1/ We love *Spend lines* at @Stellaris_VP, and have recently invested in two i.e. @GoKiwiNow and other’s still in stealth.
I remember me and @jindalprateek87 being completely blown away the first time we heard it in 2018 at Ola FS. A #fintech thread 👇
I remember me and @jindalprateek87 being completely blown away the first time we heard it in 2018 at Ola FS. A #fintech thread 👇
2/ Definitions first:
Spend line is a credit line designed to drive convenience for daily /weekly spends, while Lend line is a credit line or credit designed to drive affordability or liquidity in times of need.
Spend line is a credit line designed to drive convenience for daily /weekly spends, while Lend line is a credit line or credit designed to drive affordability or liquidity in times of need.
3/ Some examples:
Spend line examples include neighbourhood grocer Khaata, Credit card, BNPL (Eg. Paytm Postpaid, Simpl).
Lend line examples include Personal loans, EMI cards (Eg. Bajaj), Credit card EMI, Pre-approved bank lines, Debit card EMI, PL lines (Eg. CRED Cash).
Spend line examples include neighbourhood grocer Khaata, Credit card, BNPL (Eg. Paytm Postpaid, Simpl).
Lend line examples include Personal loans, EMI cards (Eg. Bajaj), Credit card EMI, Pre-approved bank lines, Debit card EMI, PL lines (Eg. CRED Cash).
3/ I'm oversimplifying, but below are core differences between the two:
Spend line drives convenience, Lend line drives affordability.
Spend line is for high frequency expenses, Lend line is low frequency.
Spend line drives convenience, Lend line drives affordability.
Spend line is for high frequency expenses, Lend line is low frequency.
4/
Spend line has end use visibility, Lend line may or may not.
Spend line often is low ticket, Lend line is high ticket.
Spend line has higher approval rates, Lend line has lower approval rates.
Spend line has end use visibility, Lend line may or may not.
Spend line often is low ticket, Lend line is high ticket.
Spend line has higher approval rates, Lend line has lower approval rates.
5/
Spend line is continuous underwriting, Lend line is discrete interval underwriting.
Spend line can be sold without explicit need, Lend line is strictly need based and sold at point of need.
Spend line doesn't lead to AUM build up, Lend line leads to AUM build up.
Spend line is continuous underwriting, Lend line is discrete interval underwriting.
Spend line can be sold without explicit need, Lend line is strictly need based and sold at point of need.
Spend line doesn't lead to AUM build up, Lend line leads to AUM build up.
6/ Spend line's primary purpose is to drive frequency, approval rates and GTM more broadly, while Lend line drives profitability.
Spend line can target a wider audience including New to credit given the lower capital-at-risk, Lend line however can be only offered selectively.
Spend line can target a wider audience including New to credit given the lower capital-at-risk, Lend line however can be only offered selectively.
7/ Some examples from India and outside:
Credit card is spend line, Credit card EMI is lend line. Former is 66% of AUM, the latter is 33%.
More details for the interested:
Credit card is spend line, Credit card EMI is lend line. Former is 66% of AUM, the latter is 33%.
More details for the interested:
8/
Paytm Postpaid is a spend line, Paytm PL is a lend line.
Amazon Pay Later is a spend line, Amazon EMI is a lend line.
CRED flash is a spend line, CRED Cash is a lend line.
Paytm Postpaid is a spend line, Paytm PL is a lend line.
Amazon Pay Later is a spend line, Amazon EMI is a lend line.
CRED flash is a spend line, CRED Cash is a lend line.
9/
AliPay Huabei is a spend line, Alipay Jiebei is a lend line.
AliPay Huabei is a spend line, Alipay Jiebei is a lend line.
10/ To summarise, the two key reasons we like Spend lines is because of the ease of GTM and high frequency of use. Former drives efficiency and scalability of the acquisition funnel, while latter drives relevance and aids in cross-sell.
11/ I have found this framework of Spend line vs Lend line to be simple yet very powerful, and my hope is it helps budding fintech entrepreneurs - like it has helped me over the years, first as a fintech operator, and now as a fintech investor. <eom>
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