Image by mohamed Hassan from Pixabay
This Indian FinTech and ethical lending product is designed exclusively for women.
Among the underserved and under banked population, the number of women taking loans is abysmal. Unfortunately, women in India are not very active in the formal credit system and have found their solace in the brutal hands of the unorganised credit economy. Unorganised credit taking methods are known to charge higher interest rates and have a slew of hidden costs.
According to a survey by Indifi Technologies, the number of women-led MSMEs in India has jumped from 2.15 lakh to 1.23 crore in just a decade. However, they face a finance gap of US$158 billion and largely rely on informal sources.
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Florence Capital is an Indian FinTech and ethical lending product designed exclusively for women. The FinTech envisions a future in which all Indian women are financially independent, empowered, and ready to take on the world on their terms.
The Tech Panda spoke to Poshak Agrawal, CEO and Co-founder of Florence Capital, who says that the credit gap between men and women in India is a severe pain point.
Poshak Agrawal
Women have traditionally been left out of financial decision-making. Our aim is to empower them with the right frameworks and information to promote financial literacy and independence
“Female borrowers are growing at a faster rate than male borrowers,” he says.
According to CIBIL data, the number of female borrowers grows at CAGR of 19% in five years, while for men, it grows at 14%. Florence Capital wants to overcome the lack of agility in the traditional banking system. Only 27% of India is financially literate, of this population, the split is 20% for women and 30% for men.
“The larger vision is to make credit accessible to underserved population segments in India. These segments are often ‘new-to-credit’ (NTC) or have very less credit history and therefore, considered ‘risky’. Innovation in technology will not only mitigate these risks but provide appropriate/customized product offerings for these segments,” he adds.
“The traditional banking system lacks agility to cater to these fast-growing segments because, the credit assessment practices are antiquated or conservative, the process is cumbersome, there are too many charges, and there is a high turn-around time,” he explains further.
Florence Capital’s vision is simple – make the women of India financially independent. The app-based FinTech platform simplifies finance for Indian women from the convenience of their homes by providing loans with lower interest rates (as low as 1.5%) while promising higher transparency.
The FinTech makes sure that women in India have the necessary resources to feel empowered enough so they can pursue their entrepreneurial dreams. To add to this, their collection agents are all-women. They are working on more such women-centric initiatives to improve women’s access to capital. The company is further working on bringing down the time of approval for loans.
The FinTech app aims at working towards a vision where they plan on building a systematic credit system that is women-friendly and fair to women seeking loans.
Women face higher rates of rejection when compared to their male counterparts. Even if they manage to secure a loan, they are often victims of harassment through collection malpractices. This has left a huge gap for access to fair and transparent credit
Florence Capital is focusing on awareness and accountability in accessing credit and making financial decisions so that women are not left in the lurch after taking a loan. Agrawal emphasises that there is a lack of access to ethical and transparent credit for women; of 100 loans disbursed, only 25 go to women. Also, there is bias.
“Women face higher rates of rejection when compared to their male counterparts. Even if they manage to secure a loan, they are often victims of harassment through collection malpractices. This has left a huge gap for access to fair and transparent credit. While this gap is an opportunity, it is also equally exploited in the market, thus necessitating the access to fair, transparent and ethical credit,” he explains.
On the Florence Capital mobile app, female users can avail of loans through a 100% digital process.
“The process is quite simple and can easily be done from the comfort of your home. Our loans are machine driven and we gamify the credit experience for the user,” Agrawal explains.
Our innovative credit underwriting system factors in the unique pain points of women
After signing up, a user has to upload her selfie, PAN card, and other necessary details. After her loan is approved, she is asked to choose a repayment method for EMIs, and the loan amount is disbursed into the bank account specified bank account. It takes not more than 10 minutes to complete a loan application.
“Our customer delight and loyalty team is always there to help, and even reach out when they feel a user is stuck at some stage through the process. Our innovative credit underwriting system factors in the unique pain points of women,” he adds.
