Exclusive Interview With OKCredit Founder: Find Out How OKCredit Is Empowering Small Businesses

OKCredit is helping small businesses and SMEs to manage their finances digitally, and decode the complexities associated with maintaining ledger, credits, invoices and more.

Recently we spoke with Harsh Pokharna, Co-founder & CEO, OkCredit about their vision, mission, and future plans.

Here is an excerpt from this interesting interview..

Tell us about OkCredit’s journey and what inspired you to establish this brand?

The idea to build OkCredit came from our own personal experience. We (the co-founders-Aditya Prasad, Gaurav Kumar, and Harsh Pokharna) used to buy groceries on credit from a nearby store, but settling it was a tedious process. The problem was in the way it was recorded – sometimes on the registers, sometimes on loose scraps of paper which led to a mismatch in our and the shopkeeper’s accounts. We realized that it wasn’t just happening with us but several customers visiting the store. There was a clear opportunity to build something that would help, not just the shopkeepers with record-keeping but customers as well. And thus, was born OkCredit.

To begin with, we managed to convince the shop owner to track our payment through OkCredit. Initially, the owner had his own doubts and concerns which we helped in solving by spending time to generate reports daily so that he could verify with this ledger book. After a few days of trial, the owner soon added a few other customers. The next step was to convert the existing accounting system into a format compatible with OkCredit. This happened after we sat down with the owner to add all his customers and their balances to OkCredit. There was no looking back for OkCredit after that, as the store instructed its employees to use the app for all transactions.

Talking about our journey, we have come a long way since the inception of OkCredit in 2017. Founded with an aim to move millions of ultra-small retailers from a traditional ledger-based system to a tech-enabled one, the OkCredit platform has been growing at a steady pace and has achieved over 20 Mn downloads to date. Currently, OkCredit has over 2.4 crore registered users on the platform of which 5.5 million customers are recording transactions on the platform. This includes over 100 types of businesses like Kirana store owners, mobile recharge shops, medical stores, and apparel amongst others across India. Also, 70% of the active merchants on the OkCredit platform record more than 10 transactions every day, and 15% of the active users on the platform are suppliers.

We registered over 800 million transactions on OkCredit’s platform in 2020 and that amounted to $40 billion worth of transactions capturing 0.5% of India’s GDP of $2.6 trillion in terms of the total value of transactions. OkCredit also added over 70 million new customers/merchants to the platform in 2020. The app can be accessed in more than 10 Indian languages.

The growth of OkCredit has mostly been organic. We started off working solely with grocery stores, which we got through referrals. Later, with an aim to make account management simple for all categories and supply chains, we started establishing ourselves leading to a rise in demand for our products across all market segments and geographical regions.

While OkCredit is present across 2800 locations in India, our strength lies in the tier-2 and tier-3 towns, wherein we have seen great adoption of our product as well as retention. We are helping small shop owners expand their business by assisting them to keep a track of their borrowers and get their credit back on time, without having to leave the shop. This has played an important role in bringing the SMB community back on their feet during the Covid times as we helped merchants get back their outstanding dues and thus restart their businesses.

Today, OkCredit has scaled up from a single product company to a multi-product company solving problems for different segments of the diverse SMB base. We have created an ecosystem of digital solutions for small businesses to help them manage their business tasks such as digital bookkeeping, staff management besides creating an online presence to compete with more organized players. 

We also identify the unique value of network effects in this and have also started pursuing that towards delivering more value to SMBs. We have raised $84.9 million to date from investors such as Lightspeed Venture Partners, Tiger Global, and Y Combinator.

How does the application work for small business owners and MSME?

OkCredit empowers small business owners such as small shops and neighborhood stores by digitizing their bookkeeping function through a simple and easy-to-access mobile app. OkCredit has been a pioneer in the digital bookkeeping sector, creating the category where none existed. The app not just helps small businesses to keep track of credit transactions – both payments and receivables, it sends timely reminders and makes it easier for them to collect and settle balance amounts quickly through an integrated reminder feature via WhatsApp and SMS.

Once a merchant registers a transaction on the platform in a customer’s name, the customer is simultaneously informed through text or WhatsApp. OkCredit app allows merchants to send collection notifications to customers in case of delayed or missed payments and enables credit payments digitally across the country.

To solve the trust problem, OkCredit allows end customers to view his or her outstanding balance with the merchant via a web page link, which also provides a monthly breakdown of credit purchases. This improves transparency in business transactions and facilitates a higher degree of trust among the participating individuals.

The application and its mechanism were developed in-house, please share insights on the technology that goes behind.

The entire backend tech stack that we use at OkCredit is Golang based system which is quite scalable. On the front-end, we are using Kotlin and RxJava and this has helped us. We also use the latest tools from AWS and Google Cloud to manage our data and backend infrastructure. Kubernetes and Docker have helped us automate a lot of development operations.

Enabling our users to keep using OkCredit even in areas with patchy internet connectivity, while still providing a reliable cloud backup has been one of the difficult problems we have had to solve. To solve this problem, we have been early adopters of Whatsapp business APIs. We are keen on using other tools and technologies which help us streamline our product design and development cycles. We use Mixpanel and BigQuery for our product analytics and data operations. Adobe XD, Miro, Product board are part of our Design and Product tool stack.

The app solves problems for small merchants on three fronts- productivity, cashflows and relationships. Small merchants usually record credit on registers or scraps of paper. It’s a time taking exercise both to record and look up this credit. The method is prone to errors with customers disputing merchants’ claims on several occasions. With the OkCredit app, it’s easy to record credit thus saving time and hassle for merchants.

