Bridging The Retail Credit Gap

In this episode of Banking & Beyond at RBL Bank, catch Sashank Rishyasringa, MD & Co-Founder, Capital Float in a frank conversation with Rajeev Ahuja, Executive Director, RBL Bank, as he takes us through his exciting entrepreneurial journey of going through the highs & lows early on in his startup's story. Listen in to know, how maintaining transparency, building newer capabilities, and staying digital first has helped them to take on the new normal.

Rajeev Ahuja

Hi, everyone, welcome to power conversations at RBL bank. You know, I have a very interesting person as my guest today. And the reason it's interesting is because, you know, we've known each other, professionally. And for the last five, six years, and I've watched with interest there, Bernie from 2012 13. And more importantly, what they've been going for the last two years has been especially, you know, insightful and interesting for many of us and written extremely well documented, you know, learnings and insights, if I have to kind of, to, you know, the most interesting company in the FinTech lending space, I'd say, capital flawed and the Sashank and Gaurav, you probably ranked right up there. Because you've been through a lot. And you've been through a lot and, you know, fingers crossed, you've come out hopefully much stronger. And I think that's something we'd like to understand. And you know, if you can, through this process of the last two years share your and Gaurav's journey, lessons learned and how those things stack up for your business and broadly the FinTech, FinTech lending business in the future. So maybe I'll start Shashank, if you can briefly describe Capital Float’s business model, as it exists today after, you know, seven, eight years of working, and especially the last two years.

Sashank Rishyasringa

Absolutely, Rajeev, and it's a it's a pleasure to be on this segment. And thanks for having me. Just to summarise the journey. So far, we've been in business now for over six years. And we started out with this thesis that there was a very large credit gap in the missing middle of India across the SME and consumer space, that could be meaningfully addressed using technology. And and that led us on a journey. That's that's been a bit of a roller coaster ride, I'd say. But I think largely been validated in terms of the size of the market opportunity. Today, we serve both businesses and individuals across the country, from over 300 cities. We've served over a million customers till date, across both personal as well as business financing needs, we're adding about one and a half to two lakh new customers every month. And we just particularly grown actually, through the pandemic, and have originated about 9000 crores of loans to date across various use cases, checkout finance, personal finance, business finance, working capital, etc, etc. In addition to running a lending business, we also have a financial advice tools, vertical through our walnut app, where we actually empower individuals to manage their money, better set budgets, save track expenses, etc. And that seen about 10 million users actually, through its lifetime, actively using the app to manage their finances better. It's been a it's been a very interesting journey. I think when we started out our Northstar was really scale and impact. I think along the way, we've built a set of muscles, particularly in the last two years, around resilience. And I think that's probably an area we underappreciated when we started out is the twists and turns that typically come with, with the financial services of a FinTech business, whether it's in an old age or a new age of avataar. And I think we were fortunate to start the business during an upcycle in India, but even more fortunate to actually live through a full downside. And I would say, over the last few years, and most recently, COVID are in the sense that it's I think, given us, as I said, a set of capabilities internally, but also way of thinking about growth. That is really shaping kind of how we think about this game over the long run. And it is a long game. I think when we came in, we didn't have a defined timeframe. But it's very become very clear to us that if we really want to pursue those two north stars of growth and impact. We're in it for the next several years and beyond. So yes, that's where we are today. We've actually seen some really interesting growth trends coming out of COVID. And that's, that's keeping us quite excited. Equally like any financial services business, we're keeping a close eye out on the portfolio, especially with the weaker segments of our portfolio that require the right kind of assistance and support coming out of this pandemic. So it's been an interesting balancing act between kind of doubling down on areas of opportunity that the conditions over the last six months have created, but at the same time continuing to flex those resilience muscles in areas where we need to hunker down like everybody else.

Rajeev Ahuja

That's a good way to actually for me to ask a question, you, you said you have a different set of muscles, which you discovered, or you've been made aware of. Maybe for us, can you elaborate on a little bit more? Which muscles? Are these? And what are the new capabilities you have built over the last two years, which you think are things which you probably did not invest a lot of time in for the first four or five years, and perhaps feel now that this is going to be a very, very important way to the future of capital flow?

