As you walk into a two-wheeler dealership of manufacturing giant Bajaj Auto in the bustling metropolis of India’s Bengaluru, the first thing that strikes you is the presence of four-five salespersons, each with a smartphone in hand. These are bank agents who don’t need thick dockets of documents, for with just your name, phone number, and a few OTPs, they can tell you instantly if you are eligible for a loan to finance your dream vehicle.
These agents may work for different banks, but they all likely have access to the same software: Lentra.
Startups like Lentra are making the process of securing consumer loans—such as one to buy a vehicle—less time-consuming and tedious, particularly in emerging markets where financial institutions are still entrenched in outdated systems and have only begun to digitise their operations.
These tech firms operate quietly in the background, offering services to banks and non-banking financial companies (NBFCs). As a software-as-a-service (SaaS) startup, the four-year-old Lentra helps lenders shift core segments of their operations—such as loan origination, loan management, and collections—to the cloud.
Lentra positions itself as a collaborator for traditional financial institutions in the digital transformation process rather than a disruptor: it does not seek to obtain its own lending or banking license.
And banks looking to digitise have been keen to try services like those offered by Lentra. As many as 50 banks and financial-services companies—including some top banks like the Indian government-owned State Bank of India and the country’s top two private lenders, ICICI Bank and HDFC Bank—use Lentra’s tech stack. HDFC Bank has invested in the company through multiple entities, with the total stake being ~10%.
Lentra claims to have processed over 13 billion transactions and loans worth US$21 billion. It processes 2 million loans per month on average; it processed 1.4 million loans in five days during the festive season in India in November 2022
Yet, Lentra’s biggest challenge is convincing banks to fully adopt its cloud-banking software. Even for a client like HDFC Bank, Lentra handles only a small percentage of its loan processing.
More importantly, an Indian government initiative called the Account Aggregator (AA) (AA) Account Aggregator An Account Aggregator, or AA, is a type of RBI-regulated entity (with an NBFC-AA license) that helps an individual securely and digitally access and share information from one financial institution they have an account with to any other regulated financial institution in the AA network ecosystem launched launched Tech Crunch India launches Account Aggregator to extend financial services to millions Read more in September 2021 for sharing consumer information with consent—a system that enables people to consolidate all their financial data in one place—may disrupt the space in which Lentra operates.