Meet Axio, The Fintech that is now helping 6 million Indians access credit

Classmates on the MBA course at Stanford University, Axio co-founders Sashank Rishyasringa and Gaurav Hinduja always knew they wanted to return to India at the end of their studies. “We were passionate about doing something that would have a real impact at home,” recalls Rishyasringa. “But when we started looking at potential opportunities, we realized that many of our co-founders felt the same way – so many different sectors and markets seemed well catered for.”

Eventually, however, the initial frustration led to inspiration. “We discovered that almost all of these entrepreneurs are running into the same problem – India’s affordability gap,” explains Rishyasringa. In any given sector, the number of Indians with disposable income to take advantage of the exciting new ventures being launched was limited. “It felt like a horizontal issue holding back more verticals,” Rishyasringa adds.

That realization led to the launch of Axio, a fintech startup that aims to bridge the affordability gap by ensuring that many more Indians can access credit – that they can increase their disposable income with loans, in other words.

Currently, only around 30 million Indians have credit cards and access to other types of lending from traditional financial service providers such as banks. The vast majority of the population of 1.4 billion are excluded from these services.

Axios believes that as many as 100 million of these people have started shopping digitally in the last three years – for example, buying goods on digital marketplaces, or creating businesses that trade through e-commerce. The number is set to reach 300 million within the next couple of years. This is Axio’s target market.

The company’s signature product is buy-now-pay-later (BNPL) financing, which is offered to consumers when they make purchases through one of the many online marketplaces and retailers with which Axio has built partnerships – including Amazon India. Customers put down a deposit on the purchase, and Axio pays the rest of the upfront cost; The borrower repays this amount, with interest, through a series of smaller installments.

The business model is built on Axio’s technology, with the data engine able to offer a loan decision to a consumer within three seconds of a request being sent. In fact, the business offers instant decisions to customers at the point of purchase.

BNPL schemes are growing in popularity around the world and in some regions there is now something of a backlash, with concerns that consumers are being encouraged to take on debt they cannot afford to repay. But there is a decisive difference between those schemes and what Axio offers, says Rishyasringa.

“In regions like Europe, consumers use BNPL on top of all the other credit products they have access to,” he says. “In India, we are addressing a structural gap in the credit market; this is most consumers’ first entry point to credit.”

Axio only lends relatively small amounts to new customers, he explains, with the aim of helping them build up a good credit record. Provided they keep their side of the bargain and make repayments when due, Axio’s borrowers can increase their credit availability over time. The company has also recently launched unsecured loans, offering financing of up to $2,000 to customers with the best credit scores.

Rishyasringa and Hinduja see themselves as pioneers in this regard, opening up an area of ​​financial services in a country where exclusion remains a significant problem for the vast majority. Axio also offers a financial management app, with facilities such as budget management and savings reminders. “We are working to drive the behavioral change we need to see around money management in India,” adds Rishyasringa.

Launched nine years ago, Axio’s growth accelerated last year when it raised $50 million in new funding from investors. The business now has 6 million customers and is adding new borrowers at a rate of 15,000 per day. Lending runs at an annual rate of $700 million – and the founders expect to break through $1 billion in the next six to nine months.

Encouragingly, borrowers appear to be behaving well. The company’s default rate is around 1 to 1.5%, which is low for sub-prime lending. Rishyasringa credits this to Axio’s responsible lending policies — and to the increasing sophistication of the data engine it uses to make underwriting decisions.

As for the future, if India’s digital user population is indeed set to grow from 100 million to 300 million in the next couple of years, there is clearly a lot of market to go around. But the company’s founders also see potential for expansion into new areas. They have already started working with providers in areas such as health, education and travel, where consumers often need help with big ticket purchases, and the launch of the loan business represents a first foray into wider credit products.

Rishyasringa is particularly proud of the fact that 60% of new borrowers coming to the site are from areas outside India’s 10 largest cities – a constituency that has traditionally found it even more difficult to access financial services. “We are very keen to regionalize and localize further,” he says.