Let’s go back in time, approximately 9-10 years. You are someone who has been associated with the financial services industry for a decade, and now you wish to foray into the world of fintech in India by solving a market gap that larger financial institutions haven’t addressed. What would you do?
If you were to ask any CEO today of a leading bank the same question, most of them would ask you to solve for the credit gaps that exist in the Indian markets. Lendbox, now a leading fintech player in the P2P lending segment, identified similar gaps in 2015 and started building for the potential borrowers of India who deserved credit but weren’t being served by the larger market.
Lendbox was founded & bootstrapped by Ekmmeet Singh, Bhuvan Rustagi, and Jatin Malwal with the goal of modernizing lending by building a peer-to-peer (P2P) platform.
How does a P2P Lending Platform work?
A peer-to-peer (P2P) lending platform acts as an intermediary between two parties, overseeing key aspects of the lending process, including credit assessment, onboarding, loan distribution, collection, and recovery. Through such a platform, an investor can generate stable returns on their surplus funds or savings. Simultaneously, a borrower can access the credit they deserve to fuel business growth.
The P2P lending space in the US and UK started on the backs of serving sub-prime borrowers. Lendbox, too, started serving such high-risk borrowers in their early days. The insight behind this was to produce high returns, as such borrowers paid high interest compared to other categories of borrowers. Lendbox, in January 2019, became one of the earliest P2P platforms to secure an NBFC P2P license from RBI. However, by the end of 2019, the company made some fundamental changes around their lending strategy.
The Pivot
New insights were developed by this time. Founders realized that their investors are not really chasing high returns but are looking for stable returns. The upside potential Lendbox would have around the number of investors on their platform was clearly visible to the team if they were to restructure their borrowing inventory. The aftermath of COVID-19 further cemented that they would now have to serve the borrowing needs of a high-creditworthy borrower.
Results Post the Pivot
Lendbox’s investors welcomed the pivot with open hands as their expectations were met by India’s leading P2P platform. The company saw a significant rise in the total number of investors onboarded on their platform. As of now, Lendbox has an active base of over 4,50,000+ investors.
The company now started to onboard high-quality borrowers who maintain an average CIBIL score of more than 700. Lendbox also initiated strategic partnerships with premium sourcing partners which led to further growth on the borrower’s side. Partnerships with other leading fintech platforms like NAVI, UNI, Khatabook, Cashe, and Snapmint allowed Lendbox to access some of the most premium borrowers. Lendbox in its nine-year journey has had 6 million+ registered borrowers and are serving 4 million+ active borrowers.
The P2P lending sector is witnessing substantial growth in India, with a projected compound annual growth rate (CAGR) of 21.6%, poised to reach $10.5 billion by 2026. Lendbox has experienced remarkable year-on-year expansion, with a staggering 300% increase in disbursement value since 2022. As of December 2023, the cumulative loan disbursement has surpassed ₹6,500 Crores. Ekmmeet Singh, CEO of Lendbox, stated that the next milestone they are targeting is $1 billion in loans disbursed by the end of 2024.
