Citi Has Invested In Indian SaaS Firm Lentra As It Prepares To Go Global
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India made a name for itself in the tech world years ago as a major hub for business process outsourcing. Business process outsourcing has evolved into a new form of outsourcing in fintech, known as embedded finance technology. Lentra, an Indian fintech company that uses embedded AI, has raised $60 million in Series B funding, according to D Venkatesh, the company's founder and CEO.
Citi Ventures, a Citigroup subsidiary, has invested in the company in addition to Bessemer Venture Partners and the Susquehanna International Group, which led the round. It is valued at over $400 million," he said. The investment banking giant's subsidiary Citi Ventures is participating in the round as well.
Citi Ventures’ first fintech investment out of India is indicative of how far the fintech and embedded finance ecosystem has developed in recent years. Lentra has expanded rapidly in recent years. In 2019, its first year of operation, it garnered $1 million from its “annual consumption rate”--meaning the amount of money Lentra makes based on the number of API users—of $1 million.
As of this year, that number has grown to $10 million and is expected to reach $100 million in 2024. Lentra powers digital loan services for commercial banks in Mumbai, India. HDFC Bank, Federal Bank, Standard Chartered, and IDFC First Bank are some of its customers.
Since its debut, Lentra has processed over 13 billion transactions and $21 billion in loans. Speaking of Lentra's growth, Venkatesh admitted that the startup did not recruit a salesperson until April of this year. Others, including a number of fintechs, have thrown their hats into the ring to work alongside rather than overthrow and revolutionize legacy financial services providers, which have found themselves unable to keep up with innovation from more nimble, technology-based competitors.
“Our mission is to assist our clients, banks, in lending better, delivering more digital services, and enhancing every aspect,” Venkatesh said. All banks around the world have the same characteristics. Banks want to provide more loans to more potential borrowers and compete better against digital-first business by moving to digital platforms.
Banks have had their feet burned repeatedly when they move to digital platforms to scale and compete better. They need better technology to evaluate borrowers and predict how much money they might earn (and lose) as a result of scaling in order to avoid taking on too much bad debt.
Lentra Lending Cloud gives ready-to-use third-party API connectors to various data sources, as well as a Loan Management System (LMS) and a no-code Business rules engine (BREx) that clients can use out-of-the-box, in addition to a no-code Business rules engine (BREx) with modules for clients to use out-of-the-box.
It also has a platform, GoNoGo, in which banks can determine whether to grant a loan after receiving an application. In India, 90% of loan frauds are perpetrated by impersonating someone with a superior credit history to get a loan quickly, as a result of ID theft.
Lentra uses AI to cross-reference data to find potential frauds. As a result, banks will be more inclined to forego an underperforming asset or bad loan if you solve ID theft fraud," the founder said. Banks have only been able to reduce the loan processing time to six to seven days, according to Lentra’s CEO, who has reduced it to mere seconds.
Despite the fact that several startups are trying to make it less difficult for banks to lend money, Salesforce is one of Lentra's biggest competitors when it comes to loan origination. Because of this, Lentra considers Salesforce as its primary competitor when it comes to loan origination.
Citi wants to latch on to Salesforce users in India, as well as utilize the country's tech ecosystem to expand its business globally. Lentra is the first fintech investment in India, and we are very pleased with the team's ability to develop and scale low-friction software solutions for lenders," said Everett Leonidas, Director & APAC Investor for Citi Ventures.
As a global bank, we're looking forward to seeing Lentra's products and platform grow internationally. We can also look forward to updating our platform, adding new features, and making it more secure and faster as a result of this funding.
In addition to expanding across India and establishing its business beyond the country, Lentra plans to expand its operations to Indonesia, the Philippines, and Vietnam, starting in Asia. The founder anticipates establishing offices in the three new countries by January.
Lentra has already established its presence in Singapore by acquiring TheDataTeam, an AI company that had an office in the city in June, which will now become the vehicle for expanding into ASEAN countries. Lentra plans to acquire complementary businesses in addition to improving the service and expanding the company.
The founder says that he plans to acquire businesses in three categories: robotic process automation, payment systems, and non-regulated entities, or statistical modelling or heuristics modelling in statistics. “Lentra has empowered lenders to bring the dreams of millions to life with effective financial inclusion and credit decisioning,” said Vishal Gupta, Partner at Bessemer Venture Partners.
“We were impressed with the technology and commercial value that Lentra brings to their customers. We look forward to assisting them achieve their mission of becoming the most trusted and sought-after cloud-native digital lending platform, allowing clients to democratise credit by equitably assessing and processing loans in a timely manner.”
Venkatesh said that HDFC Bank chose not to invest in the most recent funding round, despite the fact that it is a shareholder of Lentra. According to him, the Reserve Bank of India's policies regarding holding more than 10% of an unrelated company's shares were the reason why the bank did not invest this time.
The startup has its biggest market in Mumbai, followed by Delhi, Chennai, and Bangalore. It has a workforce of 500 employees, which will expand to 800 to support its future plans.