Sashank Rishyasringa

That's a great question. And I'll I'll focus on three. And these straddles sort of the softer side of running an organisation as well as the hard aspects of strategy and tactics. I think probably the biggest area of learning for us over the last few years has been this idea of a focus over FOMO. Right, I think you may relate to this, I think particularly being in the credit space in India, you see opportunity everywhere, especially during a boom cycle. And there's this very kind of familiar mindset that creeps in, I think, both in large organisations and in young, small one that if someone if I don't do that, someone else will. Right. And I think one of the one of the big learnings for us in the last two years have been just to abandon that, that sense of FOMO entirely. And have a sense of pacing and a sense of what is our core, and a sense of discipline as to how to stick to that. And I think that's been honestly an eye opening experience for us. Because every growth stage company thinks that growth is about expansion, and about trying to conquer as much territory as possible. And for us, it's actually been about narrowing down after a period of experimentation, expansion, stepping back, figuring out what's worked, what's not what's really aligned to where we can win and what's not, and then narrowing back down into a set of two or three core products, verticals, customer segments, where have you where we believe we have a right to win, and then concentrating the entire army behind that, right. And I think that's easier said than done. Because what we found is even when you do that, as things start to settle down, right, or as areas of opportunity, open up, this is again, natural centripetal force that pulls you back outwards. So I think kind of building that sense of innate discipline in the team being able to say no to things, being able to kind of set a timeline for when you want to expand or diversify and then stick to that timeline, no matter what, I think that has been a very important area of learning for us. It's also helped us I think, be able to kind of pivot and align realign to changing realities very quickly, right? You think large organisations take time to move, strategic focus. But actually, it's the same with younger companies as well, because you get very attached to products or experiments that are your baby, right. And equally in the team. People get deeply attached to things. And it's very easy to kind of look at what you're doing and say, Look, there's no way we can actually not do this, because we should be focusing here. And so I think even for example, I give you a practical example in the last few months. In COVID, we found that while obviously larger loans SME loans were slow. Our buy now pay later offering was suddenly catching fire, right? People were substituting massively to ecommerce, people were looking for more digital first ways to pay online where affordability was a built in feature, a lot of this population didn't necessarily have a credit card. And suddenly, a product that earlier perhaps was 10 20% of our volumes, was starting to be almost at 100% in driving growth, right. And so if what we were able to do I think is very quickly realign resources, say this is something that's working, let's go after it, and let's push. And that doesn't mean we kind of lose sight of the other areas that we've nurtured. But it means that we can wait quickly realign the resources of the company when it sales, credit, collections, tech to something that's growing. And I think that's a set of muscles that a lot of people have started to develop through COVID because it's forced people to do that. I think we were fortunate to be forced to, to make these changes internally about a couple of years back when the ILFS crisis hit us, so I think this is one big thing. I think the second one is actually transparency. I think when when storms hit the first tendency is to kind of hunker down, right and go into a shell. And very honestly, that's something we did early on, and we realised it was a mistake. And it's a bit counterintuitive to be more transparent when things are bad. But we've actually found there to be a lot of power in that both internally and externally. And I talk about both aspects. I think internally Especially when you're building a young high growth company, you learn to build a team on momentum. Right? So essentially, your culture is all about good news, new expansion, new products and growth. And when things turn in a different direction, it's I think it definitely left us in a quandary as to kind of what is the right way to communicate to our team, right. And I think after some amount of soul searching, we said, Look, we're going to need a team that is able to withstand shocks in the long run, this is probably not the last shock we're going to have, which in retrospect, turned out to be right.

