When Vineeth Narasimhan, CTO, Kristal.AI, received a call from an apple grower in Himachal Pradesh, a first-time investor, asking how he could buy shares in Apple and Google, it was one in a series of examples of the growing aspirations of small-town India or ‘Bharat’.
Building for Bharat was one of the key themes at a panel discussion on ‘The ever-evolving ‘tech’ of Fintech’ on Day 2 of YourStory’s Future of Work 2020 conference in Bengaluru.
The panel comprised Abhishek Singh, CAO, Lendingkart; Vineeth Narasimhan, CTO, Kristal.AI; and Vishal Chopra, Founder & CEO, MoneyOnClick, and was moderated by YourStory’s Tarush Bhalla.
Speaking about how technology is changing the face of lending, Abhishek said: “Today, about 90-95 percent of loans are led by machine learning (ML). A typical customer will come on Facebook and Google through one of our channel partners, and will go through the whole process till loan disbursal with little or no human interaction.”
Lendingkart is a non-deposit taking NBFC providing working capital loans and business loans to SMEs across India online, with minimum documents and no collateral needed.
Vishal’s startup MoneyOnClick uses an innovative social-selling distribution model to provide joint-liability unsecured family loans to over 100 million lower-middle-income families in small cities. He said they were building ‘a social distribution platform for loans’.
“We are offering a unique solution. We have built a network of micro-entrepreneurs and small business, and we sell our loans through them.” He added the real opportunity in India was in Bharat – in the small towns that banks were not interested in.
Vineeth also spoke about building for a new type of customer. “We are building hyper-personalised solutions for the growing aspirational segment in India and across the world. Traditionally, this segment has been given standardised products. We are trying to change the segment by creating an in-depth understanding of our clients, so we can provide customised portfolios. But we don’t want to solve the problem using technology built in the past, because it’s not very scalable. There are certain limitations to that model.”
Building for Bharat
The traditional banking system all over the world is going through a transformation. From being a closed ecosystem, where data exists in silos, the advent of technology, and the emergence of a shared ecosystem, open banking is opening avenues to a whole new kind of customer. This has particular relevance in India where the focus is on ‘building for the next billion’, but the data available on this emerging segment is limited and scattered.
“There is no one provider who can offer a clear, consolidated view on this customer. For example, there is high mobile penetration in the country and we can aggregate data from there. But how do we get the right mobile footprint when he or she clicks on an app? It’s a question of looking at inorganic sources of data and consolidating it,” said Abhishek. He added that technology today allows them to seamlessly match the customer profile that’s available in the database with what is available on social media and with the credit bureau.
Vishal said that one of the key challenges when working with this segment was that customers would come to them with multiple bank statements as they provided loans to families.
“They come with paper statements and it’s very difficult to extract data from them. That’s a real challenge for us. But once an account aggregator comes into play, that makes it much easier for us.”
Taking it back one step further, Vineeth said, “It is critical to understand the problem before technologies like machine learning come into play. You have to understand who the user is, what their pain points are, and start from there.”
Data regulation and trust
At the end of 2019, the Indian government proposed the introduction of a Data Protection Bill on the lines of Europe’s GDPR, which would require companies to get permission before using and analysing people’s personal data.
With fintech companies so heavily reliant on data to curate suitable products, this is likely to bring in a unique set of challenges.
Abhishek believes that ethics come in handy. “You can’t use what the customer has not agreed to share.” He says that since the lending market in India considers both positive and negative performance, the customer will not feel the need to filter data before sharing it.
Vishal too feels that the new regulations really will not affect them. “It’s a sellers’ market. If the customers do not give the correct data, they will not get the loan. If you are offering reasonable loans and rates, they will give you the information you need,” he said.