As developing nations’ economies grow, more previously unbanked people will require financial services. Credit scoring can play a vital role in helping to bring the unbanked into the banking world. We talk to startup TrustingSocial about its ambitions in India.

India is the world’s fastest growing economy at 8.2% GDP and as per the World Bank’s forecast, is likely to maintain this pace of growth until 2022, which will further lift the consumption growth story. This means more people, with rising ambitions and brand awareness, would want to buy more products. However, a major part of the country’s population is unable to fulfil their goals as they do not have access to credit. The reason is simple: a majority of the population in Asia’s third-largest economy do not have a credit score, which means either they have never taken any loans from banks or certified non-banking finance companies, or they are new to the credit ecosystem.

This is where TrustingSocial, a fintech startup headquartered in Singapore, comes into the picture. Launched in Silicon Valley in 2013 by Nguyen Nguyen, a Vietnamese native and former credit risk researcher at Barclays, TrustingSocial develops artificial intelligence-based alternative credit scoring for emerging markets such as India, Vietnam and Indonesia, using telecom data and other new data sources.

Opportunity in emerging markets

IBS Intelligence spoke with Darshan Shah, chief business officer at TrustingSocial (India), to understand more about the company and its plan for the Indian market. With more than two decades of experience in the credit information industry, Shah has worked with companies such as Equifax (Canada), TransUnion CIBIL and Experian (India) in leadership roles. Talking about the India opportunity, Shah says: “Of the 1.3 billion population, a mere 260 million people have been tapped by the credit bureaus. The rest of the population is an opportunity for us, and we aim to score about a billion people by 2020.”

The company, which entered the market in 2018, has already scored about 240 million consumers in India, where it has partnered with leading telecom player Idea. It works on telecom data and then by using its own big data and deep learning technologies, the company analyses the credit worthiness of an individual.

“We have our own scoring algorithms and our insights are in the range of 300-850,” says Shah. “Anyone above 600 is considered lendable by the financial institutions. In India, 95% of the population are prepaid customers across all the three leading telcos. We are banking on this huge opportunity. Telco data gives us a perspective on an individual’s credit worthiness. We want to make people visible or known to banks. These are good customers and don’t have access to formal credit. We solve this problem.”

TrustingSocial has developed a technology to analyse trillions of records that contain billions of connections in the society. “We have a forwardlooking view of credit worthiness on an individual,” says Shah. “Our technology has helped lenders in reducing credit loss despite having the best credit models. Our insights are more accurate than bureau scores and we can help lenders double their customer base.”

Trust and privacy

As the name TrustingSocial suggests, the company ensures that no customer data is misused. “Customers’ privacy is very important to us,” says Shah. “We do not have access to any personal information of the customer. We don’t even know the name of the customer.” He adds that the company is compliant from both the demand and supply side. In India, TrustingSocial works with about six large banks and non-bank financial companies.

Vision ahead

TrustingSocial chose Vietnam as its test market in 2015 by partnering with the country’s largest mobile network operator Viettel. It found that its prediction model was 50% more accurate than the previous system. The company provides credit scores to 60 million Vietnamese consumers. “Our customers include some of the largest banks and consumer finance institutions in Vietnam,” says Shah. “After Vietnam, India is the biggest market for TrustingSocial and we are also planning to tap other Asian markets.” The existence of companies such as TrustingSocial comes at a time when an increasing number of financial institutions in developing nations are depending on alternative, unstructured data sourced from social media for making a lending decision.

The company has a team of several data scientists from leading US academic institutions and financial institutions across the world, that is constantly innovating ways to find alternative data for credit scoring. As the company expands into countries it will set up “highly empowered teams”, says Shah.

Even as TrustingSocial plans to spread its wings in the Indian market, there are more than a dozen homegrown startups already helping NBFCs, banks and other tech-enabled lenders with the data scores of individuals who are beyond the ambit of large traditional scoring agencies like CIBIL. These new-age players, including CreditVidya, Cashe, CreditMantri, Lenddo, CreditSeva and Bankbazaar, are assisting individuals and small enterprises to procure different forms of credit such as personal loans, working capital loans and vehicle loans, and reducing the demand-supply gap for credit access in India. There are a few foreign players such as UK-based ClearScore that have also made forays into India sensing the huge opportunities.

In this model of credit scoring, the players use technology to assess data such as utility bills, online spending patterns and travel patterns among hundreds of borrowers by going through their social media and mobile usage. While borrowers with no credit history get access to loans easily, the alternative data also helps the lenders in boosting their underwriting process and thus mitigating the risk associated with giving unsecured loans. It also helps the lenders to understand a customer’s repayment behaviour, thus improving collection on time.

Article by –
Priyanka Pani, Senior Regional Correspondent
Middle East and Asia, IBS Intelligence

by IBS Intelligence
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