`Easy access to affordable financial services can be a game-changer for the millions of underserved Micro-MSMEs and bring economic prosperity for the economy as a whole. However, the Micro-enterprise universe in India is vast, diverse and heterogeneous with multi-faceted challenges. A one-size-fits-all approach would not work for this segment and the solutions need to be customized as per the specific needs of the businesses.'

Making Impact By Providing Financial Access To Underserved

The key to success for building impact ventures requires deep knowledge of life cycles of less-resourced customer segments and leveraging technology, data & stakeholders to address the gaps. The Women Entrepreneur India magazine had an interaction with Ms. Shweta A, CEO, ARTH. After the success of her first Fintech venture and strategic acquisition by Airtel Money, Shweta started ARTH as a Fintech venture with the objective to deliver affordable financial services to enable economic prosperity and wealth creation for millions of micro and small businesses in India. Apart from ARTH, Shweta is very passionate about plants & dogs, she also runs an indie dog care shelter for abandoned dogs. Here are some of the key highlights from the conversation.

Tell Us About Your Journey And What Inspired You To Be In The Micro-Capital Lending Sector?

I started ARTH in 2018 to provides short-term, faired-priced collateral-free (unsecured) business loans to micro-enterprises and self-employed entrepreneurs across India, with a focus on women-led businesses. Over the years, we have expanded our scope to serve more than 3.5 lakh individual customers, spread across 18,000+ Pin codes in India.

While I have always been inclined towards the development sector, my interest in leveraging technology to improve livelihood started with my project with ITC- e-chopal in 2002. The project was designed to connect farmers directly to buyers via the internet. It was built to reduce the intermediaries and hence add value to farmers directly. Even though the use of technology was at a very nascent stage then, working with the team at the rural centers helped me understand the inefficiencies of the informal economy and the many ways technology can play a part in improving transactions.

Post ITC, I got the opportunity to work with firms that were doing exemplary work in multiple areas such as financial services, payment systems, health, education, etc. Each of these experiences helped me understand the socio-economic nuances of the marginalized sector. More importantly, the long-term impact that availability of financial services such as low-cost credit can make in addressing the huge gap that exists in accessing the services.

While there are other players providing credit services, a huge credit gap persists in the market. With our unique tech-led offerings especially addressing the needs of the new-to-credit micro-entrepreneurs, we are sure we can make an impact.

Could You Briefly Describe Your Professional Journey?

I turned towards entrepreneurship post my journey in the UK at NCR in a global business role; it got me to look at last-mile banking models in emerging markets like Brazil, Peru, India, and Eastern Africa. At that time, we were trying to design and build technology that would work in underserved markets and uncharted environments to take banking deeper. While there cannot be a single solution for all; I worked on various solutions but one of my biggest achievements was an innovative first-of-its-kind Micro Deposit Machine ("Tijori"); developed for the Indian market in 2008-09 to solve the problem of Financial Exclusion. It was the first time that I had taken a product to market. Tijori was a tabletop, single-note deposit, bio-metric enabled, contactless, UI screen, the battery-powered machine that was not available anywhere else in the world. From there, the space of Digital Financial Inclusion became my primary area of work and in 2010, I left my corporate job & came back to India to directly work in this sector. During the last 11 years, I have had a rich experience of working in senior operating roles for leading digital players in the sector like Fino and Airtel Payments Bank as well as having seen my first startup, YTS get acquired by Airtel money.

Could You Explain How Arth Happened?

ARTH is a technology-first Micro-MSME finance company established in 2018 with the primary purpose of increasing access to affordable credit for the underserved sector.

As I mentioned before, I have worked for several years at the grassroots to implement financial service solutions. I witnessed the snowball effect that the availability of low-cost credit can have on micro-enterprises in India. For instance, let us look at a woman running a handicraft shop from her home in Rajasthan in need of credit to buy raw material to grow her business. Traditional financial institutions will be out of reach for her for many reasons. However, credit support at the right time increases her chance to improve her business manifold and as a result improve the living standard of her family. At ARTH, we want to reach people like her.

According to industry estimates, there are nearly 63 million MSMEs and more than 99% of those are micro-enterprises. Access to credit, however, continues to be limited especially to micro-enterprises and businesses which account for nearly 60% of the economy and employment, since India is largely an unorganized retail market. These customers do not have formal records of their business transactions and business establishments which results in typical issues of information asymmetry and exclusion.

At ARTH, our theory of change is built on the premise that if financial access in the form of fair priced and timely capital is given to an entrepreneur, it can bring viable returns on business and thereby have a positive impact on the income and economic prosperity for the household and economy as a whole. ARTH's customer needs a financing partner who understands their occupation business cycle, doesn't demand their bureau and income tax records and can still give them flexible micro capital for short term financing needs.

To solve this problem, ARTH employs advanced technology to source and analyze data of potential customers across social, economic, health and business sales information to assess their creditworthiness. It uses its proprietary credit engine and digital lending platform to generate & digitally offer the best Flexi credit to the customers.

What Are The Plans For Arth?

At ARTH, our key focus has been to create impact through access to affordable financial services to enable economic prosperity and wealth creation for millions of micro and small businesses in India. We, today have more than 3.5 lakh unique customers and have a first-of-its-kind lending proposition that is easy to scale. We are aiming to reach a million customers in two years and are on track to achieve the same.

“Our theory of change is built on the premise that if financial access in the form of fair priced and timely capital is given to an entrepreneur, it can bring viable returns on business and thereby have a positive impact on the income and economic prosperity of the household and economy as a whole.”

Our first goal is to create impact through expanding access to affordable credit to a wider population of micro-MSMEs.

The second goal is to develop new tools which include financial planning, insurance, and account management tools that can further support micro-MSMES in digitizing their operations and facilitating their growth.

Finally, the third goal is to create a trusted technology-first MSME financing brand that is deeply embedded in the process design and experience of our products. These are my three goals as a CEO within the next two years which will also complete the five years for the company.

Ms. Shweta A, CEO, Arth

Shweta A. is a corporate professional turned entrepreneur who believes in building ideas into businesses at scale that directly contribute to the growth of impact & emerging sectors.