Why we invested in CreditVidya?
By Kailash Nath
Across the value chain of lending, Underwriting is the most critical step — decision making at this point decides the fate of the transactions between lenders and potential borrowers. The success of this step is highly dependent on the availability of data; in the absence of reliable data, subjective decision-making kicks-in, resulting in sub-optimal results.
Traditionally banks and NBFCs have been dealing with underwriting using CIBIL scores and manual rules that apply data points from the borrowers’ historical credit transactions. This method, however, has flaws as well as suffers from significant time lag as it doesn’t incorporate recent changes in the subject’s socio-economic profile. In addition, this approach excludes New to Credit Customers who would potentially have much less delinquency rate than existing customers of the same lender. Our quest to find a new-age lending tool, that can help build inclusive credit offering leveraging technology, led us to Abhishek Agarwal and Rajiv Raj at CreditVidya.
CreditVidya founded in 2012, is one of the pioneering ventures in leveraging alternative data to automate the credit underwriting process for unsecured loans to New to Credit (NTC) customers. During our initial conversations, what impressed us was the founders’ understanding of the technology’s applicability to the specific use case and execution capability to ensure seamless onboarding of lender partners and maintaining uptime of the systems post-integration; this capability is crucial as the CreditVidya platform processes over 500GB of data every day.
CreditVidya has developed proprietary algorithms leveraging a set of Convolutional Neural Networks (CNN) that makes use of alternate data to build Credit scores. The CNN uses data pertaining to over 10,000 data parameters relevant to the socio-economic profile of the borrower for assessing creditworthiness prior to disbursal of the loan. CreditVidya plugs in their SDK into the lenders’ app wherein the decision to approve the loan or otherwise is assisted by the in-built algorithms; the platform has processed over 25 Million profiles so far.
As an early mover in the Credit Risk Assessment (CRA) space that is supporting the expansion of credit services into hitherto unserved segments of the population, CreditVidya is well positioned to be a market leader and preferred tech partner for all the lenders in the country. CreditVidya’s competitive edge lies in its pace of tech evolution; having a 120+ member team focused on R&D and implementation of their proprietary set of algorithms has not only helped CreditVidya outpace other players in the industry but has also given all their lender partners strong confidence in the team’s execution capabilities. In addition, the founders’ ability to think ahead of the other stakeholders and evolve business models leveraging the technology evolution curve to avoid dependency on a concentrated set of data source has been commendable.
Having over 55 lender partners in its portfolio with clear third-party validation from the leading names in the industry, CreditVidya is in a good position to increase the penetration of its technology across verticals and use cases. This sets a great foundation on which Abhishek and Rajiv would plan their international expansion in the coming quarters.
About the Author:
Kailash Nath is a Senior Associate at Bharat Innovation Fund. He tweets @Kailash_nath.
About Bharat Innovation Fund:
Set-up in affiliation with CIIE, Bharat Innovation Fund backs fearless entrepreneurs building deep-tech innovation led companies of consequence from India. We believe India’s talent, data and cost advantage makes India uniquely poised to produce globally-competitive tech innovations which will be global game-changers. We invest at early stages of ventures — typically writing our first check during pre-Series-A to Series-B rounds of start-ups.
