ZestMoney: Leading the Way in India’s Credit Revolution

ZestMoney: Leading the Way in India’s Credit Revolution

In 2015, India was growing technologically. Millions had access to cell phones. But surprisingly just 3% had access to official credit. Why? It was because of the heavy paperwork, regulatory challenges and a lack of structure. ZestMoney was set out to address this issue.

Lizzie Chapman, co-founder and CEO of ZestMoney, stated,

"We recognized that access to credit and India's transition to a digital economy did not match. The traditional financial system was unable to meet the vast population that was creditworthy."

Chapman and co-founders Ashish Anantharaman and Priya Sharma realised the needs. They had previously worked in technology and financial services in both India and Europe. The three felt that they could solve this problem so that Indians obtain loans in a quick, easy, and transparent manner without requiring a credit card. They worked to develop ZestMoney as a Buy Now, Pay Later (BNPL) platform that enabled customers to make purchases online and pay in installments.

Ramesh, a young IT worker in Bangalore and an early ZestMoney user, remembers how the platform transformed his life.

“I didn't have enough savings. I also didn't have a credit card. So I was unable to purchase the laptop I needed to learn how to code. Without any paperwork or bank visits, ZestMoney helped me access the finance to fulfil my dream. It seemed magical.”

So what sets them apart? They developed an alternative credit rating. The software evaluated a user's digital footprint, including internet activity, utility bill payments, and cell recharges, in order to determine creditworthiness rather than depending just on credit agency data. This led the way for the approval of millions of people who had previously been denied official credit.

ZestMoney then collaborated with well-known online merchants like Flipkart, Amazon, and Mi. This allowed millions of users to buy for their needs, their passion, for their business through buy now pay later EMIs.  Customers could pay for appliances, machineries, and even educational programs in convenient EMIs (Equated Monthly Installments). Later ZestMoney inaugurated physical locations for providing personal loans and education finance offerings.

By 2021, ZestMoney had 17 million registered users and raised over $100 million from investors such as PayU, Omidyar Network, and Goldman Sachs.

But the journey wasn't without its share of difficulties. The company's growth strategy was marred by growing regulatory uncertainties around BNPL products, the need to maintain stricter lending standards, and the increasing competition from major competitors like Amazon Pay Later and LazyPay.

“ The urge to expand quickly in the financial industry is constant,” according to CFO and COO Priya Sharma. “ However, we were adamant that everything we did had to be centered on responsible lending. Our goal was to establish trust rather than only a transaction.”

In 2022, ZestMoney experienced a turning moment. There were speculations that large financial giant PhonePe could acquire ZestMoney. This demonstrated that ZestMoney brings a lot of value in the market, but on the other hand it also showed that the firm will  face a difficult path in a saturated industry with many restrictions and difficulties. The merger was ultimately called off. However, it served as a reminder to the ZestMoney team of their strengths and the value of their purpose.

ZestMoney's impact extended beyond money and statistics. It helped students, business owners, start-ups and homemakers, in obtaining credit when banks refused to extend it to them. For example, a home baker in Maharashtra obtained a ZestMoney loan to purchase a deep freezer and oven. That enabled her to transform her passion into an actual business.

ZestMoney's path shows us how a business may utilize technology to address real-world problems and significantly improve people's lives. ZestMoney helped many Indians fulfill their aspirations by providing loans, be it for purchasing a laptop to learn, starting a company, or paying for school.

Though the journey hasn't always been simple, the company's emphasis on transparency, innovation, and inclusivity has helped it expand and remain competitive in a rapidly changing industry. As fintech in India evolves, ZestMoney's tale reminds us that true success comes from assisting people and providing them the opportunity to achieve a better future.

In a world where many people are still waiting for their first opportunity, ZestMoney demonstrates that true change begins when we support individuals in taking small steps toward their big dreams.