MoneyOnMobile, Inc., one of India’s largest phone-based mobile payment networks, announced the launch of the Reserve Bank of India’s payment service [Bharat Bill Payment] through the MoneyOnMobile retailer platform. The launch of this new service enables its retailers to meet the growing demand for digital payment services among the estimated 600-800 million unbanked/under-banked population of India, and increase the monthly spend of their existing customers. The eighty additional services cover a wide range of billers from electric, water, and gas utilities, to mobile bills and television recharge.

Harold Montgomery, CEO & Chairman, MoneyOnMobile, said

We are excited about the launch of the Bharat Bill Payment service on our retailer portal. We believe it will help MoneyOnMobile continue to transform the cash experience for retailers and their customers. With such a large number of services being added, consumers can convert their cash into digital payments to access more of the vital, everyday services that make their lives easier.

Will Dawson, Chief Operating Officer, MoneyOnMobile, said

Our goal is to help retailers deepen their engagement with the community they serve. By enabling new services being demanded by their customers, retailers are able to meet the growing demand, and be the ‘one-stop shop’ people can visit for access to financial services. This helps the company grow our retailer base, grow the share of consumer wallet, and increase retailer retention.

About MoneyOnMobile, Inc.

MoneyOnMobile, Inc. is an India focused mobile payments technology and processing company offering mobile payment services. MoneyOnMobile enables Indian consumers to use mobile phones to pay for goods and services or transfer funds from one cell phone to another. It can be used as simple SMS text functionality or through the MoneyOnMobile application or internet site. MoneyOnMobile has more than 350,000 retail locations throughout India.

About Bharat Bill Pay

The Bharat bill payment system is a RBI conceptualized system driven by NPCI. It is a one-stop ecosystem for payment of all bills providing an interoperable and accessible ‘Anytime Anywhere’ bill payment service to all customers across India with certainty, reliability and safety of transactions.

Bharat Bill Payment has multiple modes of payment and provides instant confirmation of payment via an SMS or receipt. It offers myriad bill collection categories like electricity, telecom, DTH, gas, water bills etc. through a single window.

CASHe, India’s most preferred digital lending company for young salaried millennials, promoted by serial entrepreneur and private equity investor V. Raman Kumar, has entered into a strategic partnership with BankBazaar, India’s leading neutral online marketplace, to offer its short-term personal loans on its online financial platform. Under the partnership, users of Bankbazaar.com will now have easy access to instant short-term credit facility from CASHe through its multiple loan options ranging from Rs 10,000 to Rs 200,000 payable over 15, 30, 90 days and 180 days.

The fintech company currently processes over 27,000 loan applications in a month and has achieved an overall loan disbursal of Rs 400 crores with 1.8 million app downloads and over 1.5 Lakh active users since launch of operations in April 2016. The company is aiming to achieve an overall loan disbursal of Rs 900 crores by March 2019.

Speaking about the partnership, Chairman of Aeries Financial Technologies, V. Raman Kumar, said

We are excited to partner with BankBazaar.com in this strategic tie up as it allows CASHe to be on BankBazar platform where our potential customers are present and comparing various personal loans from other financial institutions. BankBazaar.com’s customers will now benefit from CASHe’s best-in-class differentiated product suite in the retail loan segment.

This partnership also will help us expand our customer base exponentially with this leading neutral online marketplace recording over 90 million visitors in the last quarter of 2018. BankBazaar has been at the forefront in redefining the buying experience when it comes to the purchase of financial services for the Indian consumers. We are confident that this partnership will create a win-win situation for those customers who until now were being dropped off by lending institutions due to inadequate credit rating scores. CASHe with its social behavior filtering algorithm will allow access to such customers to a wide array of instant short-term personal loans on its lending platform.

Commenting on the collaboration, Navin Chandani, Chief Business Development Officer, BankBazaar, said

At BankBazaar.com, our mission is to help our customers access the widest range of financial products on our platform. Partnering with a fintech company like CASHe is a step in this direction. With CASHe’s integration, we are now able to offer short-term personal loans to our customers who otherwise would not qualify for loans by financial institutions that typically offer medium- to long-term loan products. We are very positive about this tie up with an agile and digitally focussed player like CASHe as we see a huge demand for a loan product offering that is instant, hassle-free and convenient.