Let's go with transparency, right, let's let's be open about the bad news. Let's Let's in some ways, review the fact that it's going to be a tough period ahead. And those who stick around stick around those who don't don't, I think in retrospect, that's been has been very helpful for us because we came out of the ILFS credit crisis with a with a leaner but I would say, team that was highly motivated, highly focused, had resilience in its DNA, and kind of saw challenges opportunity. And I think, going into COVID, that's been a huge source of strength for us. And we've been able to keep our team intact. We've had people raring to go. And we haven't had to rely on kind of good news as a way to motivate people, challenge and resilience has actually become the new credo. And that doesn't mean we don't kind of shift to growth. At some point, we're starting to do that already. But personally, I think we are a lot happier having a team that can hunker down when you when he needs to, and, and flex when when when times are good, rather than having a team that needs to be on a sugar high all the time. And I think the same thing works. And I think one of the things that helped us actually get out of this funk that, that we had, I think a couple of years back was decided to create a more regular and open cadence of communication externally. I think he was one would have seen this as just start kind of being transparent about what we're going through, be open about the challenges, preview potential negative outlooks in the future. So there are no surprises. And I think this is honestly something that the whole ecosystem is grappling with now during COVID. Right?

Yeah. Sometimes, I think a sense of wanting to say that all is well. But then inevitably, things get worse, and you have a negative surprise, and you end up in a downward spiral. I think we learned prior to this, that that that just doesn't serve anyone, right? You'd rather be upfront about preview the worst case outcomes and then and then beat that expectation, rather than the other way around. And I think the final learning Rajeev is more on the strategic side, is what I would call kind of digital fundamentalism, right? I think all of us in financial services are very excited about digital. But I think there's always a risk of going too far or not going far enough, right. And to give you an example, I think, probably until two to three years back, we under invested on things like sales and growth, because obviously it was easier to grow with a phygital model, given tech savviness of customers, etc, if you threw people at the problem, but then over relied on digital when it came to risk. And I think that's the kind of shift that we have undergone in the last two years, we actually flipped that and be more fundamentalistic when it comes to things like acquisition where you may grow a little slower for some time, but your your your growth is fundamentally higher quality and lower cost and more scalable, but equally respected industry wisdom in areas like risk and deploy people where it matters, right and so change for us in the last one and a half years, I would say is collections has gone entirely in house, there is now a strong on the ground collections team. There are subspecialties within zero to 30, 30 to 90, let's say late bucket recoveries. But acquisition has gone entirely digital. So if two years ago, we were acquiring maybe 20% of our customers in a fully digital manner. Today we're requiring 90% of our customers with zero human touch. Got it? Right, that has meant lower CAC equally, the safety valve of collections on the back end gives us the ability to grow knowing that there is a way to manage any surprises that could come up on the risk side. So yeah, I think lots more to share. But But those are sort of probably the three big ones that I would call out.

Rajeev Ahuja

These are these are very useful. And I can tell you that many of us in the financial services industry and you know, gone through many cycles and and I think the the challenge of suppressing your ego is the biggest challenge in financial services, especially in the lending business. And I would say most businesses which actually have scale vectors which have worked very well over the past few years. And then to kind of say you only pop up the champagne when you collect the money. That's a lesson many of us learned through decades of of issues which have cropped up not just in India globally. But what's interesting Shashank is that you've kind of neatly, neatly put them into behavioural, cultural, soft aspects as well as strategy, capital allocation business. How did you all get to the destination, you are the situation you have today, in terms of so much clarity and what you have built? What was the what was the role of the senior management, your board and your people, because you know, this is this is also something where fintechs, and many young institutions are born on scale, you guys are called, you know, unicorn, decacorns, and that builds itself a certain, you know, cycle of expectations across your stakeholders. And to break that, build something which is very, very mature basis where we are today, balanced, takes a lot of heavy lifting a lot of agony, as well as contradictions. How did you go about resolving them? Creating the conversation? And can you just walk us through some of these things, please?

