76 ECHELON.LK OCTOBER 2020
H
Meet The
HatchX
seven
These fintech startups
are on a mission to
improve financial
inclusion
BY JASON DIAZ
OCTOBER 2020 ECHELON.LK 77
I N N O V A T E
F I N T E C H
78 ECHELON.LK OCTOBER 2020
They are doing this
with solutions for
affordable payment platforms, cheap credit
on favourable terms, better price discovery,
insurance for all, and making the unbank-
able, informal segments of the population
bankable.
Financial inclusion is key to sustainable
growth because it reduces poverty and ine-
quality, helps people invest in the future,
manage shocks, and smoothen household
consumption. While Sri Lanka is ahead of
its South Asian peers in most inclusion indi-
cators, significant gaps remain, according
to a 2020 World Bank Group report.
Bank branch density was 17 per 100,000
people, compared to the regional average of
10. However, 26% of adults made no depos-
its or withdrawals in a year. Only 29% of the
adult population had savings, and 17% had
loans. A 2018 National Financial Inclusion
Survey quoted by the report found that 48%
of respondents borrowed from informal
lenders at high interest.
HatchX organised a demo day for these
seven companies that qualified to join its
programme. Launching in March 2020, 18
fintech startups hoping to join the acceler-
ator programme underwent an intensive
selection process. Founders had to demon-
H A T C H X , S R I L A N K A ’ S
F I R S T F I N T E C H S T A R T U P
A C C E L E R A T O R , I S
S U P P O R T I N G S E V E N
C O M P A N I E S A T T E M P T I N G
T O I M P R O V E F I N A N C I A L
I N C L U S I O N .
strate a sound grasp of business fundamentals, and
their companies had to show exceptional potential
for growth and impact.
Typically, a startup accelerator attempts to com-
press the life cycle of an innovative company from
several years to just a few months through a pro-
gramme of intense, rapid, and immersive education,
mentorship, testing and refining strategy, and finally,
preparing founders to raise early-stage funding.
Endorsed by the Central Bank and Fintech
Association of Sri Lanka, HatchX brought together
major stakeholders in Sri Lanka’s financial industry
to take on advisory and mentorship roles. It will also
facilitate funding for these seven startups that made
it through the selection process.
HatchX is a collaboration between Hatch, an
enterprising co-working space, startup accelerator
and incubator, an alliance of early-stage investors
in startups Lanka Angel Network and the U.S.-based
Ford Foundation.
OCTOBER 2020 ECHELON.LK 79
AFFORDABLE PAYMENTS TECH: Despite 23.5 million debit cards
and 1.85 million credit cards in circulation, Sri Lanka is still a 95%
cash-centric market. Issues start to arise when you look at the fees.
The cost of deploying payment gateways, payment apps, or credit
card terminals, is too high. All of these costs are detrimental to the
growth and success of small businesses. What we are looking to do
is to support the economy by providing a complete digital payment
ecosystem at reasonable costs.
Businesses utilising DirectPay will find it is one of the most cost-ef-
fective, real-time payment modes with the ability to monitor daily
transactions and reconciliation through the dashboard or merchant
app. Payments to suppliers can easily be facilitated with a click of a
button through DirectPay’s fund transfers even if the suppliers hold an
account in a different bank. We work with most banks in the country
through CEFT and JustPay under the guidelines of the Central Bank.
Using our VPOS (Virtual POS), the merchant can generate a payment
link and send it to their customers via an email, SMS, WhatsApp or
any other similar method.
Customers can make payments with ease, transfer funds by scanning
the recipient’s QR code, make seamless payments at checkout, leave tips,
split bills and pay merchants in 4 simple steps - Login, scan, enter the
amount, confirm. Going cashless has never been easier as is testament
to the over $1 billion in total transactions made in a mere 14 months.
K A N I S H K A W E E R A M U N D A
U R M I L A C H A N D R A S E K A R A M &
K U K A R A J T H A R M A S E G A R A M A
C O - F O U N D E R / C E O O F D I R E C T P A Y
C O - F O U N D E R S O F A L G O R E D G E
IMPROVING CREDIT PROFILING: Small businesses
and low-income individuals are disadvantaged by
conventional credit evaluation methods followed by
lending institutions. Chinks in customer risk assess-
ment processes by banks and financial institutions in
emerging markets have led to over $1 trillion in bad
debt. In Sri Lanka alone, the non-performing loan ratio
was 4.7% in the banking sector, while the non-banking
sector reported a ratio of 9.6% and climbing. The proper
identification of borrowers is critical from both sides
of the transaction - correct identification allows for
lenders to mitigate the risk of non-performing credit
while allowing for better rates for, and less collateral
to be put up by, borrowers. However, the method of
assessing a borrower in Sri Lanka follows very out-
dated processes. Typical data banks look at does not
offer enough information on the real creditworthiness
of a borrower, not to mention the introduction of errors
of the human component of the assessment. This neg-
atively impacts the economy due to the individuals
and organisations poorly assessed being refused credit.