About CASHe

CASHe is India’s most preferred digital lending company for young salaried millennials. CASHe provides immediate short-term personal loans to young professionals based on their social profile, merit and earning potential using its proprietary algorithm based machine learning platform.

In April 2016, Aeries Financial Technologies Pvt. Ltd, launched its innovative technology-driven lending platform for the young, urban millennials. CASHe provides almost instantaneous loans on-demand. Its user-friendly digital interface enables faster loan application process and quicker loan disbursal’s. CASHe provides hassle-free loans with its app enabled documentation and loan disbursal/repayment process. Powered by its industry-first algorithm driven credit scoring platform, Social Loan Quotient [SLQ], CASHe quickly determines a user’s credit worthiness by using multiple unique data points to arrive at a distinct credit profile of the customer. For more information, please visit CASHe

MoneyOnMobile, Inc., one of India’s largest mobile phone-based payment networks, announced the launch of a new biometric-based ATM cash-out solution. In the initial phase, the company activated 3,000 units, and expects another 3,000 activations in the coming months. Prior to launch MoneyOnMobile had 5,000 MOM ATM units operating in the field.

This new biometric MOM ATM leverages both the Open Banking APIs of our banking partners and the Indian government’s national identity system known as Aadhaar. Consumers can receive cash from their bank account by scanning their fingerprint on the new biometric reader – the fingerprint is linked to the consumer’s bank account, and substitutes for the debit card. Participating MOM Merchants provide the cash from their till just as they do when using the company’s existing MOM ATM and a debit card swipe. MoneyOnMobile’s payment platform connects our retailers to our banking partners and the Aadhaar system making the entire transaction seamless.

The Aadhaar Enabled Payment System [AePS], a Government of India initiative, was launched to empower a bank’s customer to use Aadhaar as his/her identity to access their Aadhaar linked bank account. Using AePS, the bank account holder can perform basic banking transactions like cash deposit, cash withdrawal and balance inquiry.

Harold Montgomery, CEO and Chairman, MoneyOnMobile, said

Our goal for 2018 is to expand our MOM ATM product line and the total number of deployments, and this biometric-based MOM ATM cash-out solution is a strong step towards achieving that goal. Before the rollout we had roughly 5,000 MOM ATM units operating. We expect that this figure will go well beyond 11,000 with the new biometric-based MOM ATM in the coming months, and bring us closer to our goal of having 30,000 MOM ATM units operating by the end of 2019.

Ranjeet Oak, Head–India Operations, MoneyOnMobile said

The launch of AePS-based biometric service by MoneyOnMobile, will enable our underbanked consumers to have easy and quick access to their bank accounts just by visiting one of our enabled retail partners spread across 700 plus cities across India. As this service was much awaited by our retailers, we are pleased that we were able to swiftly adapt to their recommendations.

Will Dawson, Chief Operating Officer, MoneyOnMobile, said

We are excited to launch this AePS-based MOM ATM to add yet another service which will provide last mile financial services to the over 600 million under-banked consumers in India.   Our retailers, as well as MoneyOnMobile, earn revenue based on the size of the cash-out transaction, resulting in a positive impact on our MOM ATM revenue.

The process for a consumer to withdraw cash using an AePS-based MOM ATM is similar to the current handheld MOM ATM, but instead of handing over a card that is swiped through a machine, the customer places their fingerprint on a biometric reader. Once the system authenticates their ID, the retailer can process their cash-out request in the same manner as the handheld MOM ATM.

About MoneyOnMobile, Inc.

MoneyOnMobile, Inc. is an India focused mobile payments technology and processing company offering mobile payment services. MoneyOnMobile enables Indian consumers to use mobile phones to pay for goods and services or transfer funds from one cell phone to another. It can be used as simple SMS text functionality or through the MoneyOnMobile application or internet site. MoneyOnMobile has more than 350,000 retail locations throughout India. For more information, please visit MoneyOnMobile, Inc.

Mankind’s quest for Artificial Intelligence [AI] has driven development from times immemorial. It dates back to the architectural astronomy instruments in India to Abacus of Mesopotamia; from mechanical triggering of medieval cannons in China to the emergence of the big World Wide Web; and finally to the 21st century when Internet of Things [IoT], Blockchain, Robotics and AI are finally a reality. It’s a marvel to construe that machines of today can actually learn, improve over a period of time with an in-built self learning capability.

