Actyv.ai Revolutionizes B2B BNPL Market in India, Bridging Credit Gap for MSMEs and Driving Financial Inclusivity

CXOToday has engaged in an exclusibe interview with Raghu Subramanian, Founder and Global CEO, actyv.ai

1. What are the major challenges facing MSMEs in India today?

Despite making up 30% of India’s economy, MSMEs are still struggling with a number of challenges. The most prominent one is access to credit. Indian MSMEs are currently facing a $530 billion credit gap, which hinders them from developing infrastructure, investing in technology, expanding teams, and upskilling. Traditional lending models do not cater to MSMEs and given that cash flow management plays a crucial role in their success, there is a need for flexible financial tools.

Another common challenge is regulation and organisation, especially given how fast MSMEs are growing. As they expand and develop, it is essential to have MSME data organised in a manner that makes it easy for Financial Institutions and distributors to access and leverage.

While the potential of MSMEs is vast, these barriers often inhibit them from reaching their full potential. In order to address this, it is important that we look for solutions that address the credit access and data management challenges and create opportunities for MSME growth and success.

2. How do you foresee B2B BNPL market growing in India, and what are some trends that you foresee?

B2B BNPL is a flexible financing tool that MSMEs need to get access to formal credit. Buy now, pay later (BNPL) has been a popular model in the B2C sector in recent years. However, its position in the B2B space has been steadily on the rise. It is transforming the way B2B transactions are conducted as it paves the way for responsible and sustainable financial options. This has tremendous potential to drive growth and promote financial inclusivity.

Essentially, B2B BNPL solutions offer businesses the ability to make purchases and pay for them over a period of time. This is a flexible payment solution that enables MSMEs to conserve cash, making it easy for them to access credit. Given this model is fast gaining popularity, there are three distinct trends I foresee.

1. One crucial aspect of B2B BNPL is the need for industry-specific solutions that will address unique payment problems. For example, industries dealing with global trade often require specialized payment terms, in order to deal with cross-border complexities. Various providers are now working on developing BNPL solutions for the insurance and e-commerce industries, that combat this issue. By offering industry-specific BNPL options, businesses can better align payment processes with their specific needs, fostering growth and improving cash flow management.
2. Embedded finance is another integral trend, with providers increasingly integrating their offerings directly onto their platforms. By embedding BNPL solutions into existing systems, providers can gather more sophisticated data, streamline transactions, and deliver a seamless user experience. This integration enables businesses to access BNPL services easily, simplifying the payment process and improving efficiency. Furthermore, this form of data collection can empower platforms to reduce the risk of manual errors and payment delays.
3. And finally, regulation – which is more a boon than a bane. Regulations can lead to more transparency, increasing trust in BNPL as a payment method for businesses, eventually leading to long-term gains. With B2B spending accounting for a large part of the financial services sector, businesses are seeking ways to ensure secure and streamlined payment solutions. Regulated BNPL can provide the simplicity and flexibility that are required to process B2B payments efficiently. This can address concerns of risk management and offer secure and compliant solutions.

In my view, B2B BNPL can revolutionize cash flow management, unlocking new opportunities for businesses across the globe. And with the Indian BNPL market predicted to hit $45-50 billion by 2026, the B2B sector holds substantial growth potential, especially with MSMEs.

3. Could you elaborate on what actyv.ai does and how the growth has been in India so far?

actyv.ai was co-founded in 2019. We are an AI-powered enterprise SaaS platform with embedded offerings. We focus on building Go To Market (GTM) efficiencies for enterprises by onboarding their supply chain partners, evaluating and qualifying their channel partners, enabling capital for growth for them and mitigating business risks. We enabled our embedded finance platform in November 2022 to help small businesses get easy access to working capital, while providing banks with qualified MSME data to extend innovative embedded finance credit programmes. Our game-changing solutions are transforming the B2B supply chain by democratising financial inclusivity. Since our inception, actyv.ai’s BNPL throughput has crossed $1 Billion. Given that out of over 64 million MSMEs in India, only 14% have access to formal credit, we’re helping bridge this $530 billion credit gap by providing flexible and inclusive credit and insurance.

We are truly a category creator, given that no other business operates in this space at this level. On a single platform, we bring together enterprises, their supply chain partners, Financial Institutions (FI) and Insurance organizations, and use technology to enable seamless interactions – thereby transforming the entire supply chain ecosystem. We’re a one-stop-solution for a diverse range of industries, including FMCG, pharma, energy and utilities, agriculture, infrastructure, and auto.

Through our partnerships with financial institutions, we are enabling enterprises, suppliers, distributors and retailers to grow. Some of our products on the platform include –

• actyvGo – Hassle-free digitized partner onboarding and offboarding.
• actyvScore – An AI-driven multidimensional score to find the right business partner.
• actyvPayLater – Access to purpose-based BNPL payment options for distributors, retailers and suppliers.
• actyvInsure – Bite-sized insurance options for distributors and retailers.

4. How does actyv.ai leverage Artificial Intelligence?

We leverage Artificial Intelligence

1. a) For credit scoring and risk assessment,
2. b) To detect Fraud through advanced algorithms which call identify patterns and anomalies in loan applications and transactions
3. c) In regulatory compliance, by spotting non-compliant activities and minimizing errors
4. d) By predicting customer behaviour and default risks through machine learning algorithms. Lenders can now proactively identify potential delinquents and take preventive measures.

Our product actyvScore leverages Artificial Intelligence to create a comprehensive score and business health report of a supply chain partner. We do this by automating the analysis of financial & non-financial data, and it can then be used for the following –

• IT, GST & banking triangulation
• Financial & non-financial data correlation
• Growth potential appraisals
• Any industry-agnostic holistic evaluations
• digital, insurance and ESG health scores.

This in-depth report serves as a valuable resource, empowering businesses to make informed decisions about which partners to choose and enabling financial institutions to offer credit access, thereby helping the supply chain drive growth.

We have multiple clients leveraging actyvScore – Dabur, Perfetti van Melle, Nivea, Britannia and Repos Energy to name a few.

5. Which partners does actyv work with?

The customers on our platform range from Bajaj Auto, Britannia, CavinKare, Dalmia Cements, Adani Wilmar, Nivea India, Mondelez, Perfetti van Melle, APL Apollo, among other leading businesses in India. We also have over 30 financial institutions, such as Axis Bank, Kotak Mahindra Bank, Tata Capital, Aditya Birla, and Bajaj Finserv, renowned insurance organizations like Kotak General Insurance and HDFC Auto, as well as key GTM partners like PwC and Grant Thornton.

6. What are the company’s future plans?

We are currently in the process of expanding our operations in Sri Lanka, Bangladesh, South-East Asia, the Middle East, and Africa. We aim to tap into new markets and provide our cutting-edge embedded offerings to a broader base.

We are also planning to extend our lending product as a standalone Digital Lending Platform, catering to the needs of banks and NBFCs