Digital Garage and Resona Begin Online Lending Proof-of-Concept
Digital Garage (DG) has developed an AI model (“Insite Stream”) that evaluates the credit risk of restaurants using an industry-specific data platform and DG’s proprietary methods that continuously collect and integrate open data such as public data from the national and local governments and public information on the Internet.
In addition, DG and Resona Holdings have agreed to start a proof-of-concept experiment for short-term, small-amount online lending targeting small and medium-sized restaurants in the 23 wards of Tokyo and Saitama City from today, utilizing Insite Stream.
The business environment surrounding restaurants is becoming increasingly severe due to the recent rise in utility and raw material costs, labor shortages, and rising labor costs. Since 2022, the number of restaurant bankruptcies has exceeded the previous year for two consecutive years, and the number of bankruptcies in 2023 is expected to increase 56.0% from the previous year to 802, the highest increase rate since the collapse of the bubble economy. In addition, small and medium-sized restaurants may not have sufficient credit and financial information, so lending to them requires a lot of time and effort from both lenders and borrowers.
This PoC will utilize Insite Stream to provide a highly convenient and immediate loan service that does not require borrowers to submit financial information or business plans, and can provide loans in as little as five business days after application confirmation. Unlike credit assessments that use financial statement data from a single point in time in the past, Insite Stream uses time-series data collected intermittently to achieve high credit accuracy and ongoing credit assessments that are in line with changes in the environment and business. In addition, while there are challenges such as improving the efficiency of credit operations for small and medium-sized enterprises, by providing AI models and online lending, DG will contribute to the creation of a new financial market for small and medium-sized enterprises and further revitalization of the restaurant industry. This is the first business in Japan to complete loan screening using only non-financial information without using deposit and withdrawal information.
As part of the strengthening of their capital and business alliance that they have been working on since December 2023, DG and Resona HD will combine their management resources and expand their collaboration with a view to rolling out this service nationwide and expanding its target to other industries. In addition, based on the group strategy “DG FinTech Shift” that combines payments, data, and technology, DG will further strengthen Insight Stream through data partnering with strategic partners and the development of next-generation AI technology, and develop it into a data business aimed at solving issues that exist in a variety of fields and industries.
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