Consumer credit space in India has exploded in the last ten years and has seen a 30x growth in this period. To discuss more on this, Santanu Paul, Founder and CEO, Talentsprint hosted the third episode of DeepTalk with Satish Pillai, MD and CEO, TransUnion CIBIL Ltd.
DeepTalk is an interactive series on emerging technologies where leaders, experts, trendsetters at the forefront of technological revolution discuss, and share their unique perspectives and knowledge with community professionals on disruptive technologies like AI, ML, Blockchain, Fintech and IoT.
This third episode of Deep Talk’ Torture Data, Extract Confessions’ covers key reasons for the growth of the credit business. For the last couple of years, India has been on the verge of a huge consumer credit access revolution, primarily due to facilitating factors like progressive regulatory reforms and mobile technology. Loans are available in an accessible and swift manner, and the critical element of data analysis forms the bedrock for security and recovery of loans.
So, what does the future hold for the consumer credit business? Santanu Paul, CEO & Co-founder, Talentsprint discusses the changing face of consumer credit in India with Satish Pillai, Managing Director & CEO of India’s leader in credit information, TransUnion CIBIL Ltd.
With payments becoming multi-channel, a million UPI transactions three years ago has risen to a billion transactions a month. Consumer credit space is on an aggressive increase, with various banking and non-banking units are offering their products as a lower alternative to credit card based purchase. There has been a remarkable 30x growth in the consumer credit business. According to Pillai, in 2008, a million applications were processed in a month. Today it has become a million in a day! Change is not just in volume but also in the construct in terms of serving the customer in different ways from time and value standpoints. The loan is no longer the objective; instead, the product feature is what counts. Loan disbursers have more skin in the game now.
Over 22 million applications per month and 250 million requests from existing customers, the quantum of information is at a 20-30% increase every year. With consumer data, CIBIL finds unique ways of linking and leading to information about a single individual which is called `asset layer’. Microservices comes in the second layer of deploying hard coding to make the data usable. The set, get and go layers require technology re-write, which is tough to achieve in legacy systems and one should start thinking of design not in the proverbial definition but in terms of what the consumer wants and then about product engineering the idea. The core job being the provision of updates, CIBIL updates 350 million records every month, and the objective for the immediate future is to provide real-time updates.
With respect to the application of data sciences, Pillai feels the journey is still in progress as various elements of data are in the process of being worked upon. Besides, the other aspects of human behaviour do not reflect directly in the data at hand. For instance, CIBIL score matters but direction and velocity are of consequence too. A score of 750 should be perceived in the context of the score increase from 700 or decrease from 800. The more one delves into data, the more search for instances in the credit history. Talking about financial inclusion, out of the 22 million people who apply for a loan in a month, 85% have borrowed earlier, and about 10% of these people are getting loans every 30 days. Insights from data on risk measurement, margins, and so on should be the focus for banks and other lending institutions. It has been the business model of mini banks to bundle service offerings for customers. A zero per cent loan is not just a loan. The customer gets a zero per cent loan, a credit card offer and insurance and, then in the next step the product he wants to purchase, like a TV.
The CIBIL brand platform `Information for Good’ is all about assisting consumers in obtaining loans at reasonable rates on the one hand, and on the other help banks and other institutions quantify risks. There is an overlay of security which is very important, and as custodians of data, the objective is to use it for the betterment of customers. We are like the North Star, says Pillai, and everything that is done is consumer-centric.
As a company, Pillai feels it is critical to have skilled people to help design hardcore machine learning frameworks by using heuristics to solve the problem, not for resting data but for flowing data. Technology is fairly simple, but implementation is difficult. Creating the static scores to dynamic algorithms might not be easy initially, but over time it is sure to get better. The flowing data analytics is the future to invest in.
The paucity of data can prove to be good as it allows for smartness on how to use it. Pillai is happy with the quality of data in India. 30x credits cannot happen with bad data, he says. The ability to obtain good quality data from customers is what separates CIBIL the company, from the competition.
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