AI should be seen as augmented intelligence, not artificial intelligence: Arvind Muraraka, CIO, Arohan Financial Services

As digital transformation reshapes India’s financial landscape, microfinance institutions are leveraging AI, data analytics, and cloud technologies to expand access to credit in underserved and rural markets. In this conversation, Arvind Muraraka, CIO, Arohan Financial Services, shares how technology is enhancing customer onboarding, improving credit assessment for new-to-credit borrowers, and strengthening cybersecurity, while still preserving the critical human touch that defines microfinance.

How are you leveraging digital transformation, such as AI and data analytics, to drive financial inclusion in underserved rural markets?

We are extensively using AI-driven tools in our field applications, particularly for customer onboarding. A key focus area is credit underwriting, where data analytics helps us assess whether a customer is suitable for a loan.

We also deploy AI for customer identification, this includes validating KYC documents, processing e-KYC, and using machine learning for image verification. These tools help us ensure that we onboard the right customers by combining data analytics with image processing capabilities.

What role do AI and data analytics play in improving credit risk assessment, especially for new-to-credit customers?

Traditionally, underwriting relied heavily on credit bureau reports. However, for new-to-credit customers, such data is often unavailable. In these cases, we use alternate data and demographic insights.

This includes understanding a customer’s living conditions, livelihood, local economic environment, and even informal feedback from the community. These factors help us build a more holistic risk profile.

That said, microfinance fundamentally relies on human interaction. Social collateral and personal engagement remain essential. Technology helps validate multiple data points, but it complements, not replaces, the human touch.

Cybersecurity is a growing concern. What are the biggest challenges you’re facing, and how are you addressing them?

There are two major challenges.

First is the issue of fake or tampered identification documents. Some fraudulent documents are very close to genuine ones, making detection difficult. To address this, we rely on biometrics and AI tools that can detect manipulated images or forged KYC documents.

Second is the rise of fake QR codes used in digital collections. Fraudsters circulate these codes, misleading customers into making payments to the wrong accounts. We are deploying tools to detect such fraud and, importantly, educating customers on how to identify authentic QR codes.

How is cloud computing enabling scalability and operational efficiency?

Cloud has become integral to modern operations. It allows us to scale infrastructure dynamically, ramping up resources during peak demand and scaling down during low usage periods.

However, there’s also a need for caution. If not monitored properly, cloud usage can lead to cost overruns. While scalability is a major advantage, it must be managed efficiently to ensure optimal utilisation and cost control.

What emerging technologies do you see shaping the NBFC and microfinance sector in the near future?

In the near term, two areas stand out.

First is deeper AI deployment, particularly in identifying and onboarding the right customers. Second is the expansion of digital collections, which will become a key operational focus for most institutions.

These trends are already gaining momentum and are likely to accelerate rapidly.

Any final thoughts for industry peers?

I often say that AI should be seen as augmented intelligence, not artificial intelligence. The goal is to empower people with better tools and insights so they can serve customers more effectively.

In microfinance, human interaction is indispensable. Rather than replacing it, technology should enhance it, helping field personnel make better decisions and deliver better service.