Thought Leaders in Artificial Intelligence: Venkatesh Bala, Chief Risk Officer, Biz2Credit (Part 3)

Sramana Mitra: Is your primary source of data the bank accounts?

Venkatesh Bala: To say that means that we only rely on one source of information. Having cash flow data at a transaction level is the most important, but we have other sources of information. 

Sramana Mitra: Like? Can you give me an example?

Venkatesh Bala: We have bureau reports. Our system has several APIs. We can ingest them.

Sramana Mitra: Give me examples. I’m trying to understand what other group of signals you bring in besides bank statements. 

Venkatesh Bala: One of them is in terms of industries. In some instances, we would find weather data to be useful. 

Sramana Mitra: Take an example of an industry and give an example for that industry.

Venkatesh Bala: We have something called digital site visits. This was a lot more important before the pandemic. In the past, a bank would have to go to a small business, and they might have to do a visual inspection. They’d come back and write the report. The underwriter would get 20 reports on many different places and make sense of all of it. All of it is subjective. There are differences in incentives between the underwriter and the person from the bank branch. That person would want to generate business and the underwriter would want to manage the risk.

We made a solution called digital site visits. We have a certified network. A customer might apply for small business credit. We notify them that someone will come at this time and they will do a report. We notify our network and then they send a person there with an iPad.

It’s all pre-performed. They just check all different kinds of boxes and take photographs. They just press the button and it gets transferred to the cloud and it lands on our underwriter’s desk. We have AI tools that allow us to extract that information and understand what it is. You can build different kinds of processes based on that in terms of assessing risk.

That is the solution that applies to all industries. Different industries apply them differently. In the wholesale industry, you would be interested in what is happening in the warehouse. In the retail industry, you would be interested in what is happening on the storefront. 

Sramana Mitra: What about adoption? You provide white label solutions to banks. How many banks have adopted a solution like this either from you or from your competitors? What percentage of small businesses have adopted a solution like this from you or a competitor? 

Venkatesh Bala: I won’t be able to give you exact numbers. I do know that it has increased a lot, especially in the last year with the pandemic. Out of all the banks that have adopted us, the one that has been publicly announced is with HSBC. We launched with them in Canada. We partnered with them in India last year.

We just announced our launch in the US. There are a couple of things that are going on. A few years ago, we thought that FinTech was going to displace banks entirely. Now, we are in a wiser place. FinTech now has a recognition that they bring unique things to the table. The chief thing is the innovative mindset as well as their digital inclination. They are cloud-oriented and mobile-first. They use a lot of AI and innovative ideas.

On the other hand, banks have tremendous assets. That is why they are not going away any time soon either. They have a tremendous amount of customer trust. They have a large amount of experience with a variety of product lines. They also have deep experience in terms of the credit side, investments side, consumer banking side, small business banking side, and payments technology.

The most important aspect is that banks have enormous amounts of customer data. It is already there with them. That can be harnessed with AI tools that can take that. It would allow them to transform the experience for the consumer. 

This segment is part 3 in the series : Thought Leaders in Artificial Intelligence: Venkatesh Bala, Chief Risk Officer, Biz2Credit
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