Lending for bharat: How WhatsApp, APIs and sachet loans will bring credit to millions of Indians

Aparna Chandrashekar   /    Content Specialist    /    2022-06-02


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    WhatsApp Business is on its way to becoming a quasi-superapp in India.  

    Meta’s golden goose has spent the last two years building a solid foundation by partnering with numerous banks, insurance and utility companies; it has expanded its reach in retail, and travel and has emerged as the more credible alternative for transactions for some of India's biggest banks. 

    With over 487 million users in the country, India is WhatsApp’s leading market in terms of size, effectively making it the most popular technology company. And yet, it hasn’t found itself a solid footing in India’s payments puzzle; there’s much to blame here from regulatory hurdles, privacy concerns, unfavorable global experiences and a lack of proper marketing effort to actually sell its financial wares. 

    However, with its newest launch of WhatsApp Cloud API, a free version of the Business API that is now available to all businesses, big and small, WhatsApp could find itself in a commanding position for capturing value in India - mostly through financial services.

    Before WhatsApp opened up its APIs, businesses that wanted access to WhatsApp’s Business API would have to apply for it through one of WhatsApp’s partners, and the thorough process could take anywhere from days to weeks. 

    Obviously, this is great news for businesses, especially SMEs - for whom much of their business happens over WhatsApp. The entire journey, right from placing an order, and raising an invoice to either paying via UPI/Net Banking or borrowing credit can all theoretically happen inside  WhatsApp, without redirects or hopping through windows.  For smaller businesses, having a third party implement, host and maintain the software for them is expensive. The new cloud-hosted version of WhatsApp API removes the complexities and allows businesses to get started in only a few minutes. 

    This is also great news India’s lenders inc. 

    Most of India’s largest banks have been using WhatsApp Business for facilitating small-ticket transactions. Yes Bank was one of the first banks to use WhatsApp for core banking transactions, starting in 2019. The pandemic accelerated WhatsApp as a credible alternative - chat bots were not just offering basic payment transfers, but were offering FC, insurance, claims and anything else that one could do through mobile banking.  

    And it makes sense - any changes to a bank’s core banking app requires rigorous testing that could take months. With WhatsApp, those complexities could potentially disappear. 

    Think about it - Whatsapp’s got a large user base, features in terms of product capabilities, and tons of demand on the business side. On an average, Indians spend about 19.8 hours every month on WhatsApp. 

    Lending and financial services are the perfect use case for WhatsApp business - 

    • Easy on-boarding: Most customers require an experience like Netflix or Uber — where efficiency, as well as time, coalesce. Drop-offs can be as high as 75% during onboarding. With WhatsApp’s open API’s lenders & fintechs can complete the entire onboarding process on the app. All necessary KYC documents can be uploaded on WhatApp, without skipping windows, making it convenient for borrowers.

    • Disbursals: One-tap window to verify and receive payments can go a long way in proactively handling retention. It’s a matter of time before loan agreements start getting digitally signed over WhatsApp and loans get disbursed on the UPI rails itself through WhatsApp Payments - thus reducing the friction, cost and chances of drop-offs in the final stages of the journey.  

    • Collections: With WhatsApp, businesses can build end-to-end, conversational journeys that integrate their offerings and business requirements. A quick payment reminder with UPI payment links—using preferred regional languages—can help customers pay with ease, and on time. For lenders, No VPA entry, no app switching, no drop-offs, converting payment reminders to “Pay Now” messages and collection in 2 clicks mean collection costs are much lower compared to traditional payment gateways.

    • Nudges/offers: Persuading “fence-sitters” to go through the process is a skill that will largely determine the growth of your business. The average user spends 20 Hours Per Month on the app, making it the perfect platform for nudges/offers -  ranging from discounts on the processing fee to fully waiving it off. 

    • Integrate with credit links to offer larger loans: Lenders looking to capitalize on their existing customers and build more revenue are in luck. With WhatsApp, there are now newer possibilities of custom communication with each bucket of customers and offer them different credit products - larger loans, credit lines, business loans or even secured loans or insurance.  All this can be done easily by integrating an automated Credit Link journey with the WhatsApp hub and using algorithms such as FinBox’s Conversion Kit to determine the ideal set of borrowers, offers and communication to cross-sell and upsell products. 


    • Personalized communication: The typical lender is now pulling out data by the terabyte. Real-time data - numbers, texts, voice, images and thousands of other data points - now exist for literally every action that customers make, every product that lenders sell, and every process lenders use to deliver those products and services. Putting these to good use to deliver personalized content in the language of their preference couldn’t have been easier with WhatsApp. While you won't be able to automate every aspect of the process, you can win over a lot of clients by creating a bot flow in their native language and so help them solve their issues quicker.

    Mobile payments are growing so rapidly in India that it is sometimes difficult to complete basic transactions without them. The evolution of WhatsApp to send/receive gifts, pay rent, donate, invest, insure, borrow and pay back loans is inevitable. 

    Look at WeChat and Alibaba in China - they’ve demonstrated that they can be tech leaders and develop digital products/services that far surpass what is being done by most countries, much earlier than anybody else too. Their financial products have also demonstrated that it is possible to establish a priceless digital platform to create an ecosystem; that if you have a well-made, consumer-centric product with amazing features, and you have the audacity to think bigger than traditional financial institutions, success is imminent - not just for the tech company but for the million businesses operating in its ecosystem. 

    More importantly, however, the future of digital lending is not a single product or service - it is the seamless integration of services to make the consumer’s life easier, delivered on a platform that’s on every user’s home page. 

    In other words, the future of banking is that it will run in the background of a much broader ecosystem where data and insight are used to benefit the consumer in real-time. 

    The future of banking is the future of communication - and it's already on display. 

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