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Credit’s Biggest Opportunity Lies in Providing Solutions for GenZ: Rajan Bajaj, CEO & Founder, Slice
Founded in 2016, Slice is a payment and credit start-up for young Indians. ‘Slice Card’, which is an alternative to traditional credit cards, and issued in partnership with Visa, is designed exclusively for customers in the 18 – 30 age group and can be used across 5 million merchants in India, Rajan Bajaj, CEO & Founder, Slice tells Ashish Sinha of BW Businessworld. The primary focus of Slice is on becoming the first card for millions of youngsters in India.
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What differentiates Slice cards from traditional credit cards?
a) We understand the risk and demand profile of India’s youngsters and know how to help them navigate through their finances. Despite not having any credit history, we are able to give them a highly customized credit experience and a VIP customer service. Our loss rate at 3per cent is much lower than banks today, an indication of the fact that we are have understood the pulse of this segment.
b) A Slice card is a “no gotchas” card. We don’t believe in hidden charges. The generation we serve values transparency and we give them that with our card. There are absolutely no joining or annual fees with the slice card, and we truly maintain that.
c) Our offers & rewards are truly customized for youngsters. Instead of offers on golf courses or luxury shopping, we focus on deals that will have greater utility - like offers on food delivery platforms, gym memberships, cab aggregators etc.
d) Mobile banking is critical and we believe it needs to undergo major disruption to meet the needs of GenZ. The slice app is designed to be simple, interactive, and highly intuitive for this Instagram/Snapchat generation.
Tell us more about Slice Cards? Who all have made investments in your venture?
With 260,000 customers and another 700,000 on the waitlist, today Slice is a market leader and has emerged as a preferred card of choice for GenZ and the millennial across 30 major cities in India. We have grown by 100 per cent from where we were pre-covid. While opening up of the lockdown has a role to play, the festive season has certainly fueled this further. December alone is turning out to be a big growth month for us - we have seen a 40 per cent increase in both customer acquisition and transaction volume.
We are backed by leading VCs such as Gunosy Capital, Das Capital, Finup, Blume Ventures India, Simile Venture Partner, EMVC, Tracxn Labs, Better Capital, Sachin Bansal's Navi alongside angel investors such as Kunal Shah.
Why is there a need for a product like yours in the market? Throw light on the segment of consumers you cater to and what differentiates you?
With average age of 29, today India is one of the youngest countries in the world. More than 62 per cent of our population is in the working-age group and more than 54per cent of the total population is below 25 years of age. It’s this young generation that drives major consumption across products and services today. Yet, banking experiences today are not designed with a real focus on them. They are the socio-economic fabric of our nation and the future. Yet they are ignored by financial institutions because all they see is risk, not potential. While most banks are slowly beginning to cater to those above 27, there is none in the market that is designed to meet the credit needs of people who are below 24. Times are changing and with it also priorities of the next generation. Slice is sharply focused on becoming the first financial product for this segment. The average age of our customers is 22, which differentiates us from the rest. We understand the risk and demand profile of this young customer and know how to help them navigate through their finances. At present, there is no other solution at Slice’s scale in the market that can cater to the needs of this generation in a transparent and scalable manner.
What is the growth prospect in the credit segment?
Credit’s biggest opportunity lies in solutions for the youth. There are around 5 million first time credit-card users every year who have no access to credit products designed specifically for them that are relatable and simple to use. Only 11per cent of credit-active youth owns some form of a ‘pay later’ card in India vs. countries like Canada & Hong Kong that have a penetration rate of almost 90 percent. In India, millennial and GenZ, despite being pitted as the biggest customer of credit cards, make less than 20per cent of a bank’s total customers. Banks are still risk-averse, leaving the Indian youth with limited access to credit products and lower credit scores than their international peers. This gives us an opportunity to play a significant role in filling the need gap.
What is the revenue model and how much revenue was generated the last fiscal?
The primary business model includes subvention income from merchants like Amazon and Flipkart for no-cost EMIs; interchange income from cards; and interest income from EMIs. Revenue last fiscal was INR 55.7 crore and we grew by 4X from FY-19.
You recently tweeted: The HDFC-RBI issue is likely a watershed moment for Indian banking and will probably be remembered as something that fuelled the neo bank phenomenon - Can you please expand on it? What is your take on the RBI decision regarding the HDFC Card issue? What was the alternative before RBI other than its decision for a temp halt directive to HDFC's digital banking offerings?
RBI’s move puts the customer first, and this is how it should be. From the smallest of concerns, I strongly believe that customer convenience should always be the priority. This decision has the potential to bring big changes in the credit card ecosystem. HDFC has been the largest credit card provider in India, but the temporary restrictions put on them with regards to acquiring new customers open up the ecosystem to many other players. Especially given the technology and infrastructure issue at play, fintech players have a big advantage as they are built on the premise of ‘customer-centric technology’, unlike incumbents. And this is steadily becoming the value appreciated by customers the most. This will only accelerate in this climate. At Slice, we have already seen a 40per cent increase in both customer acquisition & transaction volume from Nov to Dec MTD and it's a trend of shifting customer preferences.
What are your future plans and new areas of expansion?
Our primary focus is on becoming the first card for millions of youngsters in India. As the segment grows, the product lines will simultaneously grow to meet the needs of the customers.
a) We plan on reaching 1 million customers in the next one year, or sooner.
b) There is a major focus on strengthening our workforce - we plan on doubling our employee strength in the next one year with an exceptional focus on engineering, product, and design roles.
c) We are expanding to deeper parts of India. We will soon be available in over 50 cities.
d) We are also going to introduce some path-breaking additions to our products to enhance the banking experience of youngsters. These will be UPI-based as well as rewards-centric.