Image Source – AI in Banking

AI not only refers to a specific software algorithm but a broad spectrum of capabilities of machines that have cognitive functions, which include speech recognition, machine translation, file reading from a machine, fraud detection prediction, learning and predicting trends and natural language processing.  A recent report suggests that globally over $1 trillion of today’s financial services cost structure could be replaced by machine learning and AI.

Financial institutions worldwide have always been at the forefront of adopting new technology. Closer home, in India, recent reports published by Accenture suggest that around 83% of Indian bankers believe that AI will work alongside humans in the next two years, which is higher than the global average of 79%. 

Lets delve deeper into how AI in set to transform Banking and Insurance of the future. Focus on the how AI would be integrated into BFSI, the many benefits and use-cases to substantiate how the ecosystem would evolve. 

Customer Service Chatbots

Smart virtual agents or chatbots elevate the customer experience to a new level by providing real time round the clock service with natural language to perform day to day transaction. They anticipate customers unique transaction needs and recommend the right insurance policy or right portfolio for investment in fraction of a second, with quick ability to deep dive into the data models. This gives customer personalized services experience and increased customer satisfaction.

Customer & Business Audio Bots

A case in point, is a customer greeted by EVA from Emirates NBD [leading bank in UAE], a audio bot. This is a new face of banking where audio bots are taking over in a quick and efficient way to provide information. Bots can run query much faster and provide results to the customer objectively, without any  emotions attached to it.

There is a growing demand for audio bots within businesses. In a typical scenario, a CEO can be remotely assisted by an audio bot to provide him sales performance data of a branch or a zone, provide instant details about top performers, top claims paid or on business forecast for the year.

Virtual assistants can manage the low-value activities of advisors, such as lead management, scheduling, planning, licensing, etc., enabling them to focus on building skills and providing value-added services.

Companies have transformed from conventional password and I-pin methods to voice recognition with the help of voice prints to automate the process. Face recognition to ascertain account credentials are becoming a norm.

Customer Insights and Risk Management

Risk management is one of the largest opportunity for leveraging the full potential of AI. Using AI in Banking it is possible to sieve through different data sources such as credit scores, financial data, spending patterns help to determine risk scores of a customer, based on his or her nationality, occupation, salary range, experience, industry and credit history. Moreover, AI can be used to reduce the strain of regulatory compliance and to overhaul the way banks/insurers detect financial crimes and frauds.

Similarly in Insurance, risk scores can be very helpful in underwriting policy and adjudicating claims for a individual on basis of various parameters. It could be based on data models during the on-boarding of a customer, agent or a claim risk propensity can be calculated and early warning signals can be triggered.

AI systems can be used to perform research, aggregate, refine and present required information to underwriters, allowing them to focus on core underwriting activities.

In summary, the benefits of AI

Enhance operational efficiency, improve time-to-market, enable a more intelligent way to sell and service, and more. During the last five years, industrial use of AI – in terms of interest, investment, ideation and implementation – has risen exponentially.

The proof of the pudding is in the eating. This can be validated through how a leading health insurance startup leveraged AI by using data and software to build clinical profiles of people to identify gaps in care. These gaps in care were filled with visits and free choice of doctors for patients to avoid costly hospital stays.

Similarly, a life insurance startup used AI to generate quotes for accident death claims which simplified sign-up in less than 2 minutes. There are several such instances that fortify AI as a technology that would revolutionize businesses and the world at large.

About the author

Snehal Desai is the Global Sales Head – Insurance at 3i Infotech Ltd. More details about him can be found here

Setting an example on how grass-root level innovation propelled by disruptive technologies in the traditional banking space, can simplify complex financial procedures for the entire nation, Rubique Technologies Private Limited, India’s largest online financial matchmaking platform has today announced the start of its new journey with Rubique 2.0; unveiling its new brand identity. Currently, clocking $7.2 Mn [INR 47 Crore] revenue in March 2018, with a monthly revenue of INR 3.5 Crore, the company aims to reach an INR 100 crore month on month revenue by 2021 and plans to break-even by 2019.

