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AI & other emerging tech to revolutionise debt recovery for banks, NBFCs

The use of AI in credit monitoring and recovery is still nascent, but the combination of an exponential increase in the amount of available data and improving ML algorithms has the potential to greatly impact the field. With the technology fast maturing, there could be a considerable growth in AI in financial services within the next three to five years. AI will impact areas like fraud detection, model validation, stress testing, and credit scoring, says Anand Agrawal, CTO and Co-Founder of Credgenics, a SaaS based debt recovery startup, working to control the rise of NPAs in a pandemic ridden economy

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Established in 2018, Credgenics is a SaaS-based end-to-end debt recovery platform. Presently, over 50 lenders are using the platform, which includes seven banks with notable names like ICICI, Axis, and HDFC and more than 40 NBFCs, such as LoanTap, Drip Capital, Udaan, among others. In the last three years Credgenics has managed to grow MoM from 80–100 per cent. The startup has raised Series-A round funding, with Tanglin Venture Partners and Westbridge Capitals being the main contributors, with participation from the existing investor Accel Partners; the valuation has now reached to US$ 100 million. Credgenics has also on-boarded more than 2200 lawyers and collection-partners, apart from building a solid team of more than 150 enthusiasts and experts.

Anand Agrawal, CTO and Co-Founder, Credgenics

How is your SaaS platform helping banks, NBFCs and financial institutions in debt recovery during these troubled times?
The NPAs have surged in the aftermath of the moratorium, creating a huge demand for recovery and collections platform. There has always been a need for a full stack resolution platform which could handle and expedite the resolution of the ever-growing bad loans in the banking industry and Credgenics exactly fits in the picture during this troubled time. In the present context, the necessity has taken over the basic needs of the banking industry as lending is growing at unprecedented rates and so are the defaults. With the economy still in the vulnerable phase owing to the waves of the pandemic, the debt recovery solutions and predictive analysis our platform provides have already proven beneficiary, and will stand the test of time.

If we be honest, the pandemic-induced crisis has actually given the perfect opportunity to test our idea and our mettle has shone forth. The banks are favouring digitisation, whereas we are already spearheading that role through our saas-based platform and offerings, such as, efficient data management, automated communication, digital notices, Online Dispute Resolution, among others.

How is AI effective in managing lending and collection strategies?
Credgenics is India’s only technology enabled platform for the resolution of non-performing assets in the banking sector. The platform delivers customised collection strategies and recommends optimal legal routes to facilitate faster resolution of stressed assets which helps creditors efficiently improve their NPA, geographic reach, and customer on-boarding.

AI and ML both are a new age technology which is optimising and reducing human efforts in diverse areas. The AI needs a lot of data and banking, to be specific lending in our case, involves a lot of data that is circulated to the different departments and processes and has to be tracked and maintained until the loan case is settled. This data management is done entirely through AI. On the collections front, ML is helping us predict recovery chances based on multiple parameters including defaulter’s personality information, demographics, language, EMI payments, and communication follow-up trends. Our proprietary model is reducing the debt collection cost making the unit economics more valuable for lenders by redefining the buckets basis recovery chance, delinquency days, and different communication channels; hence increasing overall collection and reducing the expected resolution time.

What is your perception of how AI and other emerging technologies will revolutionise credit monitoring and recovery in the future?
There is a high demand for AI and ML in almost all industries, and it’s not going to reduce. Currently, AI technology holds a global market value of over US$ 30 billion US. It’s forecasted that the global AI market will grow rapidly in the coming years, reaching up to US$ 126 billion by 2025. The fintech and digital lending market also expects a CAGR of 23.37 per cent until 2025, and there are lots of factors even fastening the growth.

The use of AI in credit monitoring and recovery is still in its nascence, but the combination of an exponential increase in the amount of available data and improving ML algorithms to digest these data has the potential to greatly impact the field. With the technology fast maturing and a better understanding of AI models, there could be a considerable growth in AI in financial services within the next three to five years. AI will impact areas like fraud detection, model validation, stress testing, and credit scoring.

How will this assist banks mitigate the risks of bad loans?
The pandemic has had a significant impact on India’s economic situation. The situation of NPA crises is particularly serious for the Indian banks and NBFCs that are already struggling to cope with the rising bad loans. If digital infrastructure at banks and NBFCs is improved, application processing times and loan acceptance levels would increase, making cash available to the people most capable of driving the economy forward.

In India, digital lending is set to cross US$ 100 billion mark by the end of 2023. Increased disbursement of credit has also led to a spike in NPAs for both NBFCs and banks. This was an opportunity in the Indian market to launch Credgenics as the SaaS platform that comes armed with two unique offerings, the Automated Communication and Digital Legal Notice Module. Our SaaS enabled debt recovery platform was designed to help lessen the burden of the lenders (banks, NBFCs, fintechs) through better data management and ensuring lesser cost and time consumption in the recovery process. The legal module simplifies the entire journey of issuing a legal notice to the borrowers, sending a soft copy via digital channels (SMS, email, and WhatsApp) and physical modes (via courier partners) the platform is at a confluence of legal, technology, and finance.

What is your business and technology strategy for the post pandemic era?
With a rapidly scalable and profitable usage-based pricing, our platform offers two solutions and will continue in during post-pandemic era. These two solutions are an integral part of our business model. These are:
a. Use the SaaS platform and manage the data and the recovery: Here the creditor can pay for the SaaS platform and using our API data integration features, manage the data on their own and decide the next course of action that needs to be taken.
b. End-to-end recovery, entails the SaaS (including customisation), automated communication channels, and legal services. The creditor on-board is provided timely status for each case and the steps being taken. If there are specifications required, they are discussed at the nascent stage with regular feedbacks taken at each step. This solution entails a certain freedom from constant worries for the clients.

Also, for executing the technology strategy, Credgenics offers a full stack collection as a service platform. It’s a new-age smart automation-enabled solution for debt collection that is integrated with an AI powered recovery chance predictor to help the lender strategize recovery mechanisms basis chances of recovery.

Each organisation aims at evolution and on that note, we would like to enhance our offerings and core products, while bringing more and better products that would further the cause of digital first momentum in the banking and finance and legal arms.

Any other significant factor you wish to highlight?
We are likely to build further from our present position, which includes equipping ourselves with a better enabled team, is on growing operations and business by expanding in multiple lending products, apart from our collection angle alone. Our plans are also to continue researching and upgrading our platform features, offerings and market presence because technology and legal, both fields require a constant upgrade. Research and strengthening the core also becomes vital as the judicial and fiscal regulations in the target geographies (the existing and with the intention to spread more within India and even beyond the Indian shores) have to be thoroughly studied, followed by the design and implementation of the Credgenics platform and offerings.

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