Finlok And Building Better Financial Services For Young Indian Consumers

In the course of conversations with many innovators and entrepreneurs about how they ended up founding the firms they founded, we tend to hear something of a recurring theme. It always starts with a problem, usually one the innovator has run across in their day-to-day life and tries to solve with a simple solution. Upon realizing there is no simple solution, they decide to build one themselves.

And in some sense, Co-founders Tanuj Sinha and Atish Potdar, CEO and CTO of Finlok, respectively, fit that mold as young men. They found that being out in the world and managing money was incredibly challenging, much harder than they’d ever imagined. Particularly, they said, they struggled with saving money. The good news, Sinha said, is that through trial and error – a lot of error, admittedly – they got through it.

“What we noticed is that youth were really making the same mistakes we made at first,” he noted.

They wanted to build a platform for those younger consumers that made the whole process, well, friendlier. In thinking about how to make a more welcoming process, Sinha told PYMNTS, the foundational concept of building their financial service platform around a social network began to take shape.

Finlok, according to its co-founders, is a mobile-first financial platform designed to let early-career Indian adults – those making between ₹10,000 to ₹ 25,000 per month – to leverage their social networks to turn their future financial health into a collaborative goal for their community of friends and family.

The platform is designed to make it easy to set savings goals, control how long savings payouts will be and to invite friends and family members to either save collaboratively or contribute directly to users’ savings efforts through direct lending.

“From the point of view of a younger customer, the options in the market for saving or borrowing tools are imperfect,” said Sinha. “For savings, there are lump sum requirements that mean customers have to already have savings. Or there are lock-in commitments that put money out of reach for too long. Underwriting is still very complicated in India, where 20 percent of customers do not have a bank account.”

That is changing, and quickly. Four years ago, only about half of India adults had bank accounts, but between demonetization and the rollout of India’s biometrically enhanced PAN ID scheme, the entire financial structure of the nation has changed “very dramatically over the last few years.”

There is a reason, Sinha noted, that the FinTech startup scene in India is so incredibly crowded and competitive as 2018 is closing out its accounts.

In addition, India is a very young nation, demographically speaking: Half the population is under the age of 25, and 65 percent is under the age of 35. It is also a highly mobile nation: According to a TRAI report, 95.78 percent of the nation’s 512.26 million internet users (as of June 30) access the internet through their mobile phones. And all that opportunity to catch and serve an extraordinarily large and emerging digital consumer segment is a dual-edged sword for any FinTech startup operating in India today.

There are many consumers they can reach and hopefully help in that demographic with their saving and lending as a communal activity platform – but, he added, it’s a crowded field full of players hoping to serve up financial services to a wide spectrum to consumers, and standing out as the right choice in that field is a massive challenge for new startups getting on their feet. Particularly, he noted, because their vision is about recruiting not just individuals to their platform, but entire networks of them.

As of yet, the firm has not raised any funding, though it was recently accepted by the Mumbai-based Financial Inclusion Lab as part of its class of 11 innovators chosen for mentoring and upscaling their activities. The Financial Inclusion Lab is a $9.5 million initiative of IIM-Ahmedabad, supported by JPMorgan and other philanthropic investors.

“FinTech presents a unique opportunity to promote the financial health of India’s underserved households [that] struggle to adopt digital platforms for their financial needs,” said Kalpana Morparia, CEO, South and South East Asia for JPMorgan.

As for Finlok’s founders, they said they are looking to the opportunity to begin designing a scaling plan for their startup, and to begin developing the next generation of financial services that they think can be enhanced by a social model.

Sinha also noted that they believe what they are building with Finlok in India will broadly be applicable to consumers worldwide, and the goal is to bring that service to them.