This blog is about Rydo, a startup in the Financial Inclusion Lab. The Lab is an accelerator program supported by some of the largest philanthropic organizations in the world, including the Bill & Melinda Gates Foundation, J.P. Morgan, Michael & Susan Dell Foundation, MetLife Foundation, and Omidyar Network.

“Rydo has helped me stand up on my feet again,” said Ravi beaming with happiness as he waited for his passengers to sit in his autorickshaw. Ravi used to drive a rented autorickshaw in Bengaluru, but when the pandemic hit, he had to return the vehicle and go back to his village near Tumkur—a district 70 km from the city. Once the pandemic was over, Ravi decided to rent another autorickshaw and drive in Tumkur, but his daily earnings were much less than he had hoped. 

Sometime later, Ravi’s friend told him about a new ride-hailing service called Rydo that had launched in Tumkur. Earlier, Ravi had heard about his friends driving for Ola and Uber in Bengaluru and earning a good income. Ravi thought that Rydo seemed similar to Ola and Uber, so he decided to onboard. 

Last-mile service providers, such as auto drivers, drive the paratransit space in India. But the current ride-hailing ecosystem offers them limited benefits. Rydo is a ride-hailing app that seeks to provide the best value to drivers by providing them with a better livelihood. It also improved the drivers’ access to financial services, such as credit and insurance. 

The lightbulb moment

Rydo is the brainchild of Prakash and Vinay. Their common aspiration to work to uplift the society, brought them together. Prakash is an ex-banker, and Vinay is a Chartered Accountant. Both have more than two decades of experience.

They met at their previous workplace—a technology firm—and decided to build Rydo together. They started Rydo to boost entrepreneurship among low-income individuals by giving them suitable technology and financial support. The founders decided to focus on mobility, especially three-wheelers, due to the large market size, limited innovation in the sector, and ability to create a significant impact, especially in Tier-2 and Tier-3 towns and cities. 

How does Rydo differ from the existing ride-hailing services?

Presently, ride-hailing technologies are not active in Tier-2 and Tier-3 cities since the average number of rides and the shorter distances do not suit their economics. Rydo can tap this opportunity to enter these 200+ cities and offer its services. 

The founders launched Rydo in Tumkur, Karnataka, based on extensive research and market potential. The founders’ main goal is to mitigate the high wait time between rides, which leads to a loss of earnings for the drivers. They also want to provide affordable credit options to drivers based on their ride data. 

As an alternative to the commission-based model of other ride-hailing apps, Rydo offers a subscription model where the platform enables drivers to accept rides and charges a fixed fee daily to remain on the platform. The subscription model helps attract more drivers, especially those who initially resisted onboarding to ride-hailing platforms, as they had to forego a higher percentage of their ride income to these digital platforms. 

Other benefits to the drivers

A typical driver associated with Rydo is provided with hospital cash insurance, which gives coverage for any hospitalization for more than 24 hours, making it a lucrative offering. Rydo also encourages drivers to nudge customers to download the Rydo app, for which they get a commission, followed by a commission for every ride the customer takes on the Rydo app.

Besides these short-term incentives for drivers, the founders also plan to look at the long-term needs of drivers and create a system to fulfill them over time. 

Traction in Tumkur

After its launch in April 2022, Rydo quickly became the go-to app among Tumkur’s driver community. To gain passengers, Rydo relied on organic marketing to limit its initial burn rate and test the product’s market fit. Soon, Rydo could build momentum in Tumkur, and the eight-month-long pilot helped Rydo onboard 225 drivers and 3,200 passengers. Rydo completed 6,000 rides of the 11,500 ride booking requests by passengers, with a success rate of 50%, all at a nominal marketing cost. 

Challenges and opportunities for Rydo

While the founders’ vision of challenging the status quo to empower drivers is praiseworthy, several roadblocks persist in the journey. The ride-hailing business is capital-intensive due to the high customer acquisition and retention costs. In addition, the cost of map service to allow passengers to know drivers’ location and vice versa is very high, making the per-ride unit economics more challenging. Another area for continuous improvement is to increase driver stickiness and loyalty on the Rydo platform. 