Laying out its 2.0 vision, as initial steps, Rubique will sharpen its focus on creating a robust technology based financial ecosystem in the markets, earlier untouched by Fintech and further strengthen its technological and analytics capabilities to expand its credit product offerings to deepen its reach to small enterprises and underserved micro enterprises. As a part of its ambitious growth targets, the company has planned to heavily invest in newer products and partnerships under its Insurance segments, and further expand its product distribution into 100 more cities in India this year.

Bringing alive its renewed brand identity, Rubique Technology has unveiled its new logo which enshrines its core values and mission statement, to fulfill every financial aspiration in the Simplest, Shortest & Speediest way possible. The new logo represents the three pillars of the company- FIs, Customers and influences: Integrating deep technology and domain expertise, Applying insights from across industries, and Consistently delivering world-class integrated, end-to-end solutions for all financial services. It also highlights Rubique’s strong technology heritage, signifying a higher level of engagement and brand permission that helps all stakeholders leverage its technology expertise to address their business and financial requirements and drive future opportunities in this digital era.

Speaking on the occasion, Manav Jeet, MD & CEO, Rubique, said

Almost around four years back we started a journey with a vision to disrupt Indian banking sector with cutting edge technology and frugal innovation to simplify finances for individual and MSMEs. We stumbled, learned and grown into one of the foremost success stories driving India’s rapidly-growing digital financial services sector.

We now introduce, the second leg of our journey, Rubique 2.0, leapfrogging into the future of banking with a renewed and re-imagined focus; delving deeper into newer and underserved markets with the power of technology enabled financial inclusion. Rubique 2.0 encapsulates what we do and mean, for our partners – FIs, Customers and Business Associates – and these values find expression in our new brand identity.

In its constant endeavour to stay ahead of the technology innovation curve and bring a symbiotic relationship between traditional lending institutions and technology, the fintech major plans to develop technology products for the ecosystem to add push for digital adoption & facilitate new technologies into banking e.g. TAB solution facilitating finance for SME customers, alternate data based credit scoring mechanism to facilitate underwriting for first time borrowers using machine learning and big data analytics; create infrastructure to mitigate fraud with deepen security and data privacy and leverage alternate data, image recognition and video analytics on SPOT to automate data filling and verification thus making customer on boarding seamless and hassle free.

Established in the year 2014, Rubique with its technology thinking of financial services, has proven itself as one of the fastest growing Fintech companies in India, witnessing 4x growth YoY. Currently, serving more than 2 Lakh customers with offerings varying from Loans, Credit Cards to Insurance, the company has helped facilitate a massive disbursement of INR 2,670 crores and over 82,000 credit card setups, till date through its platform, almost 65% of which is targeted to SMEs in India.

Speaking on the renewed brand identity, Sheetal Mayekar, Founding Member and Strategic & Commercial Intelligence, said

The new brand identity marks our journey of transformation in the digital world. Our brand refresh signals an even closer engagement with customers, focusing on millennials with greater innovation in bringing advanced technologies to access deeper markets and ease credit access to the country and focus on entire ecosystem growth working as a collaborator.

With constantly innovating & evolving industry, the futuristic technologies such as Blockchain, Big Data and AI used by Rubique analyses multiple data points to assess the creditworthiness of the customers and provide them the offers they are eligible for, thereby removing the manual efforts in the loan processing system.

Suraj Agarwal, CTO – Rubique added

The digital access to finance will continue to massively impact all individuals and businesses in the country. Undoubtedly technology will play a vital role in uplifting the Indian economy over the next five years, and therefore Rubique has taken a holistic approach to introduce tech intervention at all possible touch points. Implementation of disruptive technologies blockchain. Smart KYC & Paperless loan process is nothing but one step towards creating a unified flow of information to make the transactions simpler, and reduce the processing time for customers.

With the recent close of its new funds led by two of the world’s largest corporate and investment firms, the investment subsidiary RSP India Fund, LLC of Japan’s Recruit Co. Ltd. and Russian venture capital management company, Emery Capital, along with Blacksoil and existing investor Kalaari Capital, Rubique is planning to invest heavily in Data Science methodologies and leverage insights generated to build stronger business propositions.

The company has recently built a data science team which leverages its rich customer data and bank credit policies to build a proprietary AI based Matchmaking and ranking algorithm that provides a customized list to each consumer based on his/her needs and profile.

