By Tashwinder Singh
The Indian financial sector has changed drastically over the past decade, with overwhelming growth blended and widespread digital transformation. From a traditional model, the country has turned into a service-oriented cyberspace with seamless digital delivery of financial service channels robustly and holistically integrated.
It is India’s Digital Public Infrastructure that is the main driver of the transformation into which the whole world is beckoning. Digital NBFCs use this innovative and efficient paradigm to raise the bar in their lending models powered by AI/ML for redefining MSME credit, thereby unlocking newer avenues for growth and opportunity for businesses from all walks of life.
Improving customer acquisition
Fintech companies possess an enormous amount of data that AI algorithms can scrape through to understand customer patterns, preferences, and behaviors. The insights can help in delivering precise and effective marketing campaigns toward certain customer segments. Specific customer preferences and behaviors in marketing campaigns can also be targeted in the case of fintech firms. Potential customers can be acquired by assessing customer data through machine learning algorithms and providing customized recommendations and offers through AI.
The power of AI in Operations and Management
AI-powered facial recognition technology can recognize an individual by matching the image being displayed to an official document image or a series of previously taken images. In this way, identity theft during onboarding is much less likely to happen. Most biometric authentication techniques include fingerprint scanning, iris recognition, voice recognition, or any combination that helps provide higher security levels to customer authentication and transaction verification. Furthermore, KYC laws also require that a financial institution identify its customers. AI technology makes it easier for fintech organizations to fulfill such obligations by accurately verifying the identity of the customer while also keeping scam-proof records of the whole verification process.
Analyzing credit risks and underwriting for MSMEs
Fintech companies providing lending or credit services can utilize AI to assess the creditworthiness and risks of potential customers. Such algorithms will enable NBFCs to acquire customers while reducing the risk of defaults through more accurate credit decisions. AI-powered predictive modeling can help NBFCs predict the future financial efficient performance and repayment behavior of MSMEs. For example, artificial intelligence algorithms can be used to calculate the probability of defaulting or paying later based on past data and by identifying predictive patterns.
This enables NBFCs to mitigate risk as well as optimize their lending injunctions. In the future, AI-based credit scoring models will be more precise than conventional credit scoring methods in predicting the creditworthiness of personal borrowers, given the realistic credit score and loan price the models will be able to generate after analyzing ample data points and identifying significant risk factors about personal borrowers by using machine learning approaches.
A revolutionizing aspect of NBFC underwriting procedures within the ambit of AI is its ability to automate high-volume labor-intensive processes that include data gathering, verifying, and analysis. This automation makes the process fast, reduces chances of human error, and enhances efficiency giving NBFCs the ability to underwrite loans for MSMEs fast and at a reasonable cost.
Enhancing customer service
According to PwC, 83% of financial organizations in India define improving customer experience as their top AI usage driver. Chatbots and virtual personal assistants powered by AI can take care of customer questions and requests for support 24/7 instantly. They respond to frequently asked questions, help with questions about products, and help customers through troubleshooting procedures. The final step is to make customer service more responsive and available for small and medium enterprises. By providing customer support in vernacular languages, companies stand to greatly enhance engagement and retention among users who are otherwise likely to be poor communicators.
This builds up loyalty and creates strong ties with the customers. AI analyzing customer feedback through surveys, reviews, and social media can draw out some valuable insights into areas worth improving. Thus, through the understanding of customer sentiments and likes, MSMEs can now make data-based decisions to improve products, services, and customer support processes, thus improving overall customer satisfaction and loyalty.
Overall, the future looks bright because digital transformation has made it easy to access finance, personalized services, and better support for MSMEs, which will give them the power to lead economic growth and promote financial inclusion within India.
(The author is Tashwinder Singh- CEO and MD of Niyogin Fintech Limited, and the views expressed in this article are his own)