Rydo has a mid- to long-term roadmap to overcome these challenges. These roadmaps include developing organic marketing strategies, using social media influencers, and onboarding Rydo drivers to promote the app and reduce user onboarding costs. Rydo has also partnered with a competitive service provider for the map to reduce the cost of their operations. 

Support from the FI Lab

Based on the challenges Rydo faced, MSC identified three areas to support the firm in the mid-term. A key focus area was supporting Rydo with a digital marketing strategy to boost customer downloads and increase its rides per day. The digital marketing activities in Tumkur helped Rydo create a blueprint for further scale-up. The digital marketing activities helped Rydo acquire customers at a lower cost and boosted the number of app downloads by 50%.

Giving credit facilities to drivers can ensure high stickiness to the Rydo platform. MSC helped Rydo partner with suitable NBFCs and FinTechs to provide its drivers with credit facilities using their ride data. Our team also helped Rydo choose the right payment partner to enable automated subscription fee payment and direct loan settlement against customer payments. This model will improve the visibility of the driver’s income through Rydo and encourage more lenders to associate with Rydo drivers and provide them with credit. 

What next for Rydo?

Rydo wants to impact the lives of auto drivers across India and enable them to use business support systems through technology. Rydo has planned multiple activities for the future to achieve this, as listed below: 

A) Expansion: 

1) Geographic: The founders are keen to expand into geographies adjacent to Tumkur. For now, the founders will focus on two or three states in South India in 15 cities where Rydo can make a difference. They have created the blueprint based on their experience in Tumkur. Rydo’s business model can break even at 3,000 rides per day, giving them a unique profitability advantage at the city level. This number forms only 5%-7% of total daily rides in a city like Tumkur. 

2)  Sectorial: Rydo founders also want to enter other sectors, including two-wheeler logistics, transportation, and delivery, among others, to make it a sizable player in urban last-mile mobility. 

3) Product: With the launch of its 2.0 app version, Rydo will also facilitate unsecured and secured lending for the drivers in partnership with a few lender partners. While secured lending will comprise vehicle loans against hypothecation and property loans, it plans to disburse sachet loans for unsecured lending.

B) Gamify the in-app journey: Rydo also plans to gamify the in-app journey, where driver benefits, such as credit and insurance, will automatically unlock as the drivers achieve predefined business milestones, such as the number of rides. These efforts will ensure the driver benefits on the Rydo platform are more sustainable and aligned with its overall business goals.

C) Associate with Beckn protocol or Open Network for Digital Commerce (ONDC) mobility: The Rydo app 2.0 will enable ONDC mobility. It will allow passengers to request rides from any consumer-facing third-party ONDC-enabled app. This strategy is critical to Rydo’s expansion as it allows them to focus on onboarding drivers while using third-party apps to generate ride requests by the passengers, minimizing their customer acquisition cost. 

But a few challenges remain on this front as the customer-facing ONDC apps are still in the build stage, mainly focusing on e-commerce followed by the mobility sector. The network effect through ONDC will take some time to gain traction. However, Rydo can take advantage of it. 

Rydo showcases how democratizing solutions can boost India’s entrepreneurial journey in Tier-2 and Tier-3 cities. It seeks to be the first to provide fair-priced auto-hailing services across India and help more than 4.5 million auto drivers across most Tier-2 and Tier-3 cities in India to earn a better livelihood along with improved access to financial services.

This blog looks at a startup called GoGullak, part of the Financial Inclusion Lab accelerator program, which is supported by some of the largest philanthropic organizations across the world—Bill & Melinda Gates Foundation, J.P. Morgan, Michael & Susan Dell Foundation, MetLife Foundation, and Omidyar Network.

India is home to ~450 million blue-collar workers, most of whom earn a decent income but struggle to save adequately due to lack of appropriate tools. Piyush is one of them. He works in a factory in Delhi and earns INR 20,000-30,000 (USD 244-365) monthly, depending on the incentives he receives. He often struggles to manage his finances and resorts to personal loans for exigencies. Once he pays off his EMI and other necessary expenses, such as school fees and rent, he struggles to manage his remaining expenses.

