Shivam Finance – Using Fintech to Consolidate and Grow?

Shivam Finance is a private lending firm operating in the Bhilwara district in Rajasthan. It offers loans for buying two-wheelers to customers of nearby districts. The firm applied for a non-banking financial company (NBFC) licence in 2019 as the lending regulations changed, and it became difficult for the firm to operate in the two-wheeler financing space as a private lending firm. With this licence, it plans to scale up its operations two times and adopt a fintech-based model for making its processes more efficient.
The case revolves around the future strategy that Shivam Finance would adopt to expand its business and transition into a fintech-based model, given the regulatory and customer adoption challenges. Key questions addressed include the following: What will be the risks and challenges in implementing a fintech-based model? How will it help in onboarding more dealers and customers? What aspects of fintech would be required for creditworthiness appraisal, disbursement and collection processes? Given the current customer behaviour, how could Alok Bhandari, co-founder of Shivam Finance, ensure that the transition into fintech enhances customer acquisition outcomes amongst present and new customers? How will the firm resolve the potential skill gaps related to changes in the business model? What would be the impact of COVID-19 on the transition? How much would fintech benefit a small NBFC like Shivam Finance?
The crux is how a private lending firm transitions into a fintech-based NBFC, given the challenges within the firm and changing legalities in the auto financing space in India.