How would you like to have a bank-approved personal line of credit, where you can decide how much money you want to withdraw and even the repayment terms? Even better, once you repay the amount, your credit gets restored to its original amount. All this available on your mobile phone and in a jiffy.

This is what Bengaluru-headquartered MoneyTap, a fintech start-up, offers. Founded in 2015 by Bala Parthasarathy, a serial entrepreneur, and two others – Kunal Varma and Anuj Kacker, MoneyTap is a consumer lending company that seeks to address the urgent requirement for money from millions of low and middle income salaried people.

Says Bala, 51, “this was a huge market, the people to be given credit to. Our goal was to bridge that gap. Come up with something innovative that the people would want. We spent about six months researching it, how to do it and then we started the company.” The product is an unsecured credit line for consumers, who have to download the app and go through a qualification process that takes 5-7 minutes, says Bala. MoneyTap’s target segment is those earning ₹20,000-50,000 a month. “What they want,” he says, “is flexible access to money.”

Bala, an alumnus of IIT Madras and University of California, Santa Cruz, founded Snapfish that was sold to HP in 2005. He was with the UIDAI for a year before starting a seed stage venture capital firm Prime Venture Partners (previously AngelPrime) in 2011. He realised there was a huge opportunity in the consumer credit space and quit the VC firm to start MoneyTap, of which he is the co-founder and CEO.

KYC on the go

According to him, MoneyTap has tied up with a few banks and NBFCs to provide the credit line to consumers. There have been over a million downloads of MoneyTap’s app so far. Consumers have to go through an electronic Know Your Customer process and within a few minutes they will be told whether they will be eligible for the credit line or not. “You can do a KYC on the phone itself. You can take a photo, you can do an e-sign of your loan document. Remember you are signing the agreement with the bank. We are just facilitating it,” says Bala.

How does MoneyTap decide which bank will sanction the loan? That is where, he says, the algorithm and the rules engines come in. “Our goal is to determine who is the best person who is going to give you the maximum amount of money. That is taken care of by the algorithm.”

Income from banks

The company was started in October 2015 and the product launched in September 2016. This is a banking product and MoneyTap had to comply with all the security and safety rules. The company’s goal, says Bala, is to bridge the gap without compromising on the integrity of the process. MoneyTap earns its income from the banks as a percentage of the amount that is withdrawn. The interest rate for the loans is in the 13-18 per cent range. MoneyTap raised about ₹23 crore ($3.2 million) from Prime Venture Partners and NEA in the first round and another ₹75 crore ($12.3 million) from Sequoia and existing investors in June 2017.

“We are funded for 3-4 years,” says Bala. The money will be used to improve technology, getting more consumers on the platform, adding more banks as partners and installing more features on the app. In 2018-19, Bala expects about ₹300 crore of credit line to be processed through MoneyTap.

How does his experience as an entrepreneur and a venture capitalist help him with MoneyTap? Bala, who says he is an avid hiker and trekker, draws an analogy from mountain-climbing. “You know it is exhilarating to be on the top. That is a good motivator. But as an entrepreneur, you are starting at the bottom of the mountain again. There is no helicopter or escalator to the top. You still need to climb the next mountain. MoneyTap, we started two years ago. We need to climb from the bottom. The experience does come in handy as you roughly know what the terrain is in front,” says Bala.