Focusing on maintaining a tech-led asset-light model, while remaining unit economics positive at the transaction level, Rubique 2.0 to have a renewed focus on innovation, marketing and strategic partnerships, particularly in the B2C segment, bring advanced technology features at every stage of loan processing cycle through its Online Plus Model, Improving operational efficiency & reducing cost of acquisition, creating easy access to finance with a focus on bridging financing gap and make finance easy  & accessible to the customers. 

About Rubique

Rubique was formed in November 2014, with a vision to fulfill every financial aspiration in the customer’s life cycle in the simplest, shortest and the speediest way through a wide range of loan, credit card and insurance products. Built on a proprietary AI based recommendation engine, Rubique’s marketplace platform has been integrated with financial institutions’ systems for real-time processing and providing online approvals to the customers. The advanced technology solution not only reduces the processing time significantly, but the data analytics done on multiple data points helps bring predictability and assess creditworthiness offering best deals to the customers.

Breaking new grounds in the formal finance sector through innovative and dynamic use of technology, Rubique Technologies Private Limited, India’s largest online financial matchmaking platform has raised an undisclosed amount funding led by Japan’s Recruit Group and Russian venture capital management company, Emery Capital. The funding round saw participation from Blacksoil Group & existing investor Kalaari Capital.

The funds from this round will enable Rubique to further strengthen its technological and analytics capabilities. The company also aims to expand its credit product offerings to deepen its reach to small enterprises and reach out to underserved micro enterprises.

Established in the year 2014, Rubique has demonstrated how frugal innovation, propelled by disruptive technologies in the traditional lending space, can simplify complex financial procedures to fulfill every financial aspiration in the simplest, shortest and speediest way possible. Since its inception the company has already facilitated loan disbursement worth approximately Rs. 2,670 crores and over 82,000 credit card setups through its platform.

The involvement of Recruit Group and Emery Capital, both having an international expertise in facilitating adoption of newer technologies across sectors and geographies, as well as its existing investors, underlines the trust that Rubique has generated in the global market.

Speaking on the announcement, Manav Jeet, MD & CEO, Rubique said

The success of the latest funding round is a strong indication of the trust our investors have in our vision, our technology-thinking of financial services as well as in our strong focus on robust unit economics model. We have managed to successfully stand out in the fintech space as an innovator par excellence and one of the genuine success stories of the domain through our unique asset light business model.

With the domain expertise our investors bring on-board, we look forward to leveraging their insights as we build a leading platform for digital lending in India. We would also like to thank our existing investors for continuing to support us in our growth journey.

Apart from this round we are also in the final stages of closing another tranche’ of funding, to be led by couple of marquee investors. We are excited about our next phase of growth and will continue to develop superior technology products for the ecosystem players thereby aiming to bring a symbiotic relationship between banks and technology, bridge India’s credit gap.

Rubique has recently closed 200K customers and have generated revenue of around $7.2 Mn [INR 47 Cr], clocking a revenue of around 3.5 Crores Month on Month. With a consistent growth, Rubique has been unit economics positive at the transactional level and will be aiming to break-even in 2019 & going for Rs. 100 Crores revenue by 2021.

Speaking on the fund raise, Ivan Savelyev from Emery Capital said

Rubique’s unique business model and technology thinking has an impressive ability to hit the ground running to build a financially strong nation with easy access to credit to all sectors of the society – Businesses and Millennials.

We believe that the deployment of technology to develop scalable and accessible financial services platforms, incorporating big data analytics and machine learning, will be critical to any lending business serving the under-banked and underserved customers in India. We are committed to supporting Rubique on its journey to become a leading fintech player in India and also help and share our experience with similar models in other continents & explore synergies to work with them.

With the world constantly innovating, the advanced technologies such as Blockchain, Big Data and AI used by Rubique analyses multiple data points to assess the creditworthiness of the customers and provide them the offers they are eligible for, thereby removing the manual efforts in the loan processing system. The company has recently built a data science team which leverages its rich customer data and bank credit policies to build a proprietary AI based Matchmaking and ranking algorithm that provides a customized list to each consumer based on his/her needs and profile. This offers manifold advantages in terms of higher approval rates, better customer satisfaction and improved sourcing to its financial partners.

