Non-banking finance companies or NBFCs have played an amazing role in making credit reach to the last-mile borrowers. Now, the sector is focusing on the adoption of new technology and innovation in order to simplify the entire process so that the consumption demand of the country can be met efficiently. And, that is why, in the last few years, the NBFC sector has witnessed a huge surge of a technological revolution. With the increasing innovation and development in the NBFC sector, advanced technological trends are catching the pace. Also, as the different industries are advancing their process, it is even more important that NBFCs bring in technology to boost their growth. It is like an investment that will surely pay off in a big way.
To keep up with the current market environment, here we are throwing some light on the latest digital trends of the NBFC sector.
Artificial Intelligence is completely based on the concept that machines can work in better ways on behalf of a human. In the contemporary world, a lot of Indian NBFCs are harnessing the power of AI in their day-to-day operations.
Chief Technology Officer of SBFC India Pvt Ltd, Deepak Mudalgikar, says, “While being true to our tagline i.e. ‘loans made easy’, we focus to simplify our processes both for our employees and stakeholders by using analytics, AI, machine learning and various other tools.
Biometric-based authentication is one of the best innovations of modern industry. Through this technology, an individual is identified by evaluating one or more of his unique biological traits like fingerprints, voice waves, or retina and iris patterns. These characteristics recognize individuals from an entire population according to their intrinsic physical or behavioral traits. It is the best solution for the customer’s KYC authentication.
These modalities have numerous benefits like non-repudiation, not transferable, not guessable and also provide a very high level of protection against fraud. The technology is implemented in diverse real-life applications and is being used in the financing industry also.
Data says that 80 percent of the effort related to KYC is dedicated to information gathering and processing, and only 20 percent to assessing and monitoring that information for critical insights. It is a tiresome process and involves repetitive questioning and long processing times and all in all creates a frustrating experience. That is why the service providers are looking for a new and innovative solution to the identity problem that they get in the form of Blockchain.
Blockchain solution handles the entire process of KYC. It makes data available on a decentralized network and hence makes it accessible by third parties directly after permission is granted. The new KYC system offers better data security by making it sure that data access is only made after confirmation or permission is received from the relevant authority, removing all unauthorized accesses.
Chatbots & Robo-Advisors
Presently, the use of Chatbots & Robo-Advisors is greatly increasing. They are being used in different industry verticals, and NBFC is not an exception. Most of the NBFCs are utilizing chatbots and robot-advisors for interactions with customers for self-on boarding of the customer, customer servicing and employee-related services.
The unique thing about chatbots and robot-advisors are that they hold vernacular capabilities, which make them perfect for rural and semi-urban India. Today, because these chatbots and robot-advisors, the whole process of taking different financial services by masses is streamline.
Cognitive Computing is a wide concept; it includes an application of techniques like machine learning, predictive analytics and speech recognition and more. Cognitive computing plays a key role in actualizing the process. Brian Krzanich, the CEO of Intel, says that “cognitive computing is based on the ability of machines to sense, reason, and act and adapts based on learned experience.”
Social Profiling Score
KYC is used once to assess the credit-worthiness of an individual. Present-day, because of a culture of promoting a holistic view of a prospective customer and assessing his ability to service a loan, things have come down to the level that now besides LinkedIn and Facebook posts, even the orders history of food delivery application is being taken into account by many NBFCs players for evaluating the credit-worthiness of customers.
Apart for making use of the info provided by the borrower, in order to assess customers’ creditworthiness, the advanced technology is used to match the data with whatever is available in public domain, like on the Ministry of Corporate Affairs (MCA) and GST portal, then cross-verify this using the social media profiling of the borrower. This provides service providers with a complete picture of the customer.
In nutshell, after considering the futuristic technologies driving the growth of NBFCs and gaining further currency across the financial ecosystem of the country, the sector looks headed towards a brighter phase in the years to come.