Piyush knows that budgeting and tracking his expenses would help, but he finds it challenging to follow through every month. He tried a few ledger-keeping applications, but these did not suit his needs as they all worked after expenses had been incurred and did not help in decision-making when making payments. He continued to struggle to pay monthly EMI or save and invest to build an emergency fund.

Millions like Piyush face fail to manage their finances due to a lack of knowledge about financial planning and limited access to appropriate tools through which they can plan. This struck a chord with former engineers Avinash, Yashraj, and Yash —the co-founders of GoGullak. 

Since their college days, the trio has been passionate about building a scalable product that could create real social impact. Initially, they worked on a financial education solution for investing in stock markets but quickly realized that financial management is a bigger cause of concern among India’s middle-income investors. Most users used several ledger-keeping apps to manage their finances but struggled to save enough money for investments. This led them to conceptualize GoGullak in February 2022, christening their venture based on the Hindi word for traditional earthenware coin boxes children use to save small change: “gullak.”

The GoGullak pitch: Building better financial habits through the concept of mental accounting

GoGullak is an aspiring neo-banking platform that helps users align their financial goals through real-time budgeting like an orchestrated finance platform that makes financial management as easy as arranging files on a computer. GoGullak uses the principles of mental accounting, popularized by behavioral scientist and Nobel laureate Richard Thaler as a way people organize and categorize money as per its intended purpose. This helps users better understand their spending habits and make more informed financial decisions. Users can park their money for specific purposes in separate micro-containers in their accounts, just like physical Gullaks. 

A major problem that users like Piyush face is the inability to control their spending when all of their money looks the same in a single digital account, even though each rupee may have a different purpose. 

To solve this problem, GoGullak allows users to save money for different categories, such as rent, bike expenses, subscriptions, food, and EMIs on the app. Unlike a typical savings account in a bank, GoGullak helps users to create labeled micro-containers, with each gullak acting as a sub-account on top of a single bank account. This allows users to budget their monthly expenses for each category on the app. The users pay through the gullaks created for each category on the app instead of conducting a post-facto analysis of the expenses incurred in the month. Users can club similar spending categories or earnings and manage them individually through these gullaks. 

GoGullak offers complete customization of each gullak to each individual’s needs and offers them the flexibility to budget, track, and pay conveniently through a single platform. 

An ecosystem approach to build the business model

The founders understood that if they could create value for users when they sought to plan, store their money, and pay through GoGullak, they could uncover an opportunity to monetize the platform. They could provide users with suitable products, such as mutual funds, insurance, white and electronic goods with save now, buy later (SNBL- where customers can save in installments to buy products in future) while offering them good consumer brand deals. In the process, the founders want to create an ecosystem where consumer brands and financial institutions can use transaction data to offer GoGullak customers tailored offerings.

GoGullak’s ecosystem will help users plan, save, invest, and purchase transparently while promoting good financial behavior. “I am focused on building long-term sustainability for the user and GoGullak. Anything bad for users in the short term, even if it is good for GoGullak’s revenue, is not sustainable. GoGullak’s analytics will nudge users to adopt sustainable financial practices and spending through the platform for the long-term,” notes Yash, GoGullak’s co-founder. 

GoGullak’s vision is to ensure that users enjoy financial freedom and bring financial discipline back into their lives. This vision resonated with leading financial institutions in the country and has encouraged them to tie up with GoGullak to offer its solution to their customers. GoGullak is currently a part of the Fincluvation program with the India Post Payments Bank (IPPB). Under this IPPB willl leverage GoGullak’s solution for its customers. 

Challenges for GoGullak

Automated personal finance management lies at the core of GoGullak’s value proposition. While this is valuable and holds appeal across different customer segments, GoGullak’s product roadmap and promotion will have to ensure that the initial hook of financial management translates into adopting other products like investment, insurance, financial analytics, and SNBL, as these are key revenue sources. In this process, another challenge for GoGullak is to make an intuitive user interface so that users can navigate through various products and features with the least possible friction. Besides these, system integration with banks and other financial institutions to provide a smoother user experience has been a constant challenge for the team.  

