Breakthroughs in SME financing using AI & ML
Saarathi, a digital lending marketplace, has more than 5000+ channels onboarded and 45+ lender codes on the platform:
Saarathi is financial services distribution platform that connects channels, customers and the product providers with initial focus on lending. Saarathi is a digital lending marketplace. Manish Sharma, Chief Business Officer, informs: “We have 250+ APIs (Application Programming Interfaces), integrated on our platform from certified providers.”
NEW BANKS ADDED
Saarathi currently has 5000+ channel partners onboarded and 45+ lender codes on the platform. Manish updates: “We have onboarded 6 new clients this year. These include our credit solution deployment at our first ever PSU opportunity at IDBI Bank, current account solution with Federal Bank, as well as Kotak Mahindra Bank and our first ever loyalty product deployment with India1 Payments (formerly known as BTI Payments). We have witnessed 150% growth this year and we are aiming to achieve Rs600 million revenue run rate in FY22.”
BRIDGING SME CREDIT GAP
According to estimates by the World Bank, India’s current loan shortfall for SMEs is roughly $380 billion. SMEs credit demand isn’t being met by the traditional banks & NBFCs. Manish claims: “Saarathi, is bridging this gap. We have AI-enabled digital lending platform, with MSMEs serving as one of the primary borrowers.”
Saarathi has direct LOS integrations with major banks and NBFCs, which allows complete digital file flow till sanction. It enables verified channel partners to send digitized loan applications with detailed risk assessment to lenders. Manish updates: “We have recorded platform disbursement upwards of Rs3 billion. All our data is stored in AWS India.”
Saarathi’s operations are spread across north India. It currently operates in 12 clusters in north India. The majority of its business comes from Delhi NCR and a few cities in Rajasthan and Uttar Pradesh, informs Mahesh.
TRUST IN DIGITAL LENDING
The RBI panel has recommended that the digital lending apps be subjected to a verification process by a nodal agency that will be formed in consultation with stakeholders. It has proposed for separate legislation to prevent illegal digital lending activities. Manish believes: “The recommendations made by RBI’s group is a significant step towards creating a safer digital lending ecosystem. We strongly believe that integrating protection of consumers and transparency into the digital lending landscape will significantly increase the number of people with access to formal banking and sources of credit, eliminating the informal players. The introduction of regulations will help in curbing illegal activities and in building trust in the digital lending process thus helping the industry in the long run. Digital lending innovation is crucial for the country as it has the potential to address the credit gap, especially among MSMEs and the under-served population. Saarathi is ISO:27001 certified platform.”
REMOVING CHANCES OF FRAUD
The RBI panel has recommended that disbursement of loans should be directly into the bank accounts of borrowers; disbursement and servicing of loans will be only through bank accounts of the digital lenders. Manish feels this will be a great move towards creating a transparent and efficient lending process. “Servicing of loans through accounts of digital lenders who comply with the government guidelines will enable borrowers to get loans from credible sources thereby removing chances of any fraudulent activity. Saarathi takes an Aadhar based and OTP based consent from customers before fetching any data from its API partners,” he explains.
ENSURING DATA SECURITY
The thrust of the RBI panel’s report has been on improving customer protection and making the digital lending ecosystem more secure while encouraging innovation. Manish argues for the industry to ensure to stop this menace of illegal lending apps in the industry and explains how to increase cyber security and privacy for the customers. He advocates: “The digital lending industry needs to come together along with the government regulations that are going to be introduced in the upcoming bill to form standards that all the firms need to comply with. Making policies publicly available and setting up data storage centers in India will help in resolving discrepancies without resorting to any illegal activities, which
has been the case with many lending apps operating out of China. Saarathi’s certified providers provide in-depth file analysis with complete data security.”
Data protection of customers has been a major concern across nations. Manish vouches: “A majority of credible digital lending platforms in India are already adhering to the government guidelines. The introduction of a regulatory bill will help in protecting consumer data, making it less prone to be used by countries, where data laws are not as strict as in India.”
APPLYING DATA ANALYTICS
Technology is a key enabler in providing access to timely credit to the underbanked and unbanked corners of the country as a majority of SMEs operate from semiurban and rural parts of the country. Saarathi has gained by deploying analytics to do better CRM to increase business. Manish elaborates: “By altering the traditional SME lending process, technology is delivering breakthroughs in SME financing especially with the integration of Artificial Intelligence and Machine Learning. Both structured and unstructured data are collected by the lender and applying data analytics helps in getting relevant information for the verification process. Data analytics can also help in customer segmentation to provide specific products for the customers as per their needs. It can also help in geographical segmentation, allowing lending businesses to serve people living in rural and semiurban areas better.”
CLOUD DATA CENTERS
Out of its total strength of close to 500 people, almost 80% strength is in IT and product. Manish states: “Being an ISO:270001 technology company, we have cloud data centers, located in India.” The loan servicing software is developed by Decimal Technologies.
LEADGENERATION,BLOCKCHAINS
Saarathi is gradually adding various products on its platform. In the post-covid scenario, what are Saarathi’s targets and plans for IT, digital initiatives in the next few years? Manish reveals: “Our main focus is on digital lending, but we want to include loans, credit cards, insurance and more in our customer offerings. We also want to create lead generation platforms, blockchains for invoices, third-party integrations, and a variety of things within mobile apps. In addition, we would like to set up a direct lending system with banks to minimize the effort of creditor review and approval. We hope to extend our reach to banks and other financial institutions. We expect to build a business with annual sales of more than $100 million in the next 5 years, and for achieving this, we are actively hiring for leadership and managerial positions.”
FUTURE: VIDEO BANKING
Saarathi has plans for expansion. Manish indicates: “We are planning to expand to major clusters in south and west in the coming months.”
One of Saarathi’s projects aims to transform the entire future of banking into video banking. Manish adds: “Therefore we strive to reduce the need for fixed branches for banking and the physical presence of our customers and sales reps. We would like to continue adding new products for our customers in the next fiscal year. Additionally, we would like to work on developing a SaaS-based lending system for banks, developing a blockchain for invoicing, and reducing the difficulty of lending approval.”