To mitigate this we developed a machine-learn-
ing model that gets implemented within the bank’s/
financial institution’s system - to ensure that data
is secure - that processes big data from both tradi-
tional and non-traditional sources. This non-traditional
data would be sources of information that appear to
have no direct correlation to assessing a borrower,
but in reality, requires a large amount of data to be
processed to make sense. This data will be what the
banks already have in hand, such as data collected
during KYC, data on customer interactions, publicly
available information (social media) and data shared
with the provider via third parties like CRIB. While the
processing of big data in this scenario is by no means
a new thing, we offer a model that is adaptable and
able to learn trends to provide the most accurate risk
assessment possible for our clients’ needs.
I N N O V A T E
F I N T E C H
80 ECHELON.LK OCTOBER 2020
HASSLE-FREE, LOW-COST LOANS: If
you were to apply for a small to medium
loan from a bank, there are a multitude of
pain-points that a borrower will have to
go through, namely the sheer amount of
documentation and the very high-interest
rates. And with the state of the economy, as
it is, salary advances for employees has also
become a task that employers are finding it
difficult to allocate budgets for. Helios P2P is
Sri Lanka’s first peer to peer lending platform
that is looking to remedy these issues by
connecting private investors with borrowers
over an online marketplace at extremely
competitive rates.
The three products in our portfolio
are Helios Public (HP), Helios for Leading
Organisations (HELO) and Helios for
Registered Organisations (HERO). HP was the
first product introduced where any member
of the public, with the submission of their
CRIB report, can gain access to short-to-me-
dium credit from our marketplace of inves-
tors at interest rates unmatched by banks
and other financial institutions. HELO was
the next product which does not require the
iCRIB report that HP does but is based on the
documentation supplied by the employee.
And finally, HERO where we engage directly
with the HR departments of the relevant
organisation to understand when the sal-
ary cycles run. The risks to lenders on the
platform is mitigated by Helios’ proprietary
credit rating system, auto-debiting on salary
date, and agreements with debt collection
agencies in the case of defaults.
MAKING THE UNBANKABLE, BANKABLE: The bottom of
the pyramid, the poorest two-thirds of the human economic
pyramid has never had access to financial services in terms
of borrowing. We have a lot of banks, finance companies and
microfinance companies, but when it comes to lending out
to people who are earning money in cash or on an infrequent
basis, these financial institutions still require payslips to qual-
ify for credit. Your average ride-hail driver gets paid regularly
which might amount to more than what a white-collar person
might earn, but because the transactions aren’t all aggregated
and they can’t prove where they earned the money from,
they end up being locked out of formal financial services. This
results in daily-wage earners having to resort to questionable
microfinance companies or loan sharks.
OGO Pay looks at targeting two-sided platforms, ones that
have a supplier and a buyer, or ride-hailing services, hotel
bookings etc. We first facilitate the incoming payment from
the buyer to be as seamless as possible, but we also give the
platform the option to pay out to the supplier, the riders,
drivers, hotels etc. daily with minimal fees. The added ben-
efit of this is since we know what funds are flowing into the
platform, we can offer an alternative to a payslip complete
with income history. This opens up the possibility for the
bottom of the pyramid individuals to gain access to financial
services they would not have had otherwise.
Another feature that we are working on is the option for
suppliers to choose how to accept their payments. Since we
control the inflow of funds right at the source, we can give
them the option to either save to a high-interest savings
account, invest, or if they already have a reducing balance
loan in place, they can choose to pay it back daily. We are
looking to be a company that helps its users create wealth.
N U Z H I M E Y E N
C E O O F O G O P A Y
I M E S H L I Y A N A G E
C O - F O U N D E R / C E O O F H E L I O S P 2 P
OCTOBER 2020 ECHELON.LK 81
FAVOURABLE CREDIT TERMS: iLoan
is what you would call a trade connec-
tor company. What we are trying to do is
bridge the trade-credit gap in the market
which is a $2 billion issue. We get those
who are underrepresented in the system
due to the lack of KYC and collateral, and
with our blockchain-based product, we
connect them and create transparency to
the lenders to access these creditworthy
borrowers. Through this, we have been suc-
cessful in registering 13,000 users in a year
and having a loan book of over $800,000.
