In the recent years, AI has not just emerged as a popular subject of discussions, but we can also see it being applied in real-world contexts. This can primarily be attributed to:
We are creating more and more digital data – structured as well as unstructured. Data is the fuel that AI algorithms thrive on. Greater the amount of data we have, the more accurate the results will be!
Enhanced computing level – owing to technological growth over the years, data processing has evolved, making data analysis efficient in terms of time and cost.
Algorithm efficiency advances, for example, speech or face detection have improved and match the human accuracy level.
Let us talk about how the business lending ecosystem of India is being disrupted by AI and Big Data.
Risk Assessment
As AI applications use past data as ‘fuel’, it is elementary that AI succeeds in the financial services ecosystem. Businesses cannot do without records and bookkeeping. For example, lenders use credit score as one of the factors to decide if the loan applicant is eligible for a loan product. Having said that, it is not always efficient for lenders to segregate people into Good, better or best categories! Apart from the credit scores, factors such as credit behaviour over a period, current liabilities and annual revenue are also important indicators of a borrowers’ creditworthiness.
Now, just try to recall a system that can go over thousands of personal financial information to lead to a solution. It can be done using AI, which is data-driven and based on Big Data. AI facilitates scanning of unlimited financial records and makes credit recommendations quick, accurate and cost-effective.
Recently, Tally Solutions and Biz2Credit came together to launch the Biz2Credit-Tally Add-on, through which lenders can access financials, GST returns, P&L statements for small businesses that use Tally. Complete data stored on a customer's Tally gets pushed to the Biz2Credit platform through API communication. The veracity of financial statements and underwriting can be established using this data.
Fraud Detection
Banks lend the depositors’ money to those who need it, and the borrowers return the same with some interest. This makes fraud detection very critical to lenders. AI helps lenders keep fraud management on top of their priorities. Based on past spending habits of users vis-à-vis different transactions, AI can flag odd behaviour. For example, AI can point out if a card has been swiped in another city or country just within hours of being used elsewhere.
Another advantage of AI is that it is always scalable. For example, if AI flags a transaction, but the same is corrected by human intervention, the system learns from the incident and will make even more accurate decisions in future about the transactions that can or cannot be considered as fraud.
As stated earlier, the Biz2Credit-Tally Add-on can also aid in fraud detection with verified financial information such as GST returns, P&L statements and more available to lenders. During the underwriting process, Lenders face the challenge of establishing the veracity of financial details provided by small businesses. Biz2Credit’s partnership with Tally addresses this issue.
Customer Support/ Virtual Financial Assistants
With digitalization, consumers are getting products and services delivered at a few clicks or the tap of a button. So, why should they fret over traditional customer support? Customer interface systems such as text chats, interactive IVRs or chatbots can deliver customer service just like humans, with accuracy and lesser time or cost implications.
Likewise, AI can help manage personal finance portfolios as well as assist business owners in making key financial decisions. Robotic advisors are today helping finance companies reduce their commission pricing on individual investments; as intelligent machines can do what humans may not do, with more accuracy.
At Biz2Credit, we provide a BizAnalyzer® tool to our end users – MSME owners. This tool analyses the financial data of businesses, computes a ‘score’ and offers them customized solutions to enhance their business growth and creditworthiness. This is just one example of how customer support based on data analytics can help build a strong customer affiliation. The possibilities are immense.
We can safely say deduce from the above that the future of the Indian business lending will thrive with AI and Big Data. However, this road has some challenges too – the quality of data available, lack of accountability being some. For example, in case something goes wrong in a process, who will shoulder the responsibility? This is keeping financial institutions from providing complete autonomy to machines. The common approach is to appoint human supervisors to validate robotic decisions.
In times to come, however, AI and Big Data will have a profound impact on the Indian lending domain.
