Credit Bureau Data Archives

What Is the Main Purpose of the Top Credit Bureaus in India?

The desire to own valuable assets and track debtors have persevered for millennia, and credit lines continue to play a decisive role in the health of economies.

For instance, consumer credit has existed since the days of ancient Babylon. Today, as the Information Age progresses, credit has evolved to fit seamlessly into the financial fabric of society and modern banking structures.

While credit is a widely known concept, the perception of a credit bureau is still new to the masses. What is it? Is it a policing agency that comes after credit defaulters?

This article will see the top credit bureaus in India and their functions.

What are Credit Bureaus, and When were they Established?

Birthed due to the need for sophisticated consumer credit tracking, credit bureaus emerged as information repositories.

These independent agencies collate financial and credit histories, analyse the information and assign credit scores that determine the creditworthiness of individuals. These reports are then sold to lenders, for whom it is critical for making informed lending decisions.

Although credit bureaus have been commonplace worldwide for many years, they are relatively new to the Indian financial structure. TransUnion CIBIL was the nation’s first credit bureau to appear in 2000, while Experian, Equifax, and CRIF High Mark arrived in 2010.

Also read: Top 4 Credit Bureaus in India that Every Lender Trusts

All About Data: Where does it come from, and Who has Access?

Unsurprisingly, a wealth of historical data is required to create comprehensive credit reports that indicate an individual’s financial behaviour and responsibility.

Credit bureaus build a detailed credit history based on personal identifying information, account information, utility bills, and rent payments.

This data is obtained from multiple sources such as creditors, banks, debt collection agencies, lenders, and public information houses. These sources either sell, report, or share the data in question with credit bureaus.

How are Credit Bureaus Regulated in India?

Data sharing is critical for credit bureau functioning and is an essential tool in maintaining financial transparency, preventing bad loans and fraud, and ensuring equitable credit sanctions. It is equally crucial to debt recovery processes and debtor tracking.

However, the sheer amount of sensitive data in question is bound to set off alarm bells, which is why all Credit Information Companies (CICs) in India are licensed and registered by the Reserve Bank of India (RBI). RBI regulates these bureaus to curb any malpractice while sharing data.

Data privacy, the types of data shared, and data sharing formats are standardised according to what is mandated in the Credit Information Companies Act, 2005, to protect consumer and data privacy rights.

Additionally, the Act also requires that all financial institutions with an asset base of more than Rs 100 crore must become members with at least one credit bureau. This mandate binds the institution to report consumer data accurately.

Why are Credit Bureaus Important for the Indian Economy?

The credit information synthesised and shared by Credit Bureaus has multilayered impacts on the society it works upon. But, primarily, individuals and retail owners stand to gain the most from the ensuing reduction in information asymmetry.

With low household credit penetration and approximately 70% of SMEs being underserved, credit democratisation proves to be a revolutionary method of bolstering entrepreneurship in developing economies.

While information asymmetries exclude the population from formalised credit, credit reporting solves this problem by facilitating the free flow of objective data.

With more accessible interactions between consumers and lenders, these financial institutions are empowered to make better lending decisions.

Furthermore, this democratisation creates a more competitive credit market and simultaneously lowers interest rates. The ripple effect of the work done by Credit Bureaus does not begin and end merely with transactional benefits.

Credit reports, scoring, and the benefits that come along with it act as a disciplinary tool that encourages fiscal responsibility and cleaner repayment practices.

A shift in mindset coupled with access to credit can break generational poverty cycles.

Secondly, credit bureaus enhance efficiency on an institutional level since data transparency renders the lending process more transparent.

As a result, financial institutions benefit from lower default and risk rates and have the opportunity to expand services by creating derivative products and a secondary capital market.

Simply put, more credit equals more growth. On the other hand, regulators benefit equally from credit information sharing, as this helps in lender supervision and risk and trend monitoring.

Lastly, the advantages of credit bureaus are far-reaching and can have significant macroeconomic impacts. For instance, large-scale entrepreneurial success fosters the growth of the SME sector, thereby boosting economic growth.

Moreover, the economy is cushioned against recessions, inflation, and market failures with more outstanding capital and adequate liquidity.

Additionally, extensive credit data allows for robust trend-monitoring, thereby helping to disperse and mitigate risk, inform policy changes, and maintain financial stability.

Finally, credit scoring can also help reduce the volatility of business cycles and assists in faster bounce backs from periods of high unemployment.

Know the Difference Between Credit Bureau and Credit Rating Agency

Loan Origination System

Credit bureaus and credit rating agencies are easily confused, especially because credit bureaus are also referred to as “credit reporting agencies.”