In the FMCG (Fast Moving Consumer
Goods) sector, most of the small retailers
have a very limited working capital to
buy products from these multinational
companies. What we do is we partner up
with these multinationals and target a
segment of the creditworthy retailers they
have who have no access to credit. We
then go with their sales representatives,
onboard them, and the credit we extend
them comes in the form of the goods. We
incentivise retailers to buy a higher margin
and based on that, we pay the supplier
what is due, on the due date on behalf of
the retailer. The retailer then pays us back
a week later with an applicable interest
rate which is comparable to a temporary
overdraft facility. This allows these small
retailers, the mum & pop shops to extend
their working capital, to gain some breath-
ing room and grow their business.
C O - F O U N D E R / C E O O F I L O A N
L A K S H A N D E S I L V A
I N N O V A T E
F I N T E C H
82 ECHELON.LK OCTOBER 2020
Top r o w (L-R)
Sh y amal A dik ari, K alana M eneripitiy a, Nuzhi M e y en,
M iddle r o w (L-R)
Imesh Liy ange , Urmila Chandr asek ar am, Lak shan De Silv a,
K uk ar aj Tharmasegar ama,
B o t t om r o w (L-R)
Sanchitha Silv a, R andhula De Silv a, K anishk a Weer amunda
OCTOBER 2020 ECHELON.LK 83
INSURANCE FOR ALL: Daily-wage earn-
ers and gig-workers are a segment of the
working population that is poorly covered
by health insurance schemes. Simple acci-
dents on small jobs can lead to massive
costs that these workers simply cannot
afford. Nor are they able to afford the high
premiums that come with your typical
health insurance policies that are availa-
ble. Smart Insure looks to bring peace of
mind to this class of workers by offering
microinsurance solutions for different
industries at affordable rates, increased
transparency and streamlined ease of use.
A partnership with FastFix, a startup
which is, in essence, the PickMe for hand-
ymen, is in the works to offer either a sub-
scription-based or job-based life insurance
cover. This policy will allow coverage for
on-site accidents that are commonplace
in the handyman trade. Another segment
we are looking at is in farming. We aim to
introduce an insurance policy that covers
everything down to the seed. It will offer
farmers some form of security during
periods of drought, for example. We have
already partnered with Hutch and Allianz
to enable a per-day insurance cover for
the entire Hutch base. We introduced a
Hospital Cash Plan as well as life insurance
coverage which prepaid customers can
pay per day, and postpaid customers can
pay per month.
F O U N D E R / C E O O F S M A R T I N S U R E
S H Y A M A L A D I K A R I
C E O O F F I P B O X
K A L A N A M E N E R I P I T I Y A
KNOW YOUR FDS AND WHERE TO INVEST: The Sri Lankan fixed-de-
posit and loan market is valued around Rs. 17 trillion and during the past,
despite having so many banks and financial institutions, we have seen
institutions collapsing and people having trouble getting the returns or
capital from the fixed deposits they have placed. This all happens due to
poor financial literacy where people look at either the high-interest rates
offered or more personal reasons. They usually do not refer to publicly
available credit ratings (ICRA and Fitch) because to a layperson who would
want to know this information, they would have to talk to over 60 banks
and financial institutions combined. Even if they resort to a simple internet
search, it would still be difficult since some institutions have poor SEO.
Fipbox is a platform for the fixed depositors, where they can visit the
website and find the rates being offered in the market across the board
with the relevant security ratings. 14 institutions with us update this
information via the backend, and another set of institutions whose rates
and security ratings we source from the internet, is being updated daily
and noted with a time & date stamp so you know these are the latest rates.
Users are also educated on the intricacies of fixed deposits, withholding
tax, commercial banks, specialised banks and financed companies. In
addition to this information platform, we have introduced the Fipbox
user base where we have one standardised information collection form.
This allows us to facilitate the information flow for a fixed deposit made
through our platform to the relevant fund manager with your consent.
This information will then auto-populate that institute’s form format.
One of the pain-points is KYC activity which requires the physical sig-
nature of the applicant, this is facilitated by a representative from that
respective institution.
In addition to this, Fipbox provides a dashboard highlighting your cur-
rent deposits, the present rates, and these are the upcoming renewals and
better rates in the market and their security ratings allowing depositors
to make informed investments.
I N N O V A T E
F I N T E C H