India’s diversity and size make it a challenging market in terms of regulatory norms and customer acceptance when it comes to deploying technology. The financial services setup in the country is no exception. While there has been great progress in the field of payments be it electronic bank transfers, netbanking and digital wallets, there is a perpetual lack of familiarity and trust with the online medium. A risk-averse mindset causes some consumers to believe that for a transaction to be serious, it needs to happen in ‘real life’. For these people, decisions on where to apply for loans and where to take credit is still something decided by the influence of entities in the value chain like CAs and agents. Presently, there are a growing number of innovative fintech platforms that are bringing digitization to make processes more effective, hassle-free, and beneficial for all stakeholders – but the final part of the process of signing on physical documents still remains offline.
The advent of technology has eliminated many of the physical barriers present in the country’s financial lending business. While a variety of fintech platforms are providing access to financial products, companies like Rubique are going further and providing end-to-end loan fulfilment for individuals and companies. By its huge fleet of 6000 distributors enabled through technology, Rubique has been a unique blend of online to offline (O2O) in the fintech space. Their website serves as a DIY (do it yourself) platform for customers where technology plays a major role in providing access to right financial institutions through AI based matchmaking. The company further reaches out to influencers like CAs and financial advisors to aid customers wary of the online medium, enabling the customer to process their application through these influencers on the platform, and easing the procedure from sourcing till fulfilment. The company uses a proprietary matchmaking algo and AI methodologies to provide customized offers to each customer based on his needs and profile. For further enhancement of credit underwriting, Rubique is working on alternate data scoring technique (Rubique MAGIC score) in addition to traditional risk-assessment of banks. Rubique unique match making algorithm provides quality sourcing to the financial institutions and improves approval rate. Through an innovative and dynamic use of AI and Machine Learning algorithms, quality data is passed on to the financial institutions to process the application in minutes and reduce the cost of acquisition. Robo advisories too are enriched with rich data to track the history of customers and evaluate their likelihood of default with much greater accuracy than conventional actuarial methods. These advanced systems help lenders in making a more convincing decision based on relevant data. The lack of standardisation of bank policies with regards to preclosure, prepayment, late payment charges, processing fee, renewal fee leads to customer distrust and ambiguity. Technology however irons out all the differences and information asymmetry, rolling out every product offered by banks, financial institutions, as well as the NBFCs on one platform with concise and clear communication so as to enable a customer to take an informed decision with the best deal in the market.
SMEs face a lot of difficulty getting credit. Many of these companies lack comprehensive financial records or major assets that they can leverage for credit. Their lack of financial records indicate a heightened distance for digital transactions and record-keeping. Owing to the lack of digital literacy and huge inertia in behaviour change, it is difficult to adopt a pure online strategy towards lending. So there is a need of players who can leverage technology to build a solution that marries online to offline in a seamless manner. This is where Rubique has had a major success in building a tech led solution that makes the customer journey faster, seamless and easier and allows its huge distribution network to fulfil their customer needs in a highly organized manner in a system that has largely been chaotic so far.
Many conventional lending institutions are increasingly entering into strategic partnerships with online platforms and portals to access these operational efficiency and customer outreach solutions and channels. These tie-ups in turn enhance fintech operations by increasing the variety of products that platforms have on offer, while also allowing banks and financial institutions to reduce customer acquisition costs and provide a more seamless and convenient experience to potential borrowers.
Technology is clearly bringing a massive revolution in the lending scenario of the country by linking the online and offline lending market. However, it is imperative to understand that there is no one-size-fits-all solution for a borrower when it comes to pondering over online and offline lending options. There is a need to do proper research before opting for any lending choice. The confluence of finance and technology will simply make the possibilities endless and ensure a stress-free journey to the formal financial system.
—by Suraj Agarwal, CTO, Rubique.