Credit bureaus, such as Equifax, Trans Union CIBIL, and Experian are agencies that give information about an individual’s creditworthiness. They provide credit reports and credit ratings to creditors, such as banks, to assist them in deciding how risky an individual is to lend to. The higher an individual’s credit score is, the higher their credit profile is.

Companies and their debt issuance are rated by credit rating agencies such as CRISIL, CARE, Fitch India, etc. It enables investors to assess the riskiness of a company and its debt before making an investment decision. In other words, how likely is it that the company will default on its debt obligations?

Both credit rating agencies and credit bureaus are heavily regulated, and their activities have been scrutinised more closely since the financial crisis of 2007-08.

What is a Credit Bureau?

A credit bureau keeps track of borrowers’ credit history to generate credit reports and scores. Financial institutions purchase this data to assess their customers’ credit risk and decide whether to give credit to them.

Individual debtors’ credit reports and ratings are compiled primarily for lenders. Credit bureaus or credit reporting companies are agencies that collect and disseminate information regarding consumer creditworthiness.

The way information is transmitted is an interesting aspect of the credit bureau business model. Consumer credit information is freely given to credit bureaus by financing companies, banks, retailers, and landlords, who then sell it back to them.

Credit bureaus in India, unlike credit rating agencies, assign a credit score to individual borrowers depending on the individual’s creditworthiness and payback history. After analysing the individual’s credit history, credit bureaus generate a three-digit credit score and credit report. This aids lenders in weeding out unsuitable loan applications with high risk. In India, for example, the Experian credit score ranges from 300 to 850, while the CIBIL score is from 300 to 900. In all cases, a higher score indicates a stronger financial profile.

List of credit information bureaus in India

Experian
Equifax
TransUnion CIBIL

The Reserve Bank of India has granted authorization to companies registered under the Credit Information Companies (Regulation) Act, 2005 to offer credit scores based on past performance, reported by several member credit institutions and banks.

Functions of credit bureaus in India

In India, credit information bureaus perform the following functions:

Individual borrowers’ credit information is kept on file by credit bureaus. Members of credit bureaus have access to a wide range of risk management tools.
Credit bureaus help lenders evaluate a borrower’s credit behaviour and past or current relationships with numerous lenders by providing portfolio reviews of borrowers.
Credit information firms, in addition to assisting lenders, also assist individual borrowers in monitoring their credit health.

What is a Credit Rating Agency?

A credit rating agency assigns a score to various entities as borrowers based on a range of metrics and factors. Individuals are not included in these entities, and ratings are given in the form of letters such as AAA, CCC, and so on. These ratings are usually divided into two categories: investment grade and non-investment grade.

Since the amount borrowed by companies can be in the millions or crores, individuals who invest in or lend to them face a comparatively greater risk. Hence, with these credit ratings, investors and lenders can make better judgements about corporate borrowers who might be:

Companies
Local governmental bodies
Non-proﬁt organisations
Special purpose entities
State governments

Credit rating agencies help investors to analyse the risk-reward potential of various investments and provide information on debt-issuing organisations’ financial soundness. Insurance firms are also given credit ratings to demonstrate their financial stability.

Credit ratings are based on a number of factors, including market-based, historically estimated information at the corporate level. The assessments span from business attributes to underlying investments, and they are all intended to assess the borrower’s ability to repay its debt.

Credit ratings are compiled and distributed by credit rating agencies, among which Moody’s, Standard & Poor’s, and Fitch Ratings are the three major international participants.

List of credit rating agencies in India

Credit Rating Information Services of India Limited (CRISIL)
Brickwork Ratings (BWR)
Investment Information and Credit Rating Agency of India Limited (ICRA) Credit Analysis & Research (CARE)
Onida Individual Credit Rating Agency of India (ONICRA) Fitch India
SME Rating Agency of India Limited (SMERA)

According to SEBI Regulations, 1999 of the SEBI Act, 1992, the Securities and Exchange Board of India (SEBI) reserves the capacity to authorise and regulate credit rating agencies.

Functions of credit rating agencies

In India, credit rating agencies provide the following functions:

Entities are rated by credit rating agencies based on their ability to repay a loan or service debt.
Financial institutions such as banks, public businesses, NBFCs, microfinance institutions, and mutual fund firms are rated by credit rating agencies. Fixed deposits, bank loans, bonds, and hybrid capital instruments are among the debt instruments and short-term investment vehicles they rate.
Investment credit ratings recognised by the credit rating agencies assist investors in making educated judgments.
Credit rating agencies conduct comprehensive research on the economy as a whole, encompassing industries and businesses, and provide insightful analyses to their members. The mutual fund industry uses credit rating agencies for risk management and fund evaluation.
Policy and regulatory advice are provided by credit rating agencies to major corporations and the government.

