Financial technology companies have partnered with credit
scoring companies to enable faster and more efficient lending. Online lending marketplaces Rubique
said their partnerships with credit
information companies Experian
and CIBIL, respectively, to offer free credit
reports to customers, made their lending more efficient.
report partnership with CIBIL, as well as our proprietary credit
score which blends alternative and conventional data, has helped us move from a blended approval ratio of 40-45 percent a year ago to around 65 per cent approval ratio now, said Manav Jeet, managing director and chief executive, Rubique.
Bankbazaar’s year-old partnership with Experian
increased the chances of approval of loan for its customers. “The credit
report makes an individual aware of her own score and thus enables her to decide if it’s the appropriate time to apply for a financial product. If the person has a bad credit
score, she can now choose to wait and improve her credit
score before applying for a loan,” said Navin Chandani, chief business development officer, Bankbazaar.
While both Rubique
and Bankbazaaar do not lend on their own books, they saw a marked difference in loan approval ratio of their customers.
“These partnerships play a key role in bridging the demand-supply gap. As a result, it helps the lenders provide credit
where it is due, while keeping the risk at minimum,” said Vaishali Kasture, managing director, Experian Credit
Online payment service provider PayU, and Germany-based fintech
company Kreditech recently partnered to provide instant loans for online purchases. “Customers can make a real-time decision as to whether they want to take a loan to buy a particular product and they would have customized loan options available to them, with rates based on their credit
score,” said Shailaz Nag, Managing Director and Co-Founder, PayU
India. While PayU
is in charge of distribution and providing consumer spends data, Kreditech lends on its books and provides the credit
invested EUR 110 million in Kreditech and this was the first of many lending partnerships between the two, said Nag.
Private sector lender RBL Bank has partnered with alternate data company Credit
Vidya on two accounts – verifying salaried customers data and providing alternate additional data of customers. “Our partnership with Credit
Vidya is for providing us with alternate additional data like spending patterns, bank statements and more from the consumer’s phone with her consent,” said Harjeet Toor, Head – Retail, Inclusion and Rural Business, RBL Bank. While the bank is still testing the impact of its partnership for the credit
model, it said that Credit
Vidya’s technology provided a cheaper and faster way of verifying a customer’s place of employment.
“Our platform that onboards a customer can be integrated with the FinTech
companies within 8 -12 weeks timeframe. The entire process is digitized to reduce the cost of operations and to bring speed and scale in the lending process”, said Rajiv Raj, Co-founder and director, CreditVidya.
is able to provide alternate data using technology we have not developed so far. We can use this data to further refine our existing credit
scoring model,” said RBL Bank’s Toor.
said that alternate data is most beneficial for assesement of new – to-credit
customers for whom centralized or structured data is not available.
“This segment today uses mobile, internal and social media extensively and hence, leave their digital footprint. We can use this digital footprint to understand customer profile more in detail and thereby, provide them credit
at early life-stage”, said Experian.
works as credit
enabler for leading lending institutions and looks at numerous data points on customers to assess customers’ risk, authenticate and check frauds. Here we check ability, intend and stability of the customers using alternative data,” said Raj.
score helps us understand a customer’s intention to pay as it tells if a person has defaulted on any loans before. Alternate data points like travel size, ecommerce shopping, other spends and telecom bills help to understand the consumer behavior and consistency in terms of payment and serves as a validation, said Rubique’s Jeet. While bank statements require consent from the customer, a lot of data like telecom bills and e-commerce can be pulled shopping from direct sources, he added.