joined the corporate investment bank following his MBA and quickly rose through the ranks. His journey involved experiencing multiple facets of banking, from operations to product management.
"The training I received was invaluable. It was possibly the best training anyone could get in the banking industry."
This diverse experience not only equipped him with a well-rounded understanding of banking but also laid the foundation for his future endeavors in private equity and fintech.
🌍 Transition to Private Equity at KKR
In 2012, Tashwinder made a strategic decision to transition from Citibank to KKR, one of the world's leading private equity firms. This move was driven by his desire to explore new opportunities in the rapidly growing Indian market.
"India continues to present a fantastic opportunity set, and the energy and palpability of that energy in India is unparalleled."
At KKR, Tashwinder focused on private credit and launched local credit funds. His experience at Citibank allowed him to approach these opportunities from a unique perspective, providing insights into the mid-market segment and addressing the specific needs of Indian companies.
📉 The Impact of the ILFS Crisis and the Pandemic
The ILFS crisis of 2018 marked a significant turning point for the private credit market in India. It exposed vulnerabilities within the financial system and led to a tightening of credit conditions.
This crisis was followed closely by the pandemic, which further complicated the landscape for private credit. Many companies that relied on private credit faced challenges, leading to defaults and a temporary contraction in the market.
"Today, every large player is talking about getting back into India in the private credit space."
The combination of lessons learned from the crisis and the innovation spurred by the pandemic has set the stage for a renewed focus on private credit, signaling a bright future for this segment in the Indian financial landscape.
🚀 The Birth of Niyogin and its Business Model
Niyogin was born out of a vision to address the gaps in MSME lending in India, particularly in the wake of the challenges posed by the pandemic. Tashwinder recognized that traditional banking systems often overlooked the needs of small businesses, leaving them vulnerable and underserved. With a focus on innovation, Niyogin set out to create a business model that could effectively bridge this gap.
"The pandemic highlighted the urgent need for accessible financial services for MSMEs. We realized that technology could play a pivotal role in transforming the lending landscape."
The core business model of Niyogin revolves around providing tailored financial solutions to MSMEs through a combination of technology and strategic partnerships. By leveraging existing networks, such as chartered accountants (CAs), Niyogin can tap into a vast pool of potential borrowers who may not have access to traditional financing options.
"Our approach was to partner with trusted advisors in the ecosystem, like CAs, who already have relationships with MSMEs. This allowed us to create a win-win situation where we offer financial solutions to their clients, while they benefit from the commissions."
This innovative approach not only reduces the client acquisition cost but also creates a sustainable model for growth. By focusing on the unique needs of MSMEs and employing technology-driven solutions, Niyogin is well-positioned to thrive in a competitive landscape.
💡 Innovative Approaches to MSME Lending
Niyogin's strategy for MSME lending is rooted in innovation. From the onset, Tashwinder and his team prioritized understanding the specific challenges that small businesses face when seeking financing. This led to the development of a unique lending framework that combines traditional underwriting methods with modern technology.
"We realized that to effectively serve MSMEs, we needed to reimagine the lending process—making it faster, more efficient, and tailored to their needs."
One of the key innovations is the integration of a digital platform that streamlines the loan application process. This platform allows CAs and MSMEs to interact seamlessly, facilitating quick loan approvals and disbursements.
"By leveraging data, we can make more informed lending decisions, assess risks better, and ultimately provide a better experience for our clients."
Through partnerships with various financial institutions, Niyogin has created an ecosystem where MSMEs can receive loans tailored to their specific circumstances. This collaborative approach not only enhances the customer experience but also mitigates risks associated with lending to small businesses.
📲 Leveraging Technology with iServeU
Technology is at the heart of Niyogin's operations, particularly through its subsidiary, iServeU. This innovative platform has been designed to empower retailers and MSMEs by providing them with essential financial services directly at their doorstep.
"iServeU is about democratizing access to financial services. We want to ensure that even the smallest retailer can offer banking services to their customers."
Through iServeU, Niyogin enables local retailers to act as banking correspondents, allowing customers to perform transactions like cash withdrawals, deposits, and loan applications through local shops. This model not only increases the reach of banking services but also empowers local businesses to generate additional income.
By providing the necessary technology and support, Niyogin is fostering a new wave of financial inclusion.
"Our goal is to create a robust network of financial service providers that can cater to the needs of every individual, regardless of their location."
This innovative use of technology is transforming how financial services are delivered in India, particularly in rural and underserved areas.
🌍 Expansion into International Markets
With a solid foundation established in India, Niyogin is now looking to expand its footprint into international markets. Tashwinder believes that the lessons learned and the innovations developed in the Indian market can be effectively applied elsewhere.
"The global fintech landscape is evolving rapidly, and there is immense potential for us to take our solutions beyond India."
Niyogin is currently exploring opportunities in Southeast Asia and the Middle East, where the demand for accessible financial services is growing. Tashwinder highlights the importance of adapting their model to suit different regulatory environments and market needs.
As they venture into new markets, Niyogin aims to leverage its technology and partnerships to replicate its success in India.
"Our strategy is to build local partnerships and understand the unique needs of each market. This way, we can tailor our offerings and ensure we meet customer expectations effectively."
By tapping into international markets, Niyogin is poised to scale its operations and become a significant player in the global fintech arena.
🔮 The Future of Niyogin and Its Ambitions
Looking ahead, Tashwinder is optimistic about the future of Niyogin. With a clear vision and a robust business model, the company is well-positioned to capitalize on the growing demand for financial services among MSMEs.
"Our aim is to become a leading fintech player not just in India, but across multiple markets. We want to be the go-to solution for MSMEs seeking financial support."
In the coming years, Niyogin plans to continue investing in technology, enhancing its product offerings, and expanding its reach. With a focus on innovation and customer-centricity, the company is set to redefine the lending landscape for MSMEs.
"The journey is just beginning, and we are excited about the possibilities that lie ahead. Our commitment to empowering MSMEs will remain at the core of everything we do."
As Niyogin charts its path forward, it embodies the spirit of entrepreneurship—resilient, adaptive, and striving for excellence. The future looks bright, and with Tashwinder's leadership, Niyogin is on track to make a lasting impact in the fintech industry.
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