Key Differences Between Credit Bureaus and Credit Rating Agencies

Credit information bureaus in India, generate credit scores and reports for borrowers in the country, while Indian credit rating agencies (CRAs) assess the safety or risk of investment alternatives offered by corporations or organisations.

The latter assess borrowers’ creditworthiness and ability to repay the debt to help lenders better estimate risk, whereas the former rates an organization’s offerings to assist investors.

The purpose and functions of these institutions are what distinguish them. Although both credit rating agencies and credit bureaus give financial information to individuals, the types of information provided, the entities described by the information, and the people who use the information are significantly different. The purpose for accessing the information differs significantly between the two.

If an investor wanted to spend INR 1,00,000 in the hopes of making a profit, he or she may consider purchasing a company’s corporate bonds. Before making this investment, he or she would check the company’s credit information from CRISIL or CARE to see how risky the investment is and how likely it is that he or she will lose money. It is for personal gain that this information is being accessed.

Individuals, on the other hand, would have no motive to look at their credit records unless they were interested in learning their credit score. Only if an individual applied for a loan or a credit card would a bank or credit card firm get access to their credit information.

The bank, for example, would look at the credit profile of the loan application using the information provided by the credit agencies. This would enable the bank to determine whether the applicant has good or bad credit and, if so, whether to grant a loan and at what interest rate. The purpose of accessing this information is to manage risk and avoid a potential loss.

The Bottom Line

When referring to the score connected with firms, the term ‘credit rating’ is commonly used. You should be aware that a company seeking credit will be evaluated based on its track record and financial situation in order to determine its credit rating. Individuals are referred to by the term ‘credit score.’

Finezza’s credit bureau analysis solution enables banks, NBFCs, consortiums, and entrepreneurial ventures to make risk-free decisions in the face of rising credit demand and a plethora of lenders. Finezza’s Credit Bureau Data Analyser provides an all-in-one credit evaluation solution, backed by AI-powered prediction analysis and complemented by extensive data reports from many sources.

By combining data from many data sources to create a thorough credit evaluation procedure, Finezza’s superior credit bureau analysis makes this feasible in a single click. Hence, lending institutions can save cost by identifying and onboarding profitable borrowers, meeting demanding customer acquisition targets, and substantially reducing credit risk and payment defaults.

Why Automate and Digitise Credit Risk Management?

Loan Origination System

Some of the most pressing factors to an urgent need to digitise credit risk management are competition from digitally strong, emerging fintech firms, highly volatile market conditions and cyber security threats that can lead to data privacy issues.

The pace of technological disruption has never been stronger than now, and organisations need to ramp up their credit risk processes to match up with the ever-growing market demands. Here is a detailed insight into why digital credit risk management is the only way forward and some compelling evidence supporting the same.

Why do you need to Automate and Digitise Your Credit Risk Management?

While credit loans are known to be the most vulnerable and potential risk for lenders, they are also one of the significant drivers of revenue for them.

By going digital, innovative lenders are not only ensuring the overall financial health of their loan portfolio but also meeting the different threats coming in from regulators and new competitors.

A study conducted by S & P Global Market Intelligence named ‘Digitization in Credit Risk Management’ includes opinions and data from over 200 professionals worldwide, which provides a good lens on the trending credit risk practices. Here are some of the findings from the survey:

Digitisation Boom Began Pre-Covid

The credit and risk management teams were already necks deep to digitise and improve operating procedures to arrive at better and quality decisions before the pandemic.

A majority, 75% of the professionals, had their complete focus on digitisation efforts even before the pandemic hit to benefit from the same, the report said.

A resounding 70% of the respondents said the pandemic accelerated these efforts even further. This happened due to the rapidly changing environment around us and the increasing bankruptcies that challenged the traditionally managed credit risk systems.

Not surprisingly, a good 71% of people also reflected on the positive outcomes of digitisation being better control over risks and much better management overall, which only adds to the organisational profitability.

Embracing Technology

A long list of delinquent loans and bankruptcies during the Covid-19 pandemic hit quite a few lenders hard to have essential credit information at their fingertips. This was mainly for the MSMEs for which there is a need to have systematic and crucial financial information to make better lending decisions.

Almost half of the respondents, i.e. 51%, are on the lookout for considering a range of new approaches that can be combined with traditional data mining approaches to estimate and predict credit risks.

For example, Artificial Intelligence (AI) and Machine Learning (ML) are the two valuable techniques being eyed by professionals to extract better data points.

