How the digital credit ecosystem has evolved?
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00:00 How the digital credit ecosystem has evolved and you have been part of this for a fairly
00:13 long time now, so if you could kind of get in your views.
00:16 I would like to share the bank bazaar view because we see 50 lakh customers or visitors
00:21 come every month and my focus is going to be on Paypal S. I think the unique angle I
00:26 want to add is that with what's happened with the UID authority, they have opened up infrastructure
00:32 on which both banks, bureaus and young companies can leverage off to automate and drive Paypal
00:40 S transactions in our chain.
00:43 So two key features is in the old way of doing business, I need your driver's license, I
00:48 need your utility bill, potentially I need a lease, I need to know what you look like
00:54 right, and all of this is physically picked up, it's transported to a processing hub,
00:58 it gets validated like Manish rightly pointed out and then it goes through paper.
01:03 In the eKYC model, technically I just authorize access to my eKYC on the Aadhaar system and
01:12 all of this which used to take let's say days if not weeks happens in one second.
01:17 So eKYC is a new enabler for Paypal S. There's technology available around eSign right, so
01:24 I don't need to bring all these reams of papers, get signatures in five different places, but
01:29 we electronically sign a document based on UID.
01:32 So I think the infrastructure is exciting.
01:34 I think the question now is how quickly can we move?
01:37 And the question needs to be asked of everyone, of the banks, of the regulators, of platforms
01:42 such as Bank Bazaar, to see how can we truly democratize finance by making it 100% paperless.
01:48 So I'll give two perspectives on this.
01:52 When my clients talk to me about online credit decisioning, they usually mean one of two
01:57 things right.
01:59 Sometimes online means on the internet and sometimes it means real time and instant right,
02:07 and sometimes it can mean both.
02:09 So you can be online in the sense of being on the internet without being real time, because
02:16 you know there will be customers who would like the convenience of operating online and
02:21 on the internet and outside banking hours, but they won't need a decision instantly.
02:26 There will be other instances where it needs to be real time, but it's got nothing to do
02:30 with the internet.
02:32 So you could talk about a consumer durable decision that is given in let's say a chroma
02:38 store, which is on the basis of a desk and a customer standing in front of you.
02:44 And there's a third which is online in the sense of internet based as well as real time,
02:50 which is for example what we work with people like Ardilon.
02:54 Now in different circumstances, you're dealing with different customer journeys and you're
03:01 protecting the lender against different things.
03:05 Internet is typically anonymous right.
03:07 So whilst you have a lot of customers who like the idea of doing it in their own time,
03:12 you also have a minority of customers who like the anonymity that comes from, let me
03:18 try my luck because I'm not standing in front of the lender.
03:23 Now real time, with the customer standing in front of you is obviously not anonymous,
03:30 but it is a customer who's trying their luck at getting a decision in two seconds.
03:34 Let me see what happens, maybe the bank makes a mistake.
03:37 I am who I say I am, but I don't intend to pay you, I'll still try my luck.
03:42 And then you've got, as I said, people who try to give the customer experience that is
03:48 on the internet as well as real time.
03:54 So as a credit bureau, what I try to do and as a data analytics company, what I try to
03:59 do is I try to understand the customer journey that is being intended and what my customer,
04:05 in other words my client, like a bank bazaar, is trying to do and how I can help them on
04:10 it.
04:11 And in different cases, my own customer is actually trying for different things, right,
04:18 and the customer journey they are intending is actually different.
04:21 I think before we kind of comment on yours, I just want to take off a point that Manish
04:25 made about the margin for error when you do a credit score or a credit bureau report versus
04:30 the conventional intrusive methods, and I completely agree they're intrusive.
04:35 I think you're right that there might not be a significant change in the default numbers
04:40 because you're using now credit bureau scores as against the old method.
04:44 The difference is that I think some of the banks at the operating level still need to
04:49 understand the usage of credit bureaus and credit scores.
04:52 And therefore the accountability issue, especially in your public sector banks, kicks in where
04:56 if you've done all the traditional intrusive methods of doing appraisal and the loan goes
05:01 bad, it doesn't go into your file as a credit officer.
05:04 Whereas if you've used this new nice method called a nice 750 score and then the loan
05:09 goes bad, you probably are in trouble in terms of an ex-promotion.
05:12 But that is more on the lighter side.
05:14 I think credit bureaus are still used more as a tick mark as against a yes/no decision.
05:22 And some kind of a magical 750 number seems to have emerged as the acceptable number amongst
05:30 the banks.
05:31 Now that is not the intent of a credit bureau.
05:33 The intent of the credit bureau is to give a loan to a guy who also is at 700 but recognize
05:39 that the risk is higher and therefore maybe price it higher or collateralize it differently.
05:44 And that's not yet happened.
05:45 And that is really the next evolution that needs to take place.
05:49 We talked about speed.
05:50 And I just want to kind of say that, yes, loans get processed faster, less intrusively.
05:56 It's supposed to be more cost efficient, although I think the previous panel talked about the
06:01 hidden costs of social media marketing and using that.
06:05 And it's supposed to expand your market.
06:06 But I think there is something very fundamental that we are forgetting here is the speed of
06:10 the Internet.
06:11 And I think everybody is forgetting that particular aspect that even with 4G coming up and I get
06:17 this little message which says Vodafone has gone 4G in Bombay, I'm not sure that the speed
06:23 of the Internet allows me to be continuously dealing with a bank or with my customer without
06:30 an interruption or without having to get bored because that little circle is going around
06:34 and around on my phone.
06:36 So I think this is one piece of infrastructure in this whole ecosystem which needs to be
06:40 addressed.
06:42 And the last point I wanted to make was we're talking about customer behavior.
06:46 And as we all know, we're all human beings here.
06:49 The day we can predict human behavior, we'll have conquered the world, including our respective
06:54 marriages, I think.
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