Eyeing the future growth of the company, Rubique envisions becoming the largest online financial matchmaking platform in India and aiming for entire ecosystem growth including customers, financial institutions & influencers. With focus on maintaining its model asset-light, Rubique is planning to invest in Data science & leverage insights generated to build stronger business propositions.

About the Recruit Group

Founded in 1960, the Recruit Group creates and provides platforms that connect companies and consumers. Headquartered in Tokyo, Japan, the Group offers a wide range of services in a variety of areas including human resources, education, housing and real estate, bridal, travel, automobiles, dining and beauty. The Group has more than 45,000 employees and operates in more than 60 countries. For more information, please visit Recruit Group

About Rubique

Rubique was formed in November 2014, with a vision to fulfill every financial aspiration in the customer’s life cycle in the simplest, shortest and the speediest way through a wide range of loan, credit card and insurance products. Built on a proprietary AI based recommendation engine, Rubique’s marketplace platform has been integrated with financial institutions’ systems for real-time processing and providing online approvals to the customers. The advanced technology solution not only reduces the processing time significantly, but the data analytics done on multiple data points helps bring predictability and assess creditworthiness offering best deals to the customers.

Named as ‘The Most Promising Brand’ by The Economic Times and selected among the top 20 lending fintech players in India by the Financial Express’ Best Bank Awards Jury recently, Rubique has also garnered a lot of international recognition and accolades.

Capital Float [Zen Lefin Pvt Ltd], India’s leading digital lender has raised debt of €6 million [INR 48 crores] from the Netherlands-based asset management company, Triodos Investment Management. The latter is a wholly-owned subsidiary of Triodos Bank, one of the world’s leading sustainable banks, and manages €3.3 billion in AUM.  This takes Capital Float’s total debt raise to $130 million [INR 840 crores]. The company has raised $107 million [INR 695 crores] in equity thus far.

Image Source – Capital Float

Triodos IM is the first international investment management company to invest in debt at Capital Float through its investment funds Triodos Fair Share Fund and Triodos Microfinance Fund. Through this collaboration, Triodos IM intends to increase its strategic focus on SME lending in India. Capital Float will leverage the funds from the debt raise for the purpose of onward lending, as the company continues adding to its existing AUM of over INR 1200 crores.

Gaurav Hinduja and Sashank Rishyasringa, Co-founders, Capital Float, said

We are delighted to have Triodos IM join our prominent list of investors. We have previously raised debt from some of the largest banks and NBFCs in India, such as Kotak Mahindra Bank, Axis Bank, Reliance Capital and Northern Arc Capital [formerly IFMR Capital].

This collaboration with Triodos IM indicates Capital Float’s ever-growing reputation in the international financial circles. Investments like these will help put digital lending in India in the international spotlight. With this fresh injection of funds, we will strengthen our focus on expanding our MSME borrower segments.

Aditya Mohan, Senior Investment Officer said

Triodos IM has been working with companies that are the frontiers of financial services in emerging economies for over two decades, and the role of technology in delivering financial services in these markets has increased exponentially in recent years.

We are pleased to partner with Capital Float and are enthused by their approach of using technology as an enabler for collaboration in financial services. We look forward to contributing to a digital eco-system which can make credit accessible and affordable to MSMEs.

Northern Arc Capital performed a crucial role in facilitating the debt raise between Capital Float and Triodos IM.

Dr. Kshama Fernandes – MD & CEO, Northern Arc Capital, said

Northern Arc partners with clients across various sectors and phases of their life-cycle. Basis our diligence we take balance sheet exposures and enable these entities to access reputed global and domestic investors who value Northern Arc’s skin-in-the-game.We are excited to have played a critical role in an important transaction.

The investment by Triodos IM in Capital Float is a great demonstration of our commitment to back clients in every way possible along their growth path.

About Capital Float

Capital Float is the pioneer of digital lending in India. The company leverages technology and big data analytics to deliver innovative credit products to businesses and individuals across the country. Through its proprietary digital loan underwriting and origination platform, it has been able to deliver financing solutions to large sections of the economy traditionally underserved by large financial institutions. It has also developed partnerships to finance SMEs across various ecosystems such as e-commerce, manufacturing supply chains, retail, travel and hospitality, and digital remittances.

