How Mandeep Basra uses micro-lending at RentMoola to change the banking game

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CFO Mandeep Basra joined RentMoola right as COVID-19 was declared a worldwide pandemic. Little did he know that the company would be quickly pivoting to help landlords and tenants by offering remote payment options and micro-lending assistance. This digital innovation is just what Mandeep thinks the world needs in order to serve sophisticated digital customers as well as support under-banked populations around the world.

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Key Takeaways

3:30 - Keeping tenants safe

During the pandemic, RentMoola worked with property managers to keep tenants safe by offering fully digital rent paying solutions.

“It was interesting to see our customers thinking about their employees and wanting to keep them safe. A lot of our property managers who have tenants that were paying by cash or check, they wanted to stop that because they didn't know how the virus was going to spread with paper and whatnot. So what we saw was an increase with our property managers and our marketing team, working together to market our solution to their tenants. And saying how to keep us safe, keep yourself safe. What we're going to do is we're not going to accept any checks anymore for the time being, we're not gonna accept cash payments. What we're going to do is we're going to utilize this tool that we have in place with RentMoola and make sure that you're able to pay your rent without the risk of getting sick.”

7:29 - Micro-financing for renters

No one should have to decide between paying rent or feeding their family. RentMoola solved this with a system of micro-financing.

“There's right now, I believe there is 70 some-odd billion dollars in backrent that is outstanding right now for tenants, for apartment buildings and whatnot, condos. And what we've done, we've partnered with a few companies out there and we're offering kind of like a rent now and pay later solution. Where it's kind of like micro lending, micro financing, you can call it at 0% interest. So the tenants don't have to face any financial hardship in these times. And the property manager still gets paid. And there's no additional interest right now. It's a decision that people have to make. Do I feed my family? Or do I pay my rent is basically the state of the economy right now. So we're finding those kind of solutions to help our user base.”

9:15 - FinTech at the forefront

Mandeep thinks that FinTech will explode over the next year, as legacy banks struggle to meet growing user needs.

“I think 2021, you know, for the next couple of years, FinTech is going to be the forefront in business. There's a lot of solutions out there. You know, obviously RentMoola is one of them and the banks, they have legacy systems. They can't support the current user base right now...my gut feel is within the next 12 to 18 months, these banks with their legacy system, they can't really develop and move forward. So there's, there's going to be a lot of synergies between the legacy banking systems and solutions like ours, where the banks will need to, or will be forced to work with companies like companies like ours.”

17:25 - Data is your crystal ball

While no one can predict the future, looking carefully at data can help uncover important trends.

“I think probably from my side, the data is key. Is analyzing data. You know, so we can always see, like you said, if we had a crystal ball, a magic wand, we can predict it. You know, we can see what's going on a month from now and we can be ready for it. But we can prepare ourselves the best we can with the data that we have. So, you know, in the data right now, I'm not speaking about balance sheets and income statements and cash flow statements. It's actually you know, the trends that we see in our payment processing. And you know, we do dig down deeper. What do we see a certain customer of ours, what their tenants are doing and how that changes over time? Is it just a cycle? Is it just going month over month? Or is it, you know, seasonal? And that's the stuff that we need to get a handle on. And so we can kind of predict a future. For example, if we see in the summertime, you know, short-term rentals is very high typically. And then all of a sudden, we see a decrease. We need to figure out why that decrease is happening.”

21:12 - Big bank partnerships

Soon, big banks will begin partnering with small FinTech companies to bring sophisticated offerings to their existing customers.

“Like I mentioned earlier, I think there's gonna be a frenzy of M&A activity with banks, partnerships with big banks. I think it's going to be key there, and there's a lot of companies out there that are doing great things, obviously RentMoola included, that banks can benefit from, as well as platforms like ours. So, and I'm just using examples, like building the deck as an example, partnering with a bank, we can offer bill payment, utility payments, bill payments, to our user base. Cell phone bills or whatever other kinds of bills. On the flip side, their banks can offer rental payments. Which they cannot do right now, because basically they're not an aggregator. They'll do one payment here and there for people, but using platforms like ours, partnering with platforms like ours, it's kind of like a win-win situation. They already have the user base and they're just offering, whether it's a white label or a referral, partnership, with RentMoola.”

