Data strategies NBFCs can leverage for the success of digital lending

Data strategies NBFCs can leverage for the success of digital lending

By Manish Bhatia

Data is the new electricity of the digital age, the currency that fuels innovation, informs decision-making, and shapes the future. Its significance cannot be overstated, for within its seemingly endless streams of information lies the power to unlock profound insights, drive efficiency, and catalyze progress across every facet of life. In today’s interconnected and data-driven landscape, the ability to harness, analyze, and interpret data empowers businesses to optimize operations, scientists to make groundbreaking discoveries, and governments to better serve their citizens.

Distribution/Sourcing:

Effective Distribution starts with understanding where potential customers can discover your financial products. Data-driven marketing plays a pivotal role here. When NBFCs amalgamate data across various channels, it creates a seamless marketing strategy. By harnessing the power of data, identifying the most fruitful channels for reaching prospective customers becomes second nature. It transforms marketing from a disjointed effort into a cohesive, holistic approach.

Moreover, data empowers NBFCs to craft compelling and relevant content. By scrutinizing viral trends, identifying pivotal moments, and leveraging buzzwords, they can curate marketing materials that resonate with their target audience. Additionally, data analysis helps identify high-quality leads, enabling NBFCs to prioritize resources effectively and optimize their spending across different channels.

Customer Origination/Funnel Optimization:

Customer Origination and Funnel Optimization are intrinsically tied to data-driven strategies. Effective segmentation is key here. By leveraging data, NBFCs can segment their customers during the origination phase, offering them customized products that align with their financial needs. This opens up opportunities for early cross-selling and upselling.

Furthermore, a comprehensive view of customers’ financial profiles, including household assets, income, and spending power, can be derived through data analysis. Understanding these facets assists in tailoring loan offerings to match specific requirements. Data also aids in enhancing the customer journey, pinpointing areas of improvement, and ensuring a smoother application process.

Fraud prevention is another critical aspect, where data-driven algorithms can detect and halt fraudulent applications at an early stage, minimizing potential risks and losses. Data suggests alternatives for missing documents, making the loan application process more accessible, and increasing engagement through chatbots and personalized suggestions.

Underwriting:

In the realm of underwriting, data is a game-changer. Regular refinements are possible through data-driven insights, with advanced analytics deployed on historical data, borrower profiles, and economic factors.

Automation, another key component, can be facilitated through data strategies. This speeds up application evaluations, reduces manual errors, and even allows for risk-based pricing and loan amount proposals, all tailored to individual borrower profiles. Moreover, data helps to identify and eliminate biases in AI underwriting algorithms, ensuring equitable lending practices and a vigilant eye on portfolio quality.

Collections:

When it comes to collections, data is invaluable for crafting effective strategies. It provides insights into different industries and geographical areas, enabling NBFCs to tailor collection approaches. Early warning signals and potential delinquencies can be pinpointed through data analysis, allowing for proactive measures.

Automation, driven by data, streamlines collection workflows and fosters customer engagement through chatbots and personalized interactions. Leveraging alternate data sources like geolocation data adds depth to customer profiles. Payment methods can be optimized, and behavioral influence strategies can be crafted to encourage timely payments.

Operational efficiency in the collections process is enhanced through data analytics, leading to improved performance and productivity. Compliance with rapidly changing regulatory requirements is made more manageable through customized strategies, all fueled by data. Legal procedures related to collections can also be expedited, saving both time and resources.

Conclusion:

In the dynamic landscape of digital lending, data serves as the unifying thread that weaves through each of the four critical pillars – Distribution, Customer Origination/Funnel Optimization, Underwriting, and Collections. By effectively implementing data-driven strategies across these pillars, NBFCs not only enhance their operational efficiency but also elevate the customer experience to new heights. The adoption of data-driven decision-making not only enables NBFCs to stay competitive but also reduces risks while capitalizing on emerging opportunities in the ever-evolving world of digital lending. As technology continues to advance, data will remain the driving force propelling NBFCs toward success in their digital lending endeavors.

The author is president, technology, analytics and capabilities, Lendingkart

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