Support from FI Lab

Under the FI Lab program, MSC helped GoGullak identify its target segments, understand their behavior, and help the founders identify gaps in the app’s UI/UX journey. The research with salaried classes and micro-entrepreneurs revealed pain points in managing their personal finances. It helped identify the key focus areas for GoGullak to build loyalty and retention. The insights helped the startup refocus and target its efforts towards a particular range of income and occupation segments. GoGullak’s proposition resonated the most with these segments and helps them address their pain points efficiently. 

The MSC team also helped GoGullak build a B2C and B2B2C GTM strategy and created an implementation roadmap post its launch. 

Building financial discipline and a digital future

GoGullak plans to boost its customer reach and performance. As it grows, it will focus on big data and artificial intelligence to build services that will make personal finance management easier for its users. With the vision to make GoGullak universally accessible and helpful, it expects to create an impact on the low- and middle-income segments. In addition, the team is working on creating a voice-based chatbot in the native languages of India to improve the usability of its app for even low-tech savvy persons. “Ultimately, we want to give everyone their financial assistant, which will act as their second brain for personal finance,” says Avinash, the co-founder of GoGullak.

The co-founders believe that by making financial planning and management more accessible and useful to everyone, they can empower people to take control of their financial future and achieve their financial goals. 

This blog post is part of a series that covers promising FinTechs that have been making a difference in underserved communities. These startups receive support from the Financial Inclusion Lab accelerator program. The Lab is a part of CIIE.CO’s Bharat Inclusion Initiative and is co-powered by MSC. #TechForAll, #BuildingForBharat

Introduction

The Indian footwear market employs more than two million footwear artisans and was valued at USD 24 billion in 2022, with an annual growth rate of 6.7%. Approximately 20% of its employees are from Agra, Uttar Pradesh. Agra caters to 65% of the domestic footwear demand of India. However, during COVID-19, almost 70% of the footwear manufacturers shut shop due to inadequate business. This blog looks at Kaarigar Mandi, a footwear startup in Agra, and its effort to preserve traditional handmade footwear manufacturing while securing the livelihood of the footwear artisans.

We spoke to a footwear maker from Agra to understand the problem better. Saurabh is a footwear master artisan who employs six other artisans from his community. He has been struggling ever since several shop owners who sold footwear refused to buy from him. He worked with a bulk footwear buyer. But lately, the buyer has not placed any orders with him. He rued, “Buyers say they do not know me, so they cannot trust me.” The lack of buyers forced Saurabh to explore others to sustain his business. Saurabh is now worried about getting work for himself and the artisans working under him, as no new buyers have been entertaining him.

The graphic below describes different problems Saurabh and other master artisans like him face due to an uncertain business environment.

Kaarigar Mandi is a startup that works with such master artisans. It helps them standardize their production through quality checks, capacity building, and greater transparency in the footwear manufacturing process. This standardization helps them match the needs of bulk footwear buyers. The startup aspires to build an aggregator platform between the artisan community and bulk footwear buyers. It seeks to support the artisan community through raw materials, job stability, timely payments, and linkage to a formal credit ecosystem.

The light bulb moment

The unique pitch

• Kaarigar Mandi facilitates financial support to artisans and connects them with lenders. These lenders can provide easy, low-cost credit to manage the artisans’ capital requirements. One such platform is Credochain, part of the Financial Inclusion (FI) Lab’s earlier cohort.
• Kaarigar Mandi conducts multi-level quality checks to deliver footwear with less than a 1% rejection rate for bulk footwear buyers. Thus, it builds trust among its customers.

Impact on artisans

Kaarigar Mandi works with more than 600 footwear artisans in Agra. These artisans aspire to grow their microenterprises with the startup’s support. They are keen to learn how to manage their businesses efficiently. MSC’s field research highlights how the artisans’ engagement with Kaarigar Mandi has helped them get a steady income and upgrade their skills to make better footwear. Kaarigar Mandi has also partnered with NGOs, such as Ek Pahel in Agra, to train female artisans to make quality footwear and provide them with work to earn additional household income households.