Sashank Rishyasringa

So Rajeev, it's a great question. And I think fundamentally, it for us, it has come down to creating creating a creative tension between a financial services mindset and a technology mindset at all levels of the organisation, right? externally, this could be between debt providers and equity providers. Internally, this is between people, veterans who've come been in the trenches, as you said, in areas like collections, risk underwriting, and folks who come from tech, payments, etc, who are all about growth, right. And I think at times we have sometimes wondered if this leads to a certain level of perhaps sometimes slowness in decision making too many arguments, but net net, I think having an argumentative culture has worked for us, right. It's also pushed us as founders to kind of step back and have to listen to what our team members and our stakeholders are telling us. And what we found is while in the world of technology kind of move fast and break things, you know, make decisions fast, ask for forgiveness, rather than permission are all good credos. I think in a FinTech business, particularly one where there is risk, a little bit of combination of the accelerator and the brake pedal is very helpful. I think even as founders, we need people who are willing to press the brake pedal on us. And I think that kind of organisational design is something that we found to work over the last two years, equally when things went wrong before that, we found that they had broken down. And so it's something we try and emulate in every team, right. So for example, even in something as traditional as a collection set up, we ensure we have a data scientist embedded in the team, right, who's willing to challenge conventional wisdom. And equally in a product setup where you perhaps have 80% of folks coming from a tech background, we ensure we have at least one person from a risk background who has literally gone through the trenches and cleaned up a portfolio at some point in the last 10 to 15 years. And I think that is a maybe a bit of a unique org structure. But we try and maintain it at all levels, right? Whether it's in a board composition among our debt providers in our management team, or sometimes even Gaurav, I try and play that role, right actually say, Okay, why don't you chase growth for the next six months? And I'm going to be the one who kind of plays devil's advocate and look at this because we really, you can do all the kind of all the divisions that an org level, but ultimately, the decision makers, the top aren't able to reconcile two conflicting ideas in their own head. The old mistakes

Rajeev Ahuja

No, so it's interesting you say that and and I think this creating this tension and and having a constructive dialogue, starts clarifying things immensely. And it takes time. You know, it's not something you can overnight but you know, it's slowly you resolve the contradiction, though. where you stand today, Sashank, where capital float stands today and I I've heard you say this phrase, pandemic has been very clarifying. What's been that clarity which has emerged or above what you've just shared with us, as we go through a pandemic, from a business perspective from an organisation perspective.

Sashank Rishyasringa

Sure, as I talk about the business first and then and then the old piece on the business side, it's, it's helped us first of all, clarify our target customer very precisely. I think the past we've served a very wide range of customers. Going forward, we have found that the most exciting opportunity lies with individuals in the two to five lakh annual income range, the large majority of which are self employed. I think the second thing it is clarified for us is, is product clarity, right. Rather than trying to run an org that tried to be different things to different people, we are now trying to be the best financial partner for this target customer. Which means meet their business needs, through working capital, or lines of credit, meet their personal and family needs. For things like education, health, weddings, etc. And third actually meet their day to day financial needs as well. which could mean buying a fridge or a TV online, booking a flight making a payment, or monitoring their budgets for the month. And so our aspiration really now is to be able to be a 360 degree partner to these customers who historically have been underserved, or have had a set of very fragmented relationships in their financial life, a one person for a savings account another person for business account, third person, for a loan, etc, etc. And I think that degree of clarity has really helped, or I think from an organisation side, as I mentioned earlier, I think it's it's given us a lot of clarity around where we will be technology first, and where we will be financial services first. So as I said, from an acquisition perspective, from a customer management, and underwriting perspective, we are all the way in with tech. And I think the pandemic has actually created conditions where a lot of the customer oriented barriers that we faced before have gone away, right, people are happy to do a KYC online, people are happy to interact with a partner that they've never met. People are actually people prefer digital first tools over over analogue first tools are everything equally, we've defined where we will not compromise from a physical perspective, right. As I mentioned, this has meant feet on street for collections. In house capability, we're not afraid to hire people where we need to when it comes to risk management and relationship management, and equally transparency and governance, right. I think people always believe that a tech first company is very data driven. And I think generally That's true. But this doesn't necessarily translate into a degree of transparency externally. you mentioned that it's earning season before we started, we actually believe that even as a private company, we should consider ourselves accountable to the broader ecosystem, because we take money from the ecosystem, right? So the the articles, the the kind of the matrix they were starting to share externally, are that first attempt at being a more transparent company that not only consumes data in a sophisticated way, but shares their data openly, in a way that engine engender trust, confidence in their broader ecosystem, as well. And we believe that's a very important example to set up because for all the talk of tech and FinTech, ultimately, we are taking, taking money and giving out money. And that necessitates a level of rigour in how you report and how you account in how you talk about performance to the broader markets, that really kind of sets us up in the long run to being an actual financial institution, right? I think, if put aside all the froth around FinTech and banks, etc. We believe that in the long run, there will be only financial institutions. And those institutions will either look to the past and look at Tech as an enabler or look to the future and believe the tech is at its core. But ultimately, we will be a financial institution like anyone else. And that's the standard we're trying to live on.

