The Microfinance sector is beginning to leverage emerging tech such as Augmented Reality and Artificial Intelligence to improve their reach and help them power credit access to the last mile. Although these technologies are still in the nascent phase there is a huge potential to leverage them to enhance social impact, especially in making their lending process more customer friendly.
Augmented Reality enablement – Helping MFIs power financial literacy.
Any borrower who has applied for a loan to a bank or an MFI often has to go through endless reams of paperwork, brochures, forms and more as part of the due process before applying for a loan. However, this entire process may be confusing for those in a rural setting as most of these brochures and paperwork are often printed in English or in Hindi leaving the borrowers who speak only their mother tongues such as Marathi, Tamil, Malayalam, and Telugu in the lurch.
Global Tech leaders such as Accenture are helping to solve this last mile problem by developing AR apps and multilingual chatbots that help borrowers read and localize the content in a language of their choice. The bot is activated just by holding a smartphone over the brochure, it’s similar to a virtual assistant, but unlike Siri and Alexa, these virtual assistants have been developed to prompt a conversation with their users to help them understand the material in a language of their choice. This technology could turn out to be a boon for borrowers who are either illiterate or for those prefer to read and write in their local language.
Artificial Intelligence – Helping improve credit access and scoring.
Many banks and financial institutions are struggling with bad loans. This clearly indicates that something is not going right! The problem could be with the High-profile defaulters or maybe the underwriting techniques that unfortunately are not keeping pace with changing times.
Artificial Intelligence is perfectly suited to resolve problems related to the traditional loan-underwriting process. AI has the ability to capture complex patterns of the borrower’s alternative data to get a complete picture of the borrower. This data may include social profile data, transactional data, utility data, and mobile data.
Artificial Intelligence driven systems are now being used to arrive at credit risk analysis. Using alternative data could help improve credit access in developing countries such as India, Bangladesh, Vietnam and Peru which are data rich and credit poor. This helps bridge the credit gap caused due to the inability of traditional credit bureaus to score first-time borrowers.
Moving forward: A lending process integrated with AR and AI capabilities
Banks are increasingly partnering with Fintech partners and digitizing their lending process to get quick wins by leveraging emerging technology. AR and AI enabled lending models can help make the lending process friendlier to the underserved segment, first by improving their access to financial literature and second by changing the credit assessment to make it easier for first-time borrowers to get a loan. These developments will go a long way in making the process of procuring credit easier for everyone.