India first gained notoriety in the tech industry when it established itself as a major centre for business process outsourcing. With the introduction of embedded finance technology, this legacy has now taken a totally different turn in the fintech industry. Lentra, an Indian embedded AI-based financial firm, recently announced that it has secured $60 million in a Series B round, valuing the company at “above $400 million,” according to D Venkatesh, the startup’s founder and CEO, in an interview with TechCrunch.
The round was led by existing investors Susquehanna International Group (SIG) and Bessemer Venture Partners, with strategic participation from Citi Ventures, a unit of the world’s largest investment banker, Citigroup, based in New York.
The fact that Citi Ventures has made its first investment in an Indian fintech shows just how far the integrated finance and fintech ecosystems have advanced in recent years. Lentra has been expanding really quickly and is profitable. This word refers to the amount of money Lentra earns depending on usage of its APIs, and in 2019, its first year of operations, it registered $1 million from its “annual consumption rate.” This amount is up to $10 million as of this year, and it is anticipated to reach $100 million in 2024.
The Mumbai-based business powers the digital loan services of commercial banks. Some of its most important clients include HDFC Bank, Federal Bank, Standard Chartered, and IDFC First Bank. Since its start, Lentra has handled more than 13 billion transactions and $21 billion in loans for more than 50 clients. Venkatesh claimed that up until April of this year, the firm had grown significantly without ever hiring a single sales executive.
The company’s goal is similar to that of several other fintechs who have entered the fray with the intention of collaborating with established financial services providers rather than upending and disrupting them completely. These providers have discovered that they are unable to keep up with innovation from faster moving, tech-based rivals.
Venkatesh stated, “We want to help and empower the banks, who are our clients, to lend better, lend entirely on a digital platform, and improve on all aspects.
These standards apply to all banks worldwide. Yes, banks are shifting to digital platforms to help them scale and compete better against digital-first services because they want to lend more and be more available to more potential borrowers. Banks have already suffered numerous foot burns, so they need better technology to improve how they screen borrowers and to better predict the returns (and losses) they can expect to see as a result. This is because they don’t want to scale up while taking on a lot of bad debt.
Lentra Lending Cloud, a four-year-old fintech that provides ready-to-use third-party API connectors to numerous data sources, as well as a Loan Management System (LMS) and a no-code Business rules engine (BREx) with modules for clients to use out-of-the-box, enable them accomplish this. The business also offers a platform called GoNoGo in its inventory that aids banks in determining whether to approve a customer’s loan application.
According to Venkatesh, identity theft is the method used in 90% of lending scams in India, when criminals pretend to be someone with a higher credit history in order to swiftly obtain a loan. Lentra triangulates data using AI to spot potential fraud attempts.
The founder claimed that if ID theft fraud could be stopped, “the bank’s approach or stance toward a non-performing asset or bad loan would be minimised.”
He asserted that Lentra’s technology had slashed the turnaround time for loans from the six to seven days that banks had been able to achieve by applying, processing, and accepting or declining applications.
Even though several firms are attempting to make lending easier for banks, it’s fascinating to see that Lentra sees Salesforce as one of its main rivals in the loan origination market.
“Anyone using Salesforce for loan origination is our main target. Venkatesh stated, “We go, get them, and then we convert them.
Citi is not just interested in expanding its engagement with the Indian tech sector, but also in using it to further its own worldwide expansion.
Everett Leonidas, director & APAC Lead Investor at Citi Ventures, stated in a statement that “Lentra is our first fintech investment in India, and we are very enthused by the team’s capacity to design and expand low-friction software solutions for lenders.” We anticipate Lentra expanding their goods and platform internationally as a major bank.
Lentra intends to use the cash to further improving its platform, add new features, and make it faster and more robust, according to Venkatesh, who spoke to TechCrunch. The startup also plans to establish its operations outside of India, starting with three Asian economies: Indonesia, the Philippines, and Vietnam. The startup intends to expand outside Asia and into the United States after the initial expansion.
The creator announced that offices would open as early as January in the three new Asian nations.
Lentra already has a foothold in Singapore thanks to its June 2018 acquisition of AI firm TheDataTeam, which had a location there. According to Venkatesh, the Singapore office will serve as the startup’s entry point into the ASEAN economies.
Lentra intends to acquire complementary firms in addition to enhancing its current offering and growing its business. The founder told TechCrunch that the company’s acquisition intentions are centred on three areas: robotic process automation, unregulated payment methods, and teams developing statistical modelling or heuristics models within statistics.
According to Vishal Gupta, partner at Bessemer Venture Partners, “Lentra is helping lenders to ignite the dreams of millions of people through effective financial inclusion and credit decisioning.” We were quite pleased by Lentra’s ability to combine cutting-edge technology with a competitive edge for their customers. We are enthusiastic about assisting them in pursuing their goal of becoming into the most reputable and sought-after cloud-native digital lending platform, empowering customers to democratise credit through precise decisioning and quick processing.
Although it didn’t take part in the most recent investment round, HDFC Bank is another investor in Lentra. Venkatesh claimed that although the bank had the option to make an investment, it chose not to do so because of the Reserve Bank of India’s requirement that it not hold more than 10% of its equity in unrelated companies as a result of its merger with HDFC Group.
Lentra, which received SIG’s first Indian VC investment for 2019, has our endorsement. Lentra has expanded 20 times since SIG’s investment and shown outstanding metrics for revenue retention while displaying high capital efficiency. As Lentra begins to serve customers worldwide, SIG is eager for its next stage of expansion, according to Bhavanipratap Rana, SIG’s investment advisor.
Mumbai is the startup’s top market at the moment, followed by Delhi, Chennai, and Bengaluru. It currently has a workforce of 500 workers, but 800 are anticipated as part of ongoing plans.