Rajeev Ahuja

You know, you made a couple of references to relationship management, customers. Normally, when we talk to NBFCs, they talk in AUMs, they talk in asset basis, they talk in, you know, how many loans I've done? Is this transition to relationship management approach. A was it it engineered? Because when you bought walnut, which was more revealed there? Or how is that started panning out within the organisation? Because it's a very different way of doing business? I mean, ultimately, the metrics might still be, what's your asset base, how many loans have you done, but how you go about validating yourself internally, your krs undergoes a big change.

Sashank Rishyasringa

That's a very perceptive observation Rajeev, and you're spot on, I think, for us, the North Star today and going forward is our customer base and how we're able to serve them in multiple ways. And you're right, that is a is a mindset shift over the last few years. And I think it stems out of a very clear realisation for us that this large population, I mean, call it 100 to 200 billion Customers will are not in the in the in the top premium category for most financial institutions today are looking for looking for a financial partner, right? Today, they may kind of take products from wherever they get them. But ultimately, the friction in those experiences is extremely large. And we actually set out to solve that friction. And I think somewhere along the way, not both us but even the broader industry got very tied up in in growth, right. And growth became defined as you know, buying or selling loans, and disbursals. And for us, I think the learning there was, it's very easy when you're chasing those metrics to lose sight of whether you're being a good partner to your customer, which may feel like a fuzzy concept, but ultimately boils down to what is your lifetime value per customer, right? And are you truly a base that is building engagement, retention and repeat behaviour, or I do a one off .And that's, and you're right, so the walnut acquisition was very much in line with that, I think we believe that we had built a series of capabilities around underwriting and an acquisition. But we didn't have the muscles to really engage customers and delight them on an ongoing basis. And wallet has been a core aspect of creating that sense of loyalty and delight. And I think equally, our attempt to build out by now pay later and make that a center-piece of the company is also a big part of creating this ongoing relationship with a customer, and being able to embed ourselves in their day to day life in a way that is actually useful. And that is, I think, where banking came from right, I think, before we had kind of corporate banks, you had community based banks that knew their customer, that was the first port of call for the person for the catchment area families around them. And your your, your bank manager was the person you went to when you when you are a kid, when you wanted to send someone to school when there was a wedding in the family or when your business needed expansion, right. It was also the place you went to when you had earned a bunch of money and you wanted to invest it. And I think somewhere along the line, obviously, you guys are an exception, but somewhere along the line, the corporatization of financial services, lost touch with the customer. And I think for us as we actually we actually took our inspiration from the tech industry. So just like Netflix knows which movie you should watch next. And Google can help you figure out what you're looking for, before you know it, we want to be able to actually offer you the right financial product, even before you perhaps realise that you need it.

Rajeev Ahuja

So you know if this begs the question, Shashank, and while I mean, I'm 100% in agreement with you that, that what you start off as data tech, which is why you all called FinTech. But at some stage it becomes becomes freedom of time, because the skills and the muscles you're building now, while they may be, they may be accelerated by technology, or data or a better understanding of a customer. But there's also a time element from your customer perspective, as well as your organisation perspective, because it's not very easy to, to, to kind of embed that and say to happen has to happen at the speed of a machine. Now, are you and your board, willing to give yourselves time, your organisation time to mature into this way of thinking? And therefore it's very important that what's the life cycle of your investors? So are they are they looking at this and saying, you know, hey, we've done a deal, but this is the new reality. Because you know, then those those time gaps become very important in how you build your business model.

