Analytics Insight® featured an article by Mohan Ramaswamy Co-Founder and CEO of Rubix Data Sciences Private Limited titled, “Need for Data-Backed Smart Solutions in the Finance Industry in India.”

He writes, “In 2018, we created, captured, copied, and consumed an estimated 33 zettabytes (ZB)—the equivalent of 33 trillion gigabytes—of data. This expanded to 59 ZB in 2020 and is forecasted to reach a staggering 175 ZB by 2025. This massive explosion in digital #data, along with a manifold increase in computing power, has powered the growth of ‘#datascience’.”

Some key applications in the Banking & Financial Services Industry (#BFSI):

  1. #DigitalLending: For B2B lending, digital algorithms use firmographic data, identity, financial, #compliance, legal, and financial data. The availability of a large no. of data points helps lenders better understand the behaviour of their borrowers, ensuring lower #creditrisk. The quality of #lending improves significantly when data-driven models are deployed, as loans are approved on the back of objective data checks.
  2. #RiskManagement: Data-science driven #riskanalytics help organise and analyse unstructured data, which forms the bulk of a business’ risk-related information, and drastically reduce the probability of human error. Data-driven risk assessment models can highlight the financial weaknesses of a business and provide a #CreditScore and recommend #CreditLimits. Based on the credit score generated by the models, the lender can decide whether the business is #creditworthy.

Even in cases of disbursed loans, credit-risk monitoring tools based on data science enable surveillance and provide Early Warning Signals about any deterioration in the business’ health.

  1. One of the main challenges that India faces is #FinancialInclusion. Data and technology drives financial inclusion by provide BFSI sector with the ability to leverage unstructured and alternate data to better understand the behaviour of various socio-economic and demographic groups.
  2. #FraudPrevention: As per RBI, India saw over 229 banking frauds per day in FY 2021. There is a massive amount of fraud involving UPI transactions as well, most of it unreported. Data-science based technology tools can analyse vast swathes of Know Your Customer (KYC) data and #payments data to identify patterns of #fraudulent transactions and flag suspicious activity. This helps #banks, #NBFCs, and #fintechs in #fraud mitigation as well as for #antimoneylaundering (AML) activities.

To read the full article click on the link below.