Credit Bureaus and FinTechs should collaborate

Pinkesh Ambavat, CIO, CRIF India informs how credit bureaus are leveraging on technology especially in the current situation.

Q.How do you see competition between credit bureaus and FinTech start-ups globally and also in India? How do you see the credit bureaus growing in Indian market?

Today, modern digital finance companies have adapted their own methods using alternative data sources to assess the creditworthiness of borrowers. But I do not see a competition happening globally, and not in India as well. I think there is a lot of collaboration happening because of the alternate data present with FinTech companies and financial transaction data present with the credit bureau. If they can be combined together a lot of innovation can happen or a lot of new products can be derived. For example, the credit bureau always faces an issue where the people who are very new to credit or who are taking credit for the first time, and it is very difficult to score them. With alternate data it will be very easy for them to score as well and take a decision whether to go to for credit or underwriting as well. I would say there is a lot of collaboration happening rather than competition.It is a healthy collaboration because it is helping as in credit bureaus are seeing regular growth or the way market is growing credit bureau is also growing. But at the same time with this alternate data and FinTech startups coming into the picture, a lot of new products are also coming in the market. For example early salary, pay day, peer to peer lending those were not in the standard lending practices. These are the new concepts which are coming in because of the FinTechstartups. So there are also helping credit bureau to grow their business.

Q.Post COVID-19 where do you see their position in India’s banking system?

Post covid-19 situation their responsibility will increase in defining the landing strategy as well. Because now in the post covid-19 situation a lot of Indian households are in stress and credit decision is not going to be easy because of we have to identify who can really pay credit back. So creating a good lending strategy to avoid any defaults or NPAs in future is going to be a key. Credit bureau will also play a very important role in that.
Secondly collection is going to be very difficult in the post covid-19 situation as because of pandemic many people have lost their job. So creating early warnings on default, creating some collection solutions and that is how credit bureau is going to play an important role in the Indian banking system. Credit bureaus will do a lot of digital innovation and help banks to complete their lending solution digitally.

Q.What is the lesson security analyst or CISOs or CIOs should learn after this pandemic?  How is CRIF empowering its customers in this scenario?

We are already RBI licensed and before this pandemic we never thought of working from home. For the entire organisation this was a new normal and we also have to be ready for such kind of a situation. So the lesson learnt is that data security is the topmost priority for us. We have to make sure that all our data access has been secured. We need to also make sure that our infrastructure is capable enough to manage the workload for all the people who are working from home and that they are accessing all the data in a secured way. Most being RBI licenced and ISO certified, credit bureaus already have lot of things in place. So they were already prepared for this. Also customers are all the banks and financial institutions who are also RBI governed, and they are also dealing with all the financial data. So rather than we empowering them they are already aware of the securities, all the credit bureaus are already secured and so all the data is going through a secured channel.

Q.As a Risk Leader what is your top security concern post COVID-19? What are the lessons learned?

From the security point of view it is about making sure that end points where there are laptop and desktops are secured well because people are going to work from home because of the covid-19 situation and now this is going to be a new normal as well. So data leakage and endpoint protection are going to be our top most priority as well as protection against phishing emails. Phishing attack is going to be very important for us. The internal employee awareness is going to be very important and that is what we have learnt during covid-19 situation that whenever new people are joining a lot of phishing attacks are happening.

Q.What are the some challenges you have faced and how you have helped to build a strong cybersecurity framework?

The biggest challenge for us was that we never thought some of the production data will be accessed from home as we always accessed this data from a secure zone. So that was the biggest challenge of how to enable that. We have created some communication tool, managing the teamwork tool. There were challenges faced like how to track people’s work, how to make sure that all the services are up and running and providing all the support from home, providing all the patching activities on a regular basis because during this pandemic situation we should not miss any patching activity. We have made sure that even if you are working from home all these things are taken care of and that is how we are building our cybersecurity as well.

Q.Post COVID-19 what would be the next big game-changer technology in FinTech according to you?

Artificial intelligence and machine learning are going to be big game changers. Guess now data is the new norm, so analytics around that and how you can cross sell your products, how you can scale your products and how you can identify some early warnings about defaults are going to be big game changers as well. Identifying the right kind of audience for your product is also important. Next is RPA. more process optimisation and improving operational efficiency are going to be big game changers. And how you can deploy your bot to automate your work .You must have seen a lot of chatbots are used by people to resolve customer queries and all.

Q.Please outline your growth roadmap post COVID-19. What will be the IT best practices in a post-COVID-19 world?

We are following a 50-30-20 budget tool for any IT investment or IT innovations which means that 50% will be to run the business coma, 30% will be foregoing the business and 20% will be for all the innovation or transformation from futuristic point of view. This is how we are doing from the last 5 years following the same practices. Credit bureaus are always doing a lot of innovations and we will continue to do that. But of course we have to reprioritize our business needs for this year because we have to really reduce our cost because of the pandemic situation. We will focus more on how we can reduce cost but at the same time we will continue how we can create some new business line or create new products for the next year.

Q.What is your vision for Risk Strategies in future, especially in FinTech? What would be your advice for the FinTech companies that are doing digital innovation?

We are going to collaborate with FinTech. It is not going to be a competition. Wherever we can collaborate and create new products that is going to be our strategy. I would advise FinTechs to create solutions keeping more customer in mind. Whatever they create, they should have four parameters in mind — speed, simplicity, customer autonomy and distinct capability that are not part of a bundle service. Whatever they should create they should have customer focus.

Q.What would be your digital strategy for 2020 and beyond?

Credit bureau have already started working on digital strategy from the last couple of years because FinTechs have already started coming in from the last 4 years and to match the speed, credit bureaus are also doing a lot of innovation on the digital side and they are collaborating with them. So we are also going to do the same and we are going to invest into innovation, specially into artificial intelligence and machine learning, into RPA and Big Data. One strategy is also going to be how we can move to cloud and create some new products or analytics or some new score using these technologies.

Source: Publication: Fintech Plus , 3rd August 2020