Sashank Rishyasringa

Rajeev, honestly, I think the realisation that has come to everyone in India of the last five years, not just FinTech, for everyone is it's a long game, you're building a good business here, it takes them takes a decade, if not more. So I think our investors and our board is very much aligned around this. I think I think we've kind of we always believe that we wanted to build an institution that lasts but I think we have also kind of buckled in for the long ride in a in a in a more emphatic way than ever before. And we want to chase high quality growth. And I think we've seen countless examples about how going the opposite way hasn't really led to the creation of equity value in India. And I think investors get that

Rajeev Ahuja

As you now look forward, you know, the the opportunity post pandemic, what are the changes you're seeing in customer behaviour, customer adoption, customer needs, obviously, this six months, nine months and perhaps some more time has been quite a big change in many people's lives, many people's behaviours and expectations. And we all hope at this, we see the back of that of this infection at least in some time, but some behaviours will not go back, some behaviours will probably go back. What is the opportunity you see for people like yourselves, and is your 2012- 13 vision of a very large opportunity, which is underserved, still very, very much alive at all you think is actually become more interesting?

Sashank Rishyasringa

To answer your question backwards, I think that in the long term opportunities very much there. We definitely expect growth to come back strongly, as things start to Coronavirus point of view, at least at the pandemic has created a few radically different trajectories that matter for financial services in FinTech. The first is digital adoption, that people are fundamentally more open to initiating and completing a digital product purchase online, whether it's a loan or anything else. And the old barriers of trust of doubt of lack of tech savviness have literally melted away, you know, in a way that has been dramatic. And so I suspect the big changes rather than folks thinking about inserting tech into their existing flows, we will all have to think of product delivery as tech first. From now on, and I think that's that's probably achieved two to three years work of, of natural progression in a matter of six months. I think the second is in terms of mindset. So one of the interesting trends we saw in walnut is increasing savings balances, and we see this persisting. And I think that there are there will be a thrift mindset in this generation that will persist beyond the pandemic in a way that will fundamentally change the kind of financial products that people look for a lot like what I think the 1930s did for our generation in the West. And so I think while credit will remain aspirational, will remain critical. I think saving will become become an important part of this generation. And I think I know, all of us here, I think the idea of planning for a rainy day, which perhaps took a backseat in the boom years prior to pandemic will become more important. And so I think hybrid offerings that offer both credit and savings at the right points in a customer's life will become particularly important. And I currently, to the extent that we in financial services are a first order derivative on the real economy, I think the real economy has shifted dramatically, we are seeing post pandemic ecom purchases being at least 20 to 30% higher than pre pandemic peak levels. I don't think this will change. We are seeing correspondingly, online financing growing dramatically faster than offline financing, which is very different pre pandemic. And I think you're going to see this not just in retail, you're going to see this across retail education, travel, and the whole gamut of even B2B across the economies. And so as as finances in a way, I think we will need to piggyback a lot more on the online economy, then the offline economy in a way that just wasn't the case, pre pandemic,

Rajeev Ahuja

you know, it's a very interesting question, which, you know, you you're this insight is brought up, and I think it's true for all financiers banks and NBFCs, we, when you look at an ROA model, one thing is obviously, what's your p&l, and then when you start taking that in terms of leverage, you know, financing companies have always had a big element of leverage being the amplifier on the core earnings. You know, if credit growth is going to be slow, over the next two, three years, and I'm not saying it's going to be slow for everybody, but I we do see that credit growth will take time to come back and perhaps it will come back in areas which were not really what we were, you know, focused on. What do you do to substitute that so that your overall returns? And I'm just coming to this because it's a very important question even for banks. You know, banks have had the the benefit of depositor protection and a high leverage, be able to create sustainable ROAs over time. And once your overall leverage has to come down partly regulatorily partly, you know, the environment is not exactly what you left behind. There are some other elements which go in and I'm actually very curious to understand when you start modelling your business now. For the next three, four years, you know, elements of relationship, cross sell, you know, Lifecycle Management, LTV, these are these are not necessarily leverage concepts. And so that actually changes some of the metrics you evaluate for yourself. So can you give us a flavour of how it is going through your mind? You are right now levered just about one to one. Whereas normally NBFCs are considered good leverage between four four and a half times.