The empathy, affection, and respect Kaarigar Mandi extends to its artisans is the key differentiating factor of its engagement. “My husband is a footwear artisan and was the only breadwinner for the family. Two years back, he got severely ill. My son and I struggled to survive when we met Gagan bhaiya from Kaarigar Mandi. He gave us an instant loan to care for my husband’s illness, trained me to manufacture footwear, and employed my 16-year-old son as an admin support in their office. He has changed our lives and treats us with respect—just like a younger brother,” smiles Shanta, a female footwear artisan.

Roadblocks ahead

Kaarigar Mandi faces two critical roadblocks in its growth journey:

• First, it struggles to retain skilled artisans who often leave the handmade footwear industry when they do not have steady work and seek other roles, such as factory workers or street vendors. As a result, it has to spend more time and money to recruit and train new artisans. Sometimes, it even pays them in advance to cover their weekly or monthly salary before they start work.

The second challenge for Kaarigar Mandi is that the footwear industry in India comprises traditional and close-knit businesses. Large institutions as well as small-scale footwear buyers usually have long-standing relationships with their preferred vendors. These vendors can meet the buyers’ specific needs. Kaarigar Mandi faces resistance as a new entrant in the footwear business.

It had to invest more time and effort to build trust among bulk footwear buyers. In response, Kaarigar Mandi manufactures small batches of footwear in various designs to be used as samples for various institutional buyers. However, while such small-batch manufacturing is essential to create a market for Kaarigar Mandi, the approach negates economies of scale. It is thus not sustainable in the long term.

Support from MSC’s FI Lab

MSC’s FI Lab’s support to Kaarigar Mandi has been strategic in backward and forward linkages to address these roadblocks.

• MSC collaborated with Kaarigar Mandi to identify artisans’ problems and assess ways to support them. The team interacted with the artisans directly and collected field insights to enhance their relationship with Kaarigar Mandi. MSC suggested several mitigation initiatives. These included upgrading artisans to take work from various firms, including Kaarigar Mandi, capacity building on business and inventory management, and standardization of quality checks. Better quality checks would allow Kaarigar Mandi to establish strong ties with the artisan community and become their preferred partner for footwear production.
• The MSC team explored the emerging opportunity to supply footwear to D2C (direct-to-consumer) brands to generate more business. The team helped Kaarigar Mandi reposition itself as a quality supplier to generate business from the D2C footwear companies. MSC’s assistance will allow Kaarigar Mandi to create more business and provide its artisans with a consistent line of work. In the first month of Kaarigar Mandi’s repositioning through a social media campaign, MSC helped it get more than 60 leads from footwear D2C brands.

MSC designed these two interventions to address the two key, interrelated challenges of artisan churn and limited buyers for products. D2C footwear is a growing segment, and if Kaarigar Mandi can position itself well, the artisans will stand to gain the most. MSC’s support continues to generate online leads through extensive social media marketing to position Kaarigar Mandi as a reliable, high-quality brand among D2C players.

Way forward

Alongside its business goals, the startup also wants to preserve the traditional art of footwear manufacturing, arrest migration, and build the local economy. It plans to expand its artisan network to 5,000 in two to three years. It also seeks to provide them with continuous work and increased engagement throughout the year. Thanks to Kaarigar Mandi’s efforts, artisans like Saurabh can now look forward to preserving their skills and aspire toward a brighter future.

Introduction

The Pradhan Mantri Jan Dhan Yojna (PMJDY) in India increased access to formal financial accounts to 78%, providing significant benefits to low- and moderate-income (LMI) segments. However, the usage of these accounts among the LMI segment in access to financial products remains limited.

This blog highlights the journey of the FinTech startup Finequs. The startup works to deepen access to financial products, such as loans, credit cards, and other financial products, to increase account usage by the target segment. It seeks to democratize the lead generation process for financial products through merchant channels. In this blog, you will discover how Finequs strengthens this merchant channel and motivates them to add financial services to their offerings.