Following are the features:
The FinTech also boasts of a first all-women loan collections team and customer service team, ensuring borrower comfort (female borrowers only interact with other females), and clear, fair and transparent terms of lending. They also offer credit awareness or counselling programs to help borrowers understand the impact of non-repayment on their credit score.
Our community is meant to bring our borrowers and women, at large, together. It is a safe space for Indian women who want to live a productive, dignified, and prosperous life through the necessary financial resources provided by us
“Our community is meant to bring our borrowers and women, at large, together. It is a safe space for Indian women who want to live a productive, dignified, and prosperous life through the necessary financial resources provided by us,” says Agrawal.
Their major initiatives include the following:
Their micro-educational content, which breaks down financial concepts, making finance easy to understand and equipping women to apply these concepts to overcome their day to day challenges and meet their goals.
They also provide borrowers with an array of free VAS. They are presently conducting one on one career counselling for borrowers, professional development workshops, and webinars on soft skills and business practices.
“Women have traditionally been left out of financial decision-making. Our aim is to empower them with the right frameworks and information to promote financial literacy and independence. We are building a community/network of women who learn together from our curated content and open opportunities for each other,” he adds.
Florence Capital was founded in 2021 by Agrawal and Rahul Subramaniam, both serial entrepreneurs. Agrawal, who graduated from Princeton University in Economics and Finance, founded his first company, Athena Education, one of the most renowned in its segment in India. During his years at Princeton, he worked at Fortress Investment Group, as one of the only two summer analysts.
He recalls becoming aware, very early on in life, that education is not just important for the self but is also a key to opening bigger and better opportunities and a driving factor for creating change or impact.
“Entrepreneurship is an avenue for never-ending innovation on the problem one wants to solve,” he says.
If we begin to design things for women, they will appreciate it and it will help harness the incredible potential they have
He adopted Princeton’s motto, “In nation’s service and the service of all nations”.
“This only added to my zeal to do something different, to solve problems to make the world a better place,” he adds.
He further recalls that the ‘aha’ moment came when he began to notice that society and, in turn, things / systems / processes are designed mostly by men and for men.
“Women have traditionally been an after-thought. Either they are limited to the home or thrown to carve out a space for themselves in a world designed by men. If we begin to design things for women, they will appreciate it and it will help harness the incredible potential they have,” he says.
He recalls an instance of this while traveling in the Metro, observing the ladies’ compartment.
“The need for a ladies compartment arose because women in India don’t have a lot of safe spaces just to be. It is a significant problem and extends well beyond the confines of traveling – to almost all the segments of women’s lives, including finance. Women tend to be deterred from taking loans and, more often than not, feel alienated from the entire financial process,” he says.
“In India, there are so many strong, hard-working women, who struggle every day to improve the quality of their lives, but they don’t have the monetary means and the resources to chase their dreams and live the life they want to live. That is the problem that birthed Florence Capital – an ethical lending loan app, designed exclusively to serve women. To provide women with the safe space they have always been denied and, go beyond loans and give them avenues to live their best lives,” he says with passion.
Florence Capital’s presence has been steadily growing in the country. Currently, it’s actively disbursing loans in Tier 1 cities like Mumbai, Bengaluru, NCR, Ahmedabad, Pune, Chennai, etc., and some Tier 2 cities like Mysore, and Coimbatore. On a pilot basis, it has disbursed loans in Jaipur, Ajmer, Bhopal, Udaipur, and Indore.
“With time we plan to expand our operations to more Tier 2 and Tier 3 cities,” says Agrawal.
The FinTech disbursed 1,500 loans during the period of January 2021 to February 2022. With a default rate of around 2%, over half their loans come from word of mouth. Their credit history shows a 50-50 split between new to credit / thin credit profile and thick credit profile. 15% of their borrowers are first-time borrowers. Typically, women borrow money for medical expenses, household expenses, education, and upskilling.
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As part of their future plans, he says that they plan to provide ethical and transparent credit to women across India, build India’s largest community of women.
“A community where every woman is financially empowered. As part of this, we want to scale Florence Learn and diversify our free VAS to our borrowers,” he concludes.
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