Artificial Intelligence & Machine Learning-led NBFC, Arthan Finance wants to be a one-stop solution in specialized finance

Arthan Finance is a new age LendingTech that endeavours to transform Small Businesses through AI & Deep Learning based customized “Fit to Purpose” financial products. Arthan Finance has created a niche for disrupting MSME lending in India. Arthan provides growth capital to self-employed micro and small enterprises in Tier II and Tier III cities. It is a one-stop solution for all the financial needs of Small Businesses Across the Country. Arthan Finance brings in a deep understanding of the local businesses, micro-economic impacts, their seasonality, fungible cashflows and developed organizational intelligence to underwrite Fit-to-Purpose credit products in the micromarket they are present. Mr. Pravash Dash – Managing Director & CEO, Arthan Finance shares more insights on the same.


  1. What are the innovations that the lending industry has witnessed or wishes to see?

As our current economic and financial institutions are almost entirely digitized, technology advances have spurred innovations in all sub-sectors of the financial business. Most notably, all lending decisions are now done by algorithms automatically or through supervised machine learning. An alternative financial industry has emerged in the lending landscape, pushed by technology and pressure to be more accessible. Technology has helped  lending firms consolidate and evaluate data from various traditional and non-traditional sources. They can analyze a borrower’s creditworthiness by tailoring their lending products for them. Moreover, Artificial Intelligence (AI) transforms consumer lending and strives to simplify and ease administrative duties, freeing employees to build client relationships through contextual recommendations. While loans though mobile apps, website has become very common and most of the lending companies have moved towards seamless digital acquisition of customers, the embedded journey is now taking it over. These smart technologies are allowing lending institutions to offer contextual products with super-efficient user experience and providing loans when customers need them the most. Micro-lending, P2P Lending,  and non-bank SME financing have also expanded the lending sector.


  1. What are the new trends defining the fintech NBFC industry In India?

During the pandemic, when every other sector saw a growth fall, fintech thrived as COVID-based regulations limited physical movement and boosted contactless transactions. Many people choose fast-tracked online banking, which removed the inconvenience of paperwork-heavy bank visits. Digital loan distribution has always been easy to understand. Fintech NBFCs have employed alternative data sources to understand a customer’s financial background. AI and machine learning algorithms are used to estimate loan amounts and viability using alternative sources including e-commerce payment history, employment history, telecom bill payments, social media activity, and other spending patterns, bringing more people into the formal credit system.

The latest trends of online NBFCs also include branchless operations to increase reach in market and reduction in operating cost, dealer-based solution helps in expansion of business, automated end-to-end loan management, analytics to find cross-selling and up selling opportunities, agility- to quickly accommodate customer’s requirements and customization. If you are a new entrant to the Indian market and planning to innovate in the online fintech market, your business is going to be faster, more automated and optimized.

Regulators have taken cognizance of the faster digital processing is key for financial inclusion and created an enabling ecosystem with robust frameworks for better facilitation. JAM (Jandhan Accounts, Adhaar & Mobile) helped many new to credit customers availing loans from LendingTech companies creating larger financial inclusion.


  1. How did “Arthan Finance Private Limited” manifest, and why is it distinct apart from other usual fintech NBFCs?

Arthan Finance Private Limited was conceived on December 11, 2018, with the intention of providing the missing middle with hyper customised fit-to-purpose financial products in a technology-enabled environment. Our name suggests that we value Accountability, Respect, Transparency, Honesty, Agility, and Nurturing. The leadership team comes with extensive experience in Financial inclusion space having worked with leading bank’s and NBFCs.

. Arthan is disrupting the entire MSME lending in India through its multi-channel and multi product approach. We create impact in the entire value chain through collaborative partnerships to build a productive and efficient ecosystem. By using structured, semi-structured and unstructured data, geo analytics, sentiment analysis and business related information, we create Fit-To-Purpose loans starting from 7 days to 7 years and from 2000 rupees to 20 lakhs rupees. This sachetisation has helped us in covering more and more new to credit customers with smaller loans and keep it increasing basis their credit history and truly focus on purpose based financing.