Finequs is part of the Financial Inclusion (FI) Lab’s sixth cohort. The Lab has supported 50 startups focused on the LMI segment as part of CIIE.CO’s Bharat Inclusion Initiative, with technical assistance from MSC. The Lab receives support from some of the largest philanthropic organizations worldwide—the Bill & Melinda Gates Foundation, J.P. Morgan, Michael & Susan Dell Foundation, Omidyar Network, and MetLife Foundation.

Credit is a chronic need in India. However, only 11.8% of adults could borrow funds from formal financial institutions. Several studies, including MSC field analysis and Global Findex, highlight that lack of trust and access to financial products or distance from financial institutions results in low activity in financial accounts.

Finequs is on this journey to make access to financial products similar to going to the local market for grocery shopping—simple and convenient. It uses the retail merchant channel to generate leads for financial products on behalf of formal financial institutions.

The light-bulb moment

Former banker Krishnan Vaidyanathan founded Finequs in 2019 in Chennai, India.

The ambition to make financial inclusion accessible, inclusive, and democratic

Krishnan used his rich and varied banking experience across premier private and multinational banks to understand the limitations of the traditional financial ecosystem to reach the underserved segments of society. Even the FinTechs operating for a considerable time cannot reach the masses. Gaps, such as trust in the digital medium and the savviness of users to avail digital loans of their own, limit the uptake of formal credit products. Finequs saw this opportunity and decided to operate at the intersection of technology and financial institutions to deepen access to financial products by improving their distribution.

Finequs designed its system to serve customers with limited digital savviness. These customers may or may not own a smartphone and need assistance to complete a financial transaction digitally. A major gap persists between the complete digital journey desired by lenders and the customers’ capability and requirements.

Some of its target customers are new to credit or may have bad credit scores limiting their access to formal loans by partner lenders. To solve this issue, Finequs has also looped in services, such as gold loans and credit score repair, to bring these customers into the formal credit fold.

Finequs seeks to streamline these products among the underserved segments through its distribution channel, which primarily constitutes merchants. Merchants can add revenue for the lead generation efforts at practically no investment or stocking up of goods. Finequs confirms that merchants can add anywhere between USD 180 and USD 600 additional monthly income by associating with Finequs.

Merchants can increase user engagement by providing access to various financial services, such as instant loans, credit cards, and home loans. To date, merchants have disbursed loans amounting to approximately USD 7 million through collaboration with more than 50 formal lenders.

Finequs has also partnered with direct selling agents and other partners with on-field presence to serve as fulfillment centers. These fulfillment centers take the load of processing work from merchants and assist the customers in completing their forms and other documentation processes once they are registered in the Finequs platform as potential leads.

Support from the FI Lab

FI Lab’s support to Finequs included customized solutions to address its demand- and supply-side challenges. The FI Lab provided technical assistance and field insights into merchant operations, their relationship with partner entities, and potential leads onboard onto the platform.

Our team split the technical assistance into two levels. First, we focused on the merchant channel and recommended ways to strengthen its relationship with Finequs. We also suggested merchant classifications and incentive structures that could motivate merchants to work for Finequs. Second, we analyzed FCs and validated the model for scale-up. We suggested ways in which Finequs could use FCs to increase the success rate for loan conversions and the best practices to follow.

Continued innovation

Gearing up for instant loan disbursement at the merchant centers: Finequs partnered with a few lenders to provide timely loans and created an instant loan disbursement plan for a smaller sum of approximately USD 123- USD 183. Finequs will provide real-time information to the lenders using their algorithms on this data to underwrite instant loans.

Enabling platforms to disburse loans: Another major innovation from Finequs includes creating suitable application programming interfaces (APIs), which third-party platforms, such as enterprise resource planning modules (ERPs) in hospitals and schools, can use to provide credit facilities to their customers. Finequs’ motto is to partner with offline and online stores to offer credit facilities.

Big data analysis to help generate qualified leads: Finequs invests in developing its data capability to complement its partner lenders’ efforts. Finequs logic engine can improve the lead quality for lenders by including customer data and local knowledge, such as major occupation and seasonality of income. Krishnan sounds confident about the future, “I need to know my customer better and help lenders make the right decision, which will significantly increase Finequs’ value—beyond just generating leads.”