Data-driven innovations are transforming payment solutions and revolutionising fintech operations. By leveraging big data analytics, financial institutions can make more informed decisions, enhance customer experiences, and streamline operations. Using diverse data sources like social media activity and transaction histories, fintech companies develop accurate credit assessments, detect fraud, and offer personalised financial products.
Empowering Financial Inclusion through Data
Prithwish Sinha, Director, Payments Transformation, PwC, India, sets the stage by discussing how financial institutions are increasingly using data as an enabler for their businesses. He emphasises that data is akin to ‘new oil’ fueling everything from cross-selling to customising products and benchmarking. Payments data, in particular, adds a valuable layer to the data pool, aiding financial institutions in analytics and enhancing credit risk assessment.
Sinha talked about using diverse data sources, such as social media and alternative data, so companies can better understand customer needs and behaviours, enabling more precise and inclusive financial solutions. Sinha also emphasised how embedding commercial credit cards in B2B insurance platforms can provide temporary credit to hospitals by utilising insurance claim data.
Fintech Innovations for MSMEs
Kohinoor Biswas, Head of Consumer Business at BharatPe from Bharatpay, elaborated on their approach to using transaction data to support small merchants who typically lack access to organised finance. By monitoring daily transaction levels, Bharatpay can offer tailored lending solutions to these merchants. Additionally, they employ data analytics to detect fraud at both the transaction and merchant levels, ensuring secure operations. The integration of AI for merchant verification and image sorting further streamlines their processes.
Biswas explained how non-traditional data (e.g., alarm setting habits) is used to predict creditworthiness, stressing the importance of ability and intent to pay. He also underscored the importance of complying with new data protection guidelines and balancing business growth with stringent data security measures.
Smarter Payments through Data Analytics
Tanya Naik, Head of Online Payments at Plural by Pine Labs, highlighted the critical role of data in enhancing the payment process. By leveraging data, her company can offer merchants the best checkout experience and the highest success rates. This involves identifying customer preferences at checkout and suggesting the most suitable payment options, such as buy now, pay later, or UPI. Data also helps in increasing sales by predicting where customers are likely to shop and guiding merchants accordingly.
Naik emphasised the importance of data in improving authentication processes and ensuring seamless and secure transactions, which ultimately differentiates them in the competitive payments industry. She also described how Pine Labs leverages consumer data across various merchant categories to provide a unified customer profile, enabling seamless online and offline payment experiences.
Common Sense in Data Utilisation
Aditya Soni, Founder and Chief Executive Officer, of CheQ, talked about a pragmatic perspective, warning against over-reliance on data without common sense. He stresses that, despite the abundance of data, it's crucial to maintain a balanced approach. Data should be used to build consumer trust, enhance experiences, and ensure security.
Soni illustrated an example from the payments industry: identifying high drop-off rates led to the removal of mandatory CVV entry, simplifying the user experience. He advocates for using data to address customer pain points and drive meaningful innovations that improve overall service quality and regulatory compliance. He also discussed the importance of accurate data for credit management and the transition from probabilistic to deterministic models for predicting creditworthiness.
Cross-Border Financial Services
Swastik Nigam, founder and chief executive officer of Winvesta, shared insights from his journey as the founder of a cross-border financial services firm. Initially driven by intuition, the company now relies heavily on data to inform decisions. Data plays a crucial role in acquiring and retaining customers, fraud mitigation, and improving onboarding processes.
Nigam highlighted the complexities of verifying transactions across borders and the necessity of sophisticated data systems to manage these challenges. He highlighted the role of data in understanding currency flow patterns and optimising payment solutions. He emphasises the need for continuous innovation to address issues that data alone cannot solve, ensuring that their services remain effective and reliable.
MSME Transaction Data for Embedded Finance
Rishabh Sinha, Head of Legal at FloBiz, discussed how they use transaction-level data from MSMEs to develop innovative payment products. For example, their Smart Collect product addresses collection challenges by sending payment reminders and reconciling transactions. By analysing transaction data and integrating it with payment data, Flowbase can identify patterns and build tailored credit products for specific business needs.
Sinha also touched on the legal implications of the new Data Protection Act, which introduces new challenges in data collection and usage. Ensuring compliance while leveraging data effectively is crucial for the future of embedded finance solutions. He also discussed the implications of the DPDB Act on data collection, emphasising enhanced trust through regulated and justified data collection practices.
Financial Inclusion Through Digital Solutions
Vishal Bhatia, Chief Digital Officer, Canara Bank, discussed how leveraging AI and ML enables the bank to serve both rural and urban customers, including those without credit histories, by providing digital solutions tailored to their needs. The bank conducts digital outreach to semi-urban and rural areas, using branch pin codes to identify and demo digital solutions within a 2-3 km radius. These solutions help schools, universities, and merchants streamline their collection and payment processes, transitioning from manual to digital systems.
Bhatia expressed the significance of this approach as it simplifies operations, reduces cash handling, and improves customer satisfaction and engagement, benefiting both the customers and the bank. He elaborated on the example of customer segmentation and fraud detection models developed in partnership with institutions like the RBI Innovation Hub and IIT Kanpur to improve banking services.
