Can loans to low-income customers be delivered fully digitally, with no people or paper involved, while still protecting customer interests and maintaining portfolio quality? Enter x-techs.
A digital-first MFI built for scale
Avanti Finance (a member of CGAP’s ABERA cohort) is a digital-first non-banking financial company that aims to make financial services affordable and accessible to the next 100 million households in India by 2032. Their products include agriculture and livestock, small business, and earned wage loans to low-income customers in both rural and urban areas. Their loans – primarily in the 10,000-80,000 INR (about 115 to 920 USD) range – are offered at an average annual interest rate of 26% (compared to an industry average ranging from 22-28%). Around 90% of borrowers are women, with 60% new to credit (NTC).
Avanti partners with organizations that have strong relationships and deep knowledge of local communities, their livelihoods, and financial services needs to identify, onboard, and serve their customers. Partners are varied and include NGOs, community-based organizations, and microfinance institutions (MFIs) leveraging the latest technologies to meet their business goals. This also includes x-techs – companies in any given sector that leverage the latest technologies to carry out their work/ activities.
Leveraging technology throughout the paperless, physical presence-less loan disbursement process translates to operational and cost efficiencies for Avanti and its partners and better experiences for the customers they serve. The technology is built to facilitate a fully digital onboarding process which, through an agent-facing app, allows for quick data and identity verification without a need for hard copies of any Know Your Customer documents. It leverages Aadhaar (India’s ubiquitous unique digital ID system), universal bank account ownership, and other components of the nation’s digital public infrastructure for a paperless experience. Loan agreements and communications are also digital, eliminating the need for paper.
Thanks to its strong tech and partner infrastructure, Avanti does not need to establish brick-and-mortar outlets and can keep its workforce lean, especially in the field—Avanti serves over 583,000 customers across 26 states with less than 200 employees. Staff at Avanti’s partner organizations act as Avanti’s agents—equipped with the Avanti app, they engage with customers and play an important customer-facing role.
Loan disbursements are 100% digital, deposited directly into the customer’s bank accounts, while repayments are 35% digital, compared to the industry average of 15%. For ease of digital repayments, each user has their own unique QR code which they receive via WhatsApp or as a PDF through SMS (depending on the customer’s phone ownership profile) through which repayments are made. Those who prefer to make cash repayments can do so through an agent or at specific locations. Customers who are skeptical about but not comfortable making a digital repayment on their own can do so in the presence and under the guidance of an agent.
All of this means that Avanti realizes time and cost efficiencies in both operations and collections.
The technology has been built for scale from the get-go, making it cost-effective and easy for Avanti to scale through new partnerships. This will enable them to grow their portfolio but also expand into geographies to reach new customers, many of whom may be NTC, therefore bringing more people into the fold of formal credit.
What customers say about the experience
Avanti’s technology is set up for individual lending (all loans are individual loans) even though loans originate through group constructs leveraging Avanti partners. This means customers are not limited to a single joint liability group product. Customers from the same MFI or livelihoods group can access individually tailored loan terms based on their needs and credit history. As long as Avanti continues to co-create with its various partners, the customers will benefit from having products designed to truly meet their livelihood needs and matched to their cash flow realities.
We heard through focus group discussions customer appreciation for the time and cost savings the paperless loan application process affords. One woman shared that with other MFIs, simply obtaining a hard copy of the required family photograph meant spending half a day traveling to and from a printing shop, losing income for the day, and paying 300 INR (about 3.50 USD) plus transport costs.
Why partners see value too
Efficiencies for Avanti translate to efficiencies for partner organizations. One of Avanti’s partners, an MFI, said that the paperless process helps them reduce stationery costs and lets them work out of a smaller office, given there are no paper files to store. Avanti has taken a user-centric approach while factoring in the realities of the operating environment, resulting in improved experiences and efficiencies.
Avanti’s technology meets people where they are, with what they have – their app runs on an Android phone, unlike other MFIs’ apps that require a dedicated tablet. Not only does this contribute to partners’ cost efficiencies, but it also eases the burden of adopting new tech.
One partner praised the functionality of both the Avanti app and management information system which enables them to better serve their customers. The technology integrations enable agents to quickly verify documents, resulting in quicker loan disbursals. The app being on their phones allows them to independently problem-solve and resolve customer queries, strengthening customer trust as a result.
Avanti’s mobile app’s UI/ UX has been designed with the user at its core, making it easy for them to use. This translates to reduced new partner onboarding and field officer training time, contributing to overall efficiency.
What this means for inclusive finance
Avanti’s experience offers a compelling response to the questions posed at the start: yes, loans to low-income customers can be delivered digitally — with minimal paper or in-person interaction — while still protecting customers and maintaining portfolio quality. But doing so requires intentional design, ongoing user consultation and engagement, and investment in digital and financial literacy. Avanti’s approach also aligns partner incentives, encouraging digital repayment through commissions that reduce the cost and risks of cash handling. These efficiencies don’t just benefit the provider through a lower cost of capital — they bring more competitive rates for borrowers. For the inclusive finance sector, the takeaway is clear: scaling responsible, digital credit for underserved communities is possible when technology and customer-centricity are combined.
