The Account Aggregator framework can be used to improve the process of digital lending: Nageen Kommu, Founder and CEO, Digitap.AI
Digitap is an active participant in the Account Aggregator ecosystem and also a registered Technology Service Provider (TSP) on Sahamati, a self-organized Industry Alliance for the Account Aggregator ecosystem. Digitap has achieved sales of around USD 1 Mn for year 2021-22 by onboarding around 60 clients in the Fintech and banking sector. The company is growing at 200% CAGR. Nageen Kommu, Founder and CEO, Digitap.AI, shares with us his plans for accelerating the company’s growth
Some edited excerpts:
Please shed light on the journey of Digitap since inception and highlight a few milestones?
When the Covid-19 crisis hit us, a majority of the world’s economy came to a halt. This made lending money to companies and individuals risky. Many banks and fintech companies were caught off guard because they couldn’t determine the nature of their customers.
This is when I realized the value of having a company that would conduct background and financial checks for its clients before helping them decide whether or not to lend to the prospective borrowers.
Founded in 2019, Digitap works with 90+ leading fintechs/ NBFCs like Bajaj Finserv, Motilal Oswal, Incred, KreditBee, NAVI, Northern Arc, BharatPe, CredAble, Lendbox, Faircent, Finnable, mPokket, MAS Financial Services, etc.
As of now, we provide services to BFSI companies in India and aspire to have a global presence in the next 5 years. Additionally, we work towards continuous product innovation, and are a listed Technology Service Provider (TSP) as a part of the Account Aggregator (AA) ecosystem. In the capacity of a TSP, we have taken several customers live on the AA framework.
Please elaborate on the business and revenue model of Digitap
As the process of our business model, we develop solutions that can be sold as Application Programming Interfaces (APIs) and we provide the data to our clients through these APIs. We then ask our customers to pay for what they use, hence we usually don’t charge any hefty upfront fees or integration fees. We ask our clients to pay for the APIs they consume only and the payment is made on a post-paid model.
What are the various products and services by Digitap for financial institutions?
Digitap’s product stack that it offers to its clientele is the scoring model, which allows them to create customized scoring models that will benefit their customer segment. The primary goal of a scoring model like this is to help businesses improve risk management and reduce fraud. KYC solutions, Optical Character Recognition and document validation, and Reserve Bank of India (RBI) compliant video KYC solution are among the platform’s onboarding options.
At present, we are currently focusing on individuals as our primary customer segment. We aim to gather data about these individuals which will help the fintech clients to know more about these customers and make a decision whether they should provide credit to the customers or not.
Elaborate on the role of technology in Digitap’s distinctive stack of offerings
We use AI/ML technologies in almost all of our solutions, whether it’s assisting digital customer onboarding or analysing various data sources and developing scoring models to assess a customer’s credit worthiness.
Our initial AI/ML focus was on OCR-related technologies, from which we progressed to applying the technologies to crunch numerous data points obtained from customers and generate scoring models for decision making.
As Digitap is a listed Technology Service Provider (TSP) on Sahamati, how can the Account Aggregator framework be used to improve the process of digital lending?
By allowing customers to securely share their financial data with lending institutions, the Account Aggregator framework can be used to improve the process of digital lending. This information can then be used to quickly and accurately assess the customer’s creditworthiness, streamlining the loan application process and eliminating the need for manual financial information verification. Furthermore, the framework can be used to automatically update financial data, eliminating the need for customers to manually provide updated information and improving credit assessment accuracy.
Considering Digitap works with multiple digital lenders, how do you see the next decade of digital lending in India?
I anticipate a period of significant growth and innovation in digital lending in India over the next decade. The Indian government has made significant investments in digital infrastructure and implemented policies to promote digital financial inclusion, which are expected to drive the country’s growth in digital lending.
AI and ML are also likely to become more prevalent in the digital lending space in India. These technologies have the potential to improve credit assessment accuracy, automate the loan application process, and reduce fraud.
It will also be a period of regulatory compliance, with the RBI and other regulatory bodies issuing new guidelines and regulations to ensure the safety and security of the financial system.
As Budget 2023 was announced recently, please share your views regarding the same
The Union budget announced by FM holds great significance for the Fintech sector, as it lays down the roadmap for further growth and development in the industry. Recommendations on adopting a risk based approach for KYC and a system that is amenable to meet the needs of Digital India will ensure measures taken to control potential financial crimes are in line with the risks identified. Additionally, extending incorporation benefits for startups to 10 years will further boost sentiment and encourage entrepreneurship in the country. This will also make startups more attractive to investors since a lower tax burden means better income and returns on investment.
Lastly, provisions to boost R&D and innovation for financial inclusion, and create innovative financial products by expanding the ambit of the Digilocker facility and using 5G, AI and other technologies will help bridge existing gaps in the system and auger a positive impact to the country as a whole in the long run.