More Focus on Automated and Dynamic Reports

Sixty-four per cent of the professionals surveyed are ready to focus on developing more automated and dynamic reports for executive-level decision making.

Since an applicant’s creditworthiness is based on a series of factors, detailed monitoring is required, which is impossible to comply with by relying solely on manual efforts.

In light of this, dynamic and automated reporting is emerging as a ‘must-have’ for any savvy lender of today.

How Companies are Taking Digitisation Efforts

Digitisation has excellent growth potential in the credit risk management arena. Lenders realise the various challenges and opportunities that come with it and rely on the following ways to achieve digitally sound credit workflows.

Going Agile

Lending organisations are making digitisation efforts a priority. They’re deploying sets of cross-functional, full-time teams that are solely dedicated to producing quality credit decisions to deliver agile projects on time.

By focusing their attention on the seven-step digitisation process, they are on the path to achieving it shortly. The seven steps are:

Data management
Advanced analytics and automated decision making
Smart interfaces
Culture
Workflow automation
Flexible Infrastructure
External ecosystem

By completely overhauling their front and back-end capabilities, along with offering unique digital services to their customers, these organisations are on the road to revamping their credit risk management systems.

Partnering with Fintechs

One of the familiar frustrations faced by lenders across the sector is the lack of legacy IT systems. As a result, many fintechs have come to their aid in strengthening their digitisation efforts and, as such, helping resolve issues and create innovative solutions.

As many as 80% of the top global banks have partnered with fintech at some point, out of which 16% pertain only to lending.

Some of the essential and valuable services these fintech to the lending institutions include API integrations, business and SME loans, digital banking, credit scoring, creditworthiness assessment, fraud detection and prevention, short term cash advances etc.

The Road Ahead

The new norm for credit and lending processes is digital, and therefore going digital for managing your credit risk systems is key to thriving. How the organisations manage to achieve that by opting for which route is an individual call that remains solely their discretion.

However, those who will harness the right tools to digitise their credit risk management systems will benefit exponentially and emerge as a true winners.

By introducing proper risk management capabilities, they are ensuring fraud prevention and retaining quality customers.

Finezza’s fraud prevention tools and other services such as loan management services, API integration, credit scoring, bank statement analyser, etc., can help lending organisations manage their lending portfolios seamlessly and efficiently.

Contact us today if you’re an MSME, fintech, or any business looking to streamline loan origination harnessing agile technology.

A Deep-dive Into Finezza’s Credit Bureau Analyser

Lending Lifecycle Management

The demand for superior credit bureau analysis is higher than ever as the financial lending industry grows exponentially all over the globe. Moreover, with so many mobile and web-based quick loan options available in the market, it has become straightforward for the borrower to get fast money for personal needs or businesses.

As the number of borrowers has increased drastically, the number of payment defaults has also grown proportionately. Reports indicate that non-bank lenders have seen a whopping 50% rise in customers missing payments in the first fortnight of May, threatening to push up overall defaults to perilous levels.

This is where it becomes significant for the lenders, including banks, NBFCs, consortiums, and venture capitalists, to thoroughly analyse the customers’ credit history during the onboarding stage.

What is a Credit Bureau Analyser?

A credit bureau is responsible for collecting various individual data points that determine the person’s creditworthiness. But that raw data may not be sufficient to make risk-free lending decisions in this digital era when customers expect loans to be more readily available than ever.

Hence, specialised software comes into play that analyses the credit reports generated by bureaus, such as a customer’s personal information, credit summary, any inquiries made, foreclosures and repossessions, and public bankruptcy records with advanced AI and algorithms.

Hence, a credit report is a record of a person’s or company’s credit history. And a credit bureau analyser does the job of parsing through the heaps of raw data to provide actionable, meaningful, ready-to-impact feedback points.

The Need for Holistic Credit Bureau Analysis to Ascertain Creditworthiness

The fastest and most effective way to assess the borrower’s creditworthiness is to get access to the credit score. These credit reports and overall credit scores are readily available through the various credit bureaus that collect data from banks regarding the overall fiscal record of the borrower.

This typically includes the summary of how the borrower has handled credit accounts, including the types of accounts and payment history, and certain other information reported to credit bureaus by the lenders and creditors.

Though the credit scores can be easily accessed from any of the four main credit bureaus (CIBIL, CRIF, Experian, and Equifax), the final credit score alone may not suffice for a lender to make a good decision. This is where advanced software with AI-backed predictive analysis and holistic data reports becomes quintessential.

Also read: How Finezza’s Comprehensive Analytics can Simplify Risk Management for Banks and NBFCs