Founded in 2013, Capital Float is the trade name for Zen Lefin Private Limited, a Non-Banking Finance Company [NBFC] registered with the Reserve Bank of India. For more information, please visit Capital Float

Where once, words like lending, borrowing and loans belonged to the confined walls of a bank, these terms have now grown to the unconfined boundaries of technology.

Fintech i.e. Financial Technology is a term used to describe technology disruptive start-ups that are changing the way traditional financial services are carried out. Any app that you use for availing financial services all fall under the Fintech ambit, whether you’re talking about digital wallets or robo-advisors. Even lending has transformed significantly thanks to Fintech!

This means one can safely bid adieu to long queues, heavy paperwork, continuous rejection and slower procedures when it comes to borrowing loans. Fintech makes use of big data, cloud and digital technologies to acquire, retain, underwrite and monitor customer’s behaviour at greater, efficient speeds and at betters costs and accuracy.

Abhishek Kothari [Founder of Indian digital lending platform FlexiLoans] in his article in VCCIRCLE has thrown light on how Tech & Data has driven the fintech lending space in India

Tech: With cloud-based IaaS [Information-As-a-Service] models and API [Application Programming Interface] banking gaining rapid adoption, it is now possible to have the stack ready with minimal capital expenditure. In fact, technology has been a great asset for companies across the globe to gain speed to market and grow as fast as the more established counterparts in other countries. In many countries, disbursing and collecting installments has been made possible through seamless banking integration but India is yet to see a mature solution around it. UPI is a step in the right direction but still needs a lot of work before lenders can use it.

Data: Alternative finance hinges on the availability of newer data sources to make risk decisions. More data allow informed decision making and lending to segments which were otherwise underserved. On this metric, countries like the US, UK and China have been far ahead because of connected data sources like bank accounts, companies database, tax data, etc. while India lags behind as many data sources are still inaccessible [e.g., litigation database], insufficient [e.g., bureau penetration] or inaccurate [e.g., business ratings]. However, the government has put huge focus on this and programmes like UIDAI and IndiaStack are enabling this at a good pace.

He’s also spoken about the unique problems faced by Indian retailers and how Fintech has helped overcome some of them

Fintech lending platforms provides credit to small segments

According to him small Indian businesses are really unique and in the absence of government aid they fall back on the informal sector for funding. That’s why fintech companies in India try to innovate on the acquisition model to provide finance to this segment. They use partnership models wherein they either partner with e-commerce platforms for borrowers or offline retailers through point of sale providers.

Fintech solves the problem to identify risk of borrower

But, after the acquisition, the bigger problem is assessing the borrower’s risk of default. That’s where the ‘alternate lending’ methodology helps. Because of a thin credit file or sparse financials in this segment, new-age lenders have developed innovative data science-led approaches to solve this problem. Various sources like social sites, device data, digital footprint, seller reviews, etc. are being used to develop surrogate yet highly correlated indexes that can potentially replace or enrich traditional models.

They solve the problem to provide credit at low costs

Another problem banks face is the difficulty to carer to small business segments. These segments want quick, unsecured, small-value loans but because of the cost-heavy branch-based operating model, it is sometimes unviable for banks to lend small-value loans. New-age lenders have solved this very efficiently by using cutting-edge technology to bring the acquiring, processing and servicing cost down such that they are profitable for small value loans as well. This is really the birth of ‘digital lending’.

Collection of data is super useful to a company to understand the credit worthiness of a customer. Here’s how this data is collected

Suppose you opt for ‘Pay as EMI’ while online shopping, this information is captured and gives an insight on your payment history. According to one Fintech startup founder, “Someone has to look at a range of these financial, behavioural, and social attributes, make sense of them and make the data available to institutions in a manner that they can trust and use for lending.”

He believes that, “Most institutions are completely missing out on maximizing how they use old data, let aside new data and new insights. Alternative data may be the answer”.

He explains how sometimes the name and details on an Aadhaar card may not exactly match the one name on the PAN card. Location data might suggest that the person is living elsewhere. Or an individual may on paper be working with Company X, while social data suggests that they’ve already moved on to Company Y.

For a lender all these are extremely important and valuable pieces of information. If used they could significantly bring down default rates. He also throws light on how Mobile Data in India might not exactly be clean because of use and throw sim cards. But that’s when algorithms come into picture to counter this problem.

References1, 2, 3 and 4