23:34 - The RentMoola advantage

To explain the benefits of RentMoola, Mandeep described how you can spend weeks pursuing financing through a bank, versus 90 seconds on an app.

“Let's go with micro-financing as an example. Right now you have to go into a bank, you have to make an appointment, that appointment can take days. And then you have to provide them with all your, your IRS tax returns, your W2's and whatnot. And we're looking at a week to two week process for a thousand dollars, $2,000 a loan to get you through to next pay period or whatever. But with technology like ours, it's all done through the app. You can apply for your micro-financing and you get a response back within 90 seconds. You have the funds deposited in your account within a couple of minutes, and it's at 0% financing. Whereas in the banks, they'll charge you 5-8% for that. Or on the flip side, if you're not going to go to the bank, you're going to a payday lender. And for those who don't know how challenging it is to be in a situation where a payday lender is your option, I can vouch that RentMoola’s no interest payment structure is a far more wise route.”

25:37 - Profiting from processing

If RentMoola is helping people out and charging 0% interest in these challenging times, how do they make money? The answer is the elegant solution of payment processing fees.

“So the way, high level, without getting in details and stuff, the way RentMoola makes money. And you know, this is all available online. So it's nothing that is secret here, is basically interchange fees, processing fees is where we make a bulk of our money. So as an example, you go to a gas station, you know, Esso or Chevron. You pay at the pump, you pay $100 for gas. You receive a hundred dollars in gas, but what the merchant only gets is about $97 or $96 because Visa, MasterCard, Amex are keeping $4 for themselves. And then we get a portion of that.”

27:00 - The underbanked are underestimated

One thing that Mandeep sees as requiring more attention is the underbanked population, who may not have convenient access to the services they want and need.

“I think what the world is underestimating is the underbanked population. And that's what a lot of these FinTech companies are out there doing is serving the underbanked or unbanked. I believe it's somewhere around the 40% range or 30-40% range where residents of the US are underbanked. There's a large number in Europe that are underbanked, Australia, the same thing. You know, obviously we have the third world countries that don't have bank accounts, and this is where solutions like ours and FinTech, and obviously partnering with banks or even neobanks that are very, very popular these days are the solutions.”

29:24 - 100% digital

In the modern age, you can complete almost all financial transactions without ever opening your physical wallet.

“For example, I'll use myself as an example. I don't even remember the last time I went to a bank. I had, majority of my stuff is done online. You know you, and I'm like, like you said, I'm from Canada. And we don't use checks that much, but when I do receive a check it's, I open up my app and take a picture and deposit the check. Everything, majority of the time, everything is digital. Now you have wallets - you just have to tap your phone and you can pay for whatever you need. Cash is just, it's in the bank and you use it to pay your Visa bills or your MasterCard or Amex bills.”

32:40 - Embracing innovation

In the past, technology was a scary unknown for many people. Today, people trust that innovation will help them, versus hurt them.

“I don't think there will ever be an end to innovation, right? Like we mentioned, we have neobanks all of a sudden, branchless banks. We have bitcoin. Like it's, you know, it's just crazy. The electric cars, self-driving cars. So it changed. Back when I started my career a long time ago, I'm not going to age myself here, but you know, we were implementing a new software on the accounting and HR side. And there was a lot of fear, because back then change was perceived as negative. We're getting new systems, we're getting automating, we're automating things and I'm going to lose my job were the discussions in the workplace before. Now, innovation, it's seen as something positive. Change is good. We're actually getting tools, we’re automating things to move the business forward, to help our employees be more efficient and more effective.”

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