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Unpacking Zype’s lending and collection model

Zype, a credit-first financial well-being and lifestyle app, grabbed the limelight in December 2022 after raising nearly $18 million and coming out from stealth mode. Last week, Entrackr spoke with Yogi Sadana, founder and chief executive of Zype to get more insights on its business model, differentiators and scope of lending among others.

Before we delve into the conversation, let’s look at its offerings. It lends short-term personal loans to retail individuals. According to Sadana, Zype generates revenue from lending loans which implies interest at the rate of 26% to 27% annually.

Zype claims to have more than 2.5 million app installs [across Android and iOS) and 2 million plus registered users since the launch. “Zype provides loans to salaried professionals and our average ticket size could range between Rs 40,000 to Rs 45,000. We lend from Rs 10,000 up to 3 lakhs,” said Sadana.

It lends primarily for financing two-wheelers, travel, medical emergencies, marriage, home renovation and education. “Unlike other lenders, we do collection on our own rather than relying on third party agencies. Since our disbursal consists of a low ticket size, most of the collection is done only through in-house teams,” added Sadana.

As of now, Zype has disbursed more than one lakh loans and expects to increase its loan book to Rs 500 crore within a year. The Mumbai-based firm lends through its own NBFC and its current monthly loan disbursal rate is Rs 75 crore. “About 75% of the people are repeat customers and their average age ranges between 26 to 29 years,” highlighted Sadana.

Zype competes with the likes of MoneyTap, Fibe( previously EarlySalary), Uni, and KreditBee. While all its competition are large in terms of scale and age, the personal loan space is large enough to accommodate hundreds of fintech companies and banks.

Zype’s collection approach seems new but whether it continues with the same ops-heavy call centers model as they scale, is yet to be seen.

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