In a competitive ecosystem, what keeps you afloat and unique for your consumers?

At OkCredit, our strength lies in the robust, feature-rich product that improves the transparency in business transactions and helps in building a higher degree of trust among the participating individuals. The app is completely free to access and ensures 100% safety, data security, and accuracy. 

OkCredit app has an impressive retention rate and generates positive word of mouth through merchants who have found the platform to be simpler and easy to use leading to a strong referral-triggered growth pattern. 

Talking to users and observing them while they used the product is the thing that keeps us afloat, on our toes and gives us a lot of insights into what they expect. It helps us keep our product relevant, updated and we keep enhancing it as per use case. In our very early stage, one of the users had asked for the payment functionality but we couldn’t do it at that point given our finite resources. We waited for more scale and our enhanced capability to come in to build this feature. Another early user, someone in his 50s was not willing to adopt the product, making us realize that we need to make it even simpler for older users to come in. 

Come to think of it, there were some highly satisfying moments for us, especially when users would call and express their delighted by using our product. I remember, a particular customer from Gujarat would call up every week saying “mazaa aa gaya, kya app banaya hai aapne” ( What a wow product you have built!).

With Flipkart, Amazon coming in, there was an aspirational change happening in these people. They had understood the power of digital and e-commerce as customers and now wanted to offer similar services to their customers by leveraging the power of mobile and internet technology.

What are the future plans for OkCredit and your outlook for 2022?

OkCredit is an innovator in the digital bookkeeping space, discovering the category and attracting the attention of VCs and other entrepreneurs in solving problems for SMBs in India. We were the first to prove that SMBs could be acquired for using an app without deploying feet on the street. 

Despite the covid pandemic, we continue to work towards solving some more problems for small business users. Our single-minded focus has been to empower the underserved SMBs by democratizing access to technology and capital for them. We strive to help them at every stage of their business cycle to enable them to grow their profits by going online and integrating with the growing digital economy. We have witnessed a steady growth since the unlock phase in 2020 and increased its workforce by over 80% in the last one year. Our user base has grown by 34% since March 2020. Transactions by active users on the platform have grown by 15%. The percentage of organic registrations are up by 3x when compared to the pre-pandemic levels. OkCredit is on a growth and hiring spree, to double the workforce by FY-22.  We are targeting to reach the 60 million+ SMBs, who are exploring digital business solutions more than ever.

What are your plans for investment in technology, will you add new features, applications, and services?

We have already made significant investments in technology and use some of the best software to power our data and analytics engine. Features and updates are a constant process at OkCredit, wherein we use customer feedback to design products and features they need. OkStaff and OkShop came as a result of us realising a need gap for our SMBs to go online and manage their staff attendance. We are in the process of testing more new features and products for SMBs that will help significantly in their day to day operations.

Besides, OkCredit has been an inherently viral product from Day 1. Whenever a customer receives a payment reminder, there’s a link where they can check the balance and transaction history with the merchant. We placed an install button there and later we also added the option to install OkCredit in the SMS alert themselves. And if you happen to be one of those customers who also runs a business, you might want to install it because you have seen the benefits first hand as a customer. Even if you are not a merchant, the word of mouth referral is very strong. This in-built virality has helped us a lot in ramping up our customer base.

We see the number of SMBs who will be interested in exploring digital solutions towards business objectives going up significantly in the coming years. Hence, we have scaled up from a single product company to a multi-product company solving problems for different segments of the diverse SMB base. Our new platform OkStaff aims to help small businesses in staff management while OkShop plays an important role in creating an online presence for small businesses to compete with more organized players. 

We are just a four-year-old startup, yet, we have witnessed excellent growth since the inception with merchants spanning 98% of the pin codes across the nation and active transaction recording from 90% of the pin codes every month. These merchants are across categories such as- Kirana, medical stores, mobile recharge, apparel, eateries, etc.

How does OkCredit use new-age technology – Like AI, ML and NLP, how does that benefit?

The main data asset of OkCredit is the commerce network and the activities such as sale on credit, payment, reminders, etc. that happen over the network. We work on this huge volume of data generated every day (~3M activity data points per day) using machine learning to allocate cashback, prevent payment frauds besides enhancing our understanding of users like their demography, suppliers, customers, etc. 

Our work on the huge volume of data generated on the platform also enables users to make informed product decisions, create business friendly features like automatic collection reminders for users and hence grow our user base. To this end, we validate the signals generated from the data through our research team. Sometimes, it also happens the other way round when the user research team comes up with the findings which are then validated through the data before commencing work on it. 

At OkCredit, analytics is used at each step. Even if there is a small change that needs to be made in the user interface, it comes through data that gives insights into the likely impact of the feature on the user such as fitment of the feature in the current user journey. Our analytics decisions are derived from our goals which then feeds into the company’s product or feature decisions. For example – if at a company level, our goal is focussing on retention, we would look at what type of users are retaining more, what’s the rate of their conversion, which category are they coming from, etc

Users engage with the app/digital solutions in different ways. We capture this data on Mixpanel and analyse it to make product decisions. This helps us to decide which features need to be pushed to which type of users. On the marketing side, it would be about targeting users that retain for the long term, using models that can predict this.

In data science, OKCredit has built models which can help in predicting B2B users. These are networked users who bring in more users. Then there are category and location prediction models. All of these are used by our marketing team for better targeting. Using data science tools, OkCredit has built a model which can automatically suggest due dates for customers. Due dates ensure that credit collection happens on time and the app calculates it based on different factors without the merchant having to work it out. OKCredit is also using data science to detect frauds in payments and weed out non relevant transactions.