Focus on customer risk profile as online credit purchases increase

BENGALURU : Fintech companies and traditional lenders, including non-bank financial corporations (NBFCs) and banks, seek greater visibility of customer data, as more Indians turn to online credit shopping .

At Nasscom’s product conclave in Bengaluru, representatives from banks, insurance companies, NBFCs and fintech companies searched for more detailed customer data, as both online and offline platforms have started partnering with lenders to offer direct credit purchases to customers.

With the slowest-paced economic growth in six years, Flipkart and Amazon have relied heavily on EMIs and other forms of pre-approved credit purchases. For example, as Diwali’s sales approach, Flipkart said in a statement that it has “massively accelerated the distribution” of its online credit offerings. And the key to driving this strategy is having access to customer data, including credit. expense history and bank statement, in addition to data gleaned from social media platforms.

Smrithi Ravichandran, Business Manager, Payments, Insurance and Commercial Lending, Flipkart, said the e-commerce platform kicked off the process to provide affordable loans to customers in early 2016. Initially, it started partnering up with banks and NBFCs to directly list credit and EMI. products online, although this deployment was only open to customers of partner banks and NBFCs.

A year later, Flipkart turned to pre-approved EMI loans through partnerships with lenders, for which it had created a whitelist of its “premium” clients, she told the Nasscom conclave. However, as customer data sets began to grow, in 2019 Flipkart began looking at even customers without a formal credit score.

Flipkart isn’t alone in leveraging new customer data sets to expand the reach of its lending services. Sonny George, managing director of the State Bank of India, said its latest agricultural segment credit product requires a fintech partner to gain greater visibility on loan seekers. “We have pre-approved loans for the agricultural sector… for that we are working with a fintech company that uses blockchain to get certain data (users),” he added.

Anuj Singhal, Senior Vice President and Head of Risk Management at Swiss Re, said that several insurers are also working with FinTech companies to improve the risk profile of their clients, which can be likened to underwriting ready.

“Each year-end, insurers experience a peak in the number of renewals in the automotive segment, and there hasn’t really been a way to determine the profitability of these different (insured) customers because we treat each renewal at the same level (financially). Now, with fintechs in insurance, we’ve applied data analytics to determine the top 20 clients, undertake revenue forecasting, and then transparently determine my most profitable clients, ”Singhal added.

However, a single fintech model cannot be emulated across all banks and insurers, as each entity has its own market and products.

“There are different use cases for a loan. It can be a short term 30 day loan or a 12 month loan for expensive products. There is a way to look at each use case to understand customer behavior, and customer demographics, to come up with a predictive score… Maybe in five years we will be able to come up with an alternative score by ourselves for our own clients (on Flipkart), ”Ravichandran said.

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David A. Albanese

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