FEBRUARY 20209Disruptions happen on a strong backbone of internet, GPS and mo-bile penetration. For lending, in addition to mobile and internet, the disruption enabling platform is India Stack. The stack consists of different layers including Aadhaar eKYC, eSigns, UPI and consent driv-en data sharing. The process from identifying a user's intent to borrow all the way through to repayments will happen paperless and presence less. In the next five years we will see all users authenticate them-selves with Aadhaar and sign agree-ments with eSigns. UPI 2.0 will au-tomate payments and remove the need for physically signed cheques. A consent driven data sharing layer will make the process of submitting bank statements, IT returns and utility bills seamless and secure for the users.An important piece that needs to mature more is underwriting pro-cess. While there are many smart NBFCs that have automated the un-derwriting process, the larger ones still rely on human intervention and subjectivity. This is due to the myr-iad forms in which an applicant's data could come. Address proof, for example, can be one of 20 plus document types each of which has no standard format. Data science, ML and AI are ripe to start exper-imentations in this space. Once the data formats are standardized, algorithms can munch through personal documents and financial statements in no time and without human errors or fatigue. These al-gorithms can learn over time to discern between good and bad bor-rowers. There is ample research to prove how psychometric traits like impulsiveness and delayed grati-fications are strongly related to a person's financial discipline. We will see more this in the coming years. One word of caution though - AI and ML can go horribly wrong. While we avoid human errors, computer bugs and faulty mathematical models will crop up.Data privacy is an area for reg-ulation to catch-up. Lending orga-nizations will have access to pri-vate data of potential and existing borrowers. The need of the hour is to make it is easy for the user to know what data is being collected and constraint the sharing this data with 3rd parties. European Union has just taken a bold step in this di-rection with General Data Protec-tion Regulation (GDPR). Something along similar lines needs to emerge in India also.Credit has not reached people who need it the most. Technology is yet to disrupt lending like some of the other industries. Mobile and in-ternet penetration along with India Stack is a transformative platform that will launch the lending indus-try. What we require is careful, in-novative experimentation and data privacy regulations. In the next five years we will see all users authenticate themselves with Aadhaar and sign agreements with eSigns. UPI 2.0 will automate payments and remove the need for physically signed cheques
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