Sashank Rishyasringa

A question, Rajeev fine. harp back to my point about focus, right and knowing what you're good at and knowing what we're not, I think the way we look at it is, we are still a young company, right. And for us, we think it's still kind of day zero day or one at best. And so partnerships on the on the liability side is really core to how we grow. And as you know, we operate a co- origination marketplace, where we are trying with the best and largest banks and NBFCs in the country, who have a similar DNA and mindset, but really be able to leverage the vast resources that are already aggregated under their disposal, such as, um, and the reason I think this is the bet that we're making is, we believe that right now, all our resources need to be focused on finding those niches, where we can acquire customers who are fundamentally set on a better income trajectory than others, and really serve them over their lifetime. Right. And so if to not to oversimplify, but if we think of it from a financial markets lens, when the beta is working against you, you have to look for alpha and bet the house in it. And that's what we're really chasing, we're looking to find those customers who are underserved today, but are going to win over the next next couple of years, right? Where, as entrepreneurs or salaried professionals, or people who are inheriting and running a family business, and we want to back those guys, we want to do the best job offering the products over the lifetime, so that we can remain relevant to them. And then on the on the other end, find the right partners who can back this vision and deploy capital through our platform to be able to meet this, that's really the crux of what we're trying to do. Because you're absolutely right, in trying to be all things to all people or trying to fight on too many fronts, I essentially gets you back to beta. And the beta or the market is not great, right? So we're trying to pick our battles and really drill down and find partners that are able to support us on the on the liability side.

Rajeev Ahuja

And Shashank, I've also been a markets guy, creating alpha is about knowing who you are, first, knowing what your team is all about knowing your processes, knowing what to say no to. And some of the world's best investors actually focus on the internals more than just the external, I'm actually very glad to hear that the way you've kind of defined your journey, you know, in terms are now focusing on building the alpha, rather than looking at leverage, or the terms of leverage to define your ROA. And it's a very important change. As I said, it's a it's more than just a metric change. It's also a change in the way you work. The engine, the way you measure yourself the change in the quality of your conversations internally and externally. So I you know, I think this is this is a dilemma for all financial institution for the last decades. I mean, people people at the top of the market are believing they are you know, they are super people and and then leverage takes over. Let me just switch to the last section Sashank, it's about you. It's about, you know, what has inspired you and Gaurav when I know you and Gaurav or like, you know, you know, pretty much. And I heard somewhere that you spend a lot of time together at the same time. You know, you've kind of had a journey as friends and as co founders. What has been the inspiration for you, especially in the last two years when things were not looking great. And especially when the first five years of your journey, you were literally crowned as the FinTech to watch.

