Bengaluru: Fintech firms and traditional lenders including non-banking financial companies (NBFCs) and banks are seeking greater visibility of customer data as more Indians turn to online means for credit purchases.
At Nasscom’s ongoing product conclave in Bengaluru, representatives from banks, insurance companies, NBFCs and fintech firms sought for more granular data on customers, as both online and offline platforms have started partnering with lenders to offer direct credit purchases to customers.
While India braces itself through an economic slowdown, both Flipkart and Amazon banked heavily on EMIs and other forms of pre-approved credit purchases for festival sales. In the run-up to Diwali sales, Flipkart said in a statement that it had “massively ramped up distribution" of its online credit offers. However, what drives this is also access to customer data including credit spending history, bank statements, and even data purged from social media platforms.
According to Smrithi Ravichandran, business head for Payments, Insurance and Commercial Lending at Flipkart kicked off the process to bring affordable loans to customers way back in 2016. In early 2016, the e-commerce company first started partnering with banks and NBFCs to directly list credit and EMI products online, although this initial rollout was open to customers of partner banks and NBFCs only.
A year later, Flipkart turned to pre-approved EMI loans through partnerships with lenders, for which it depended on a whitelist of its own customers, Ravichandran said during the Nasscom conclave. The pre-approved loans were open only to those whitelisted ‘premium’ customers on Flipkart. However, as data sets on customers began to expand, Flipkart in 2019 has started looking at even those customers without a formal credit score, added Ravichandran.
Flipkart isn’t the only one who is banking on new sets of customer data to expand the scope of its lending service. Sonny George, chief general manager, SBI bank said during the Nasscom event that the bank’s latest credit product targeted at agriculture segment required a fintech partner to get greater visibility on loan applicants. “We have pre-approved loans for the agriculture sector…for this, we are working with a fintech that uses blockchain for getting some of the (user) data that we use for the pre-approved offer," George added
Anuj Singhal, SVP & Head of Risk Management, Swiss Re added that several insurers are also working with fintech firms for improving risk profiling of its customers, which can be equated with loan underwriting.
“Every year-end insurers get a spike in number of renewals across motor segment, and there hasn’t really been a way to determine the profitability of those different clients (policy holders) because we used to treat each renewal at the same level (financially). Now with fintechs in insurance space, we have data analytics being applied to determine the top 20 clients, undertake revenue forecasting, and then seamlessly figure out my most profitable clients," added Singhal.
However, that a single approach to apply financial technology cannot be emulated across all banks and insurers, since each entity has its own market and product focus, most agree.
“There are different use cases that customers come to use for a loan. It could be a short term 30-day loan or a 12-month loan for high-ticket product. There is a way to sort of look at each use case to sort of understand the behavior of the customer and the demographics of the customer and come up with a predictive score…Maybe 5 years from now we may be able to come up with an alternate score by ourselves for our own customers (on Flipkart)," said Ravichandran.