In an exclusive interview with Express Computer’s Radhika Udas, Mr. Sameer Aggarwal, CEO and Founder of RevFin, a digital lending platform, gets candid about the fintech industry and technologies used to benefit customers.
Kindly brief us on RevFin’s business model and what problem in the current financial process is RevFin looking to solve?
Our business model is simple. We give loans to individuals and charge them interest on the amount. Loans are repaid to us in equal monthly installments. Our main objective is to promote financial inclusion. For this, we provide loans to customer segments that do not have access to formal and affordable lending. Our loans are given out for productive purposes like employment generation.
Most of our customers take their first loan from us, therefore, we use several innovative techniques to underwrite loans in the absence of credit history data. These include Psychometrics, where we determine intention to repay a loan based on psychometric profiling of individuals. We also use gamification techniques to improve the repayment behaviour of customers. All our loans are delivered digitally.
How do you think the combination of technology and finance would pave the way forward for Fintech?
Financial services have always used technology to bring efficiencies in processes through automation of tasks and for data storage. Developed countries have also used technology for decision making over the last four decades. This phenomenon of using a combination of data and technology to make decisions is being increasingly adopted in India. While this brings efficiency and consistency to decision making, it does not help much in expanding to new markets and customer segments. The real gain from the use of technology will be when segments that are deprived of formal credit get access to credit through the use of innovative technology. This is where fintech can add real value to society. The use of innovative techniques can help identify and extract new forms of data through technology, which when analysed properly can help make decisions. As an example, the use of psychometric profiling to determine the intention to repay. Another example is to use a person’s social network to infer their performance based on the performance of their network. There can be many more such examples and the good news is that several fintech firms are already working on such techniques.
What kind of technology is RevFin using for underwriting and other processes?
RevFin uses innovative techniques like psychometrics, biometrics, and gamification to generate user data as part of a loan application journey. This data is then processed using machine learning algorithms to underwrite loans. As we follow a low/no touch digital model, we use biometrics to establish identity and presence through artificial intelligence-based algorithms. We are also in the process of developing voice-based authentication and sentiment determination techniques.
Your thoughts on AI, ML, and Data Analytics for Fintech?
Machine learning and data analytics have been in play for many years in developed economies like the USA and UK. India is now adopting such techniques for KYC and underwriting. Use of Artificial Intelligence is still in the early days and here is a lot more learning and benefit to be derived from it. The use of AI and machine learning helps in bringing sophistication, consistency, and efficiency in decision making. However, the availability of right and good quality data is more crucial than the technique used to analyse data. Therefore, organisations with differentiated and relevant data will win in the long term.
RevFin has been in the news for encouraging electric mobility by lending to EV customers since the costs are too high. What future do you see for EVs in India?
Electric vehicles offer very good running economics in the small commercial vehicle category. In my opinion, over the next 5 years, almost all intracity commercial vehicles (2, 3 and 4 wheelers) will shift to electric. Small towns and semi-urban areas will leapfrog to the use of electric vehicles for last-mile connectivity. Annual sales of such vehicles can easily cross 10 mn units in the next 5 years.
If proven successful, then intracity buses will also almost entirely shift to electric.
I do not see much adoption in the private electric vehicle category. This is due to the high input cost and low average running of such vehicles. Poor battery/charging techniques and low infrastructure for charging are a barrier. Even the environmental argument falls flat as production is equally if not more damaging to the environment than internal combustion engine vehicles. Low average running means not much reduction in pollution due to emissions and battery dumping will also lead to polluting of the environment.
Since the company would be acquiring a lot of confidential data, what is your cybersecurity plan?
We take cybersecurity very seriously. As an organisation we constantly monitor the security of our digital assets and tie any loose ends. We also use third-party cybersecurity experts to test our infrastructure and make it crack proof. We store all our data in secure cloud servers.
What gives RevFin an edge over its competition?
There are over a billion mobile phone connections in India with about half of them on smartphones. This means that there is still a huge chunk of the population that is not digitally enabled. Even amongst those who have smartphones, usage for accessing financial services is very low. Therefore, the opportunity to expand in the digital world is immense. Organisations with innovative ideas, good products, and secure technology will be able to access opportunities. At Revfin, we pride ourselves in the way we underwrite loans without compromising on ease and simplicity of the process. This gives us an edge over competitors, which we are exploiting to increase our footprint.