Sashank Rishyasringa

It’s a very interesting question. So I think, first of all, you're absolutely right. Gaurav I have been friends before this for a long time. And then of course, now partners for a reasonable amount of time. And you know, when we started out, we really said, I actually remember we were in business school. And we were kind of dreamy and starry eyed back then. And we had laid we had started our journey by saying we're gonna work together. And it actually began as a partnership of capabilities, right. We said we don't know what we're going to do. but we have a very complimentary skill sets we respect each other's abilities and when we're really not good at what the other person is. So we say this is a good team. Let's start with this and see what we can build. But even before we fix we fixated on lending or financial services, we say look, what's, what are the sort of two or three Northstar life KPIs for us in this adventure, right. And the first was, we wanted to build something that was large and enduring, the secondary wanted to build a business that had impacts, we wanted something that impacted the lives of millions of people in a positive way in India. And the third is we wanted to build an institution or a culture that we could be proud of. And these were the three things and I still have a picture of this somewhere. And I think when when when obviously, kind of the ILFS crisis hit, and we were forced to soul search and in kind of crisis managed to a great extent, I think the biggest thing that kept us going was that we were, we signed up for the long haul, we need to build what it takes to to survive the long haul, right. And if we've been kind of creatures of summer over the last few years and enjoyed a good ride, we need to also learn to kind of what capabilities we need to develop within us or find within us to get through the tough part. Because even if we get through this, there'll be another winter at some point a few years down the road, right? So I think that's, I think the that's probably the single biggest thing that kept us going where we tend to be quite hard on ourselves. So we say, look, if we, if we got ourselves in this situation, we bloody well get ourselves out of it, and make sure that we are well prepared when the next crisis happens. Right. And that's, I would say, we did feel like that when COVID happened, anything, we felt that we had a playbook. I feel like we had done all the hard work to get ready for something like this, we never expected that something would happen so quickly, you generally expect cycles to come at you every five to six years. Ah, but I think that was really kind of what's kept us going. Right. And I think, again, I think a partnership structure has, has its has its has its pros and cons. But for us, it's mostly been pros, in the sense that we've been able to rely on each other right? There are a there have been days where one of us has been kind of down and only thinking about worries and the other person is optimistic and upbeat. And there are days where we switch and I think that that balance helps. As I as I mentioned earlier, I think being able to kind of in some ways, play different mindsets, one person takes the conservative mindset. The other case, takes the aggressive mindset, again, helps at the top of our company, as well. And these are things we've kind of I think learnt and definitely having become stronger and and closer as partners over the last last couple of years. Hope that answers your question somewhat.

Rajeev Ahuja

No great, excellent. Who do you turn to inspiration outside of your partnership with Gaurav. Do you have any role models outside?

Sashank Rishyasringa

Ya definitely, so I think one company we have tremendous admiration and with whom we have worked closely is actually, Amazon. There is a lot of perception about Amazon, that it is a hyper growth fast company. Which it is. But I think, after working with them we have also developed deep appreciation on how methodical and process oriented it is as a company. And, I think that’s something we would like to emulate as a company. Actually create an organization set up to transcend us a founders, and it is process driven and not person or personality driven. I think we honestly admire a lot of the Banks in India, we admire you guys and HDFC and others that have played the long game and many ways have ridden the growth wave that India has had in over 20-30 years. And, I think there is a lot of talk about Fintechs disrupting Banks in this epic battle. and I actually don’t think that’s ever going to come. Because Fintechs are merely trying to be a new kind of financial institution in partnership with existing ones. These are truly two sets of institutions that we deeply admire. The third one interestingly is Nike. Gaurav comes from apparel background, worked closely with Nike and Phil Knight was a GSB alum and endowed the entire campus that we studied in for two years. And I think, the kind of resilience and the doggedness the culture that he built at nike, is just phenomenal. it is one of the few companies that it says has the set of principles and values and actually lives by them even if sometimes those values puts them at odds with the larger trends or an ecosystem and we have a lot of admiration for what they have achieved both as a business obviously but more importantly as the org and a culture.

Rajeev Ahuja

I think Phil Knight’s book, Shoe Dog is one of straight from the gut literarily. Really really appreciate your time and more importantly your candor. I know both you and Gaurav have been very open about your challenges, you have shared with wider community. It takes a lot to do that. It takes a lot to do that only when you have internalized this thing first yourself. I really. at the start of this conversation, I said, you are more interesting now that you were 2013- 14-15, when the whole world feted you. And deservedly so. Because I think, having gone through this and having learnt some lessons, which are actually your own. Is perhaps the best equity and the best alpha as you said you can create. The opportunity is not going to go away and I truly believe that the Pandemic has changed the slope of the curve substantially. And the opportunity is becoming more clear and you can pick and choose what you want and then you can build your capabilities over the long period of time. And I think, these lessons, these insights are tremendously valuable. As we look at ourselves as well, we are still a very young organization in the scheme of banks in India. We still have lots to go through and many resonate with us too. And I hope that what you have been able to share and go through, is something we all can learn including young companies which I think are going to be building better and bigger future of India. Really appreciate Shashank. And, more power to you and more power to Gaurav and more power to all the people at Capital Float to continue building on this and continue learning and inspiring all of us. Thank you so much.

Sashank Rishyasringa

Thank you so much Rajeev. It was really a pleasure talking to you today.