IoT enables secure financial inclusion in India

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According to a report by World Bank, 1.7 billion individuals in the world still remain unbanked.Financial inclusion of these people is critical. Lending small amounts to buy a smartphone is one of the innovative ways that consumer lending & fintech companies have identified, to bring such people in the fold of organized credit. Such loans help lending companies build user profiles and their credit scores, allowing larger amounts to be disbursed basis favourable scores. But such loans come with their fair share of challenges; for instance, the challenge with financing smartphones is that the lender doesn’t have any real control over the asset.

On one hand, Financial Inclusion gives the underserved population a fair chance to strengthen their economic conditions and lead a quality life. On the other, lenders still shy away from the market due to perceived higher credit risk. Odyssey– a Fintech solution by Datacultr, an IoT enablement platform, reduces this credit risk using a combination of IoT technology at its core, machine learning for predictive fraud detection & customer education.

Odyssey makes an unsecured loan significantly less risky for lenders by allowing them to manage & control the lent out device during the tenure of the loan. Odyssey integrates end-to-end with the lent out device on one side and the Lender’s Loan Management System on the other, as well as with device buyback, Insurance & repair companies, putting together the entire ecosystem, making it a successful program for both the user & the lender.

Key features of Odyssey are-

  • Device Management

For the term of loan, Odyssey manages the users experience on the device. In the case of delay in loan repayment, it gives the control to the lender to persuade the borrower to pay his dues and blocking the device in case of default.

  • Customer Education

Financial literacy is low amongst a large part of India. The solution helps ‘first to credit’ users to understand the mechanism of credit scores, timely payments of EMIs, access to cheap credit, etc. This is done through innovative messaging formats to communicate and internalize the message.

  • Predictive Fraud Detection

Using machine learning, Odyssey helps the lenders to predict the fraud by comprehending the usage patterns of the device and suggest immediate actions required.

  • Business Process Integration

Datacultr’s Odyssey is fully programmable, with in-built business rules, Templates that define various stages of the User journey and complies with all relevant government regulations. It automates the whole process by seamlessly integrating with Loan Management System of the lender via APIs.

Conclusion

Odyssey mitigates risk for new smartphone financing as well as low ticket personal loans, converting the smartphone into virtual collateral. This is managed via its proprietary device management platform that integrates with the device, allowing the lender to educate users, impair device experience in case of delayed loan repayments & ultimately locking it in case of a default, significantly reducing NPLs & risk.

It is important to recapitulate that there are millions of people in India who are still deprived of the benefits of a smartphone. While Datacultr’s Odyssey will ensure that a maximum number of people across the country, even those in the hinterland, are connected to the mainstream. It will also minimize the risk for FinTech companies and hence, will bring these first-to-credit people under the digital umbrella, helping them stay connected as they build a positive credit history.

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