  1. How would you describe Arthan’s contribution (its offerings) to the future of banking?

Arthan is a one-stop solution that provides specialized finance solutions. For MSME’s and small retail owners, we offer secured loans, unsecured business loans without collateral, supply chain finance, and invoice discounting. We’ve disbursed more than ₹3 billion and influenced 50,000 lives. Arthan Finance has studied MSMEs’ financing and the micromarket throughout time. We have used advanced data analytics, and AI & ML algorithms to keep up with industry changes and ensure client confidence. Our company provides credit and loans to kirana store owners, garage owners, tailoring shop owners, pharmacies, hardware shop owners, small manufacturers, retail and wholesale dealers, and saree shop owners who are primarily excluded from the formal financial system. Transparent and rapid processing, 24-hour loan approval, flexible loan size, Tenor, and ROI, collateral-free with easy repayment, minimum documentation, and risk insurance are the core attributes. Our smart solutions help the firms to expand their business and diversify their business lines, create jobs, and sustain future generations.


  1. What are the most difficult hurdles for regulators in the fintech space? / What are the top three obstacles confronting the NBFC industry today?

With the quick rate of digitization and the decentralized nature of Fintech, authorities who are accustomed to overseeing centralised hubs of activity and well-defined entities face new hurdles. Initially, regulators seek to strike a careful balance between maintaining data security and privacy and supporting the free movement of data. Secondly, governments must promptly respond to developing technologies and fintech models by gaining a comprehensive grasp of their consequences for the financial system and limiting their potential hazards. The third hurdle facing the regulators is the challenge of funding due to the lack of a refinancing alternatives and large scale credit guarantee for micro/small loans. In India, banks offer a variety of refinancing options. Similarly, home financing firms have access to a variety of refinancing options, including refinancing through the regulator of Housing Financing Companies.


  1. How have Artificial Intelligence and Machine Learning assisted Arthan in achieving success? / In what ways do you think Artificial Intelligence and Machine Learning have contributed to Arthan’s rise to prominence?

AI is a cutting-edge technology for NBFCs, elevating their decision-making and expanding their 360-degree view. Initially, AI and ML tools assisted NBFCs primarily with credit and risk management; however, AI is now a necessity that can be leveraged across departments. Over the years, at Arthan Finance, we have scrutinized the credit aspects for the MSMEs and developed a deep understanding of the micro market. We use a lot of data and surrogates to create our underwriting models which takes into account the business segment, hyperlocal geo analytics and other behavioural attributes of the small entrepreneurs. We are constantly providing leading-edge solutions to our customers and easy access to working capital and the utmost reliability to end their economic meanderings. We will continue to leverage our unique strengths and bring them together in order to serve those who need it the most which will also boost our prominence.


  1. What are your expansion plans? How do you intend to remain competitive in the banking industry?

We believe to create larger impact in the economy by uplifting the MSMEs which are one of the strong pillar of Indian economy. In the next 3 years we proposed to disburse more than 2,000 cr to over a lakh of nano/micro enterprises. We are fortunate to have Michael & Susan Dell Foundation as our investor who are also aligned on our mission for inclusion. Arthan has always endeavoured to increase its bottom line by optimising its operating expenses through digitization and automation projects. We will be able to remain competitive in the banking business as we create strategic collaborations with important ecosystem players and harness technology to satisfy the needs of new consumers.


  1. Fintech is rapidly altering the financial landscape. What makes this the next big thing?

Fintech has revolutionized the manner in which monetary transactions are conducted, with the majority of payments now taking place online via internet banking or mobile apps, reducing the need for individuals to physically visit banks for such fundamental tasks. While these transactions are helping people with seamless transfers, these digital footprints are giving a lot of surrogate to offer loans for such new to credit customers. As fintech continues to expand swiftly, it has never been more important for financial decision-makers to keep abreast of the most recent advancements. Fintech companies reduce the cost of financial services and increase their openness and credibility. In a relatively brief period of time, fintech has illuminated the need for digitization by bringing real-time value exchange and the “cashless” digital world to life. This is only the beginning. Fintech will spawn India’s greatest unicorns in the next few years. It is not an exaggeration to claim that fintech is practically transforming people’s lives and routines by making it simple to trade, bank, swap money, and obtain loans, all in an embedded format. The fintech business has a promising future, with the ultimate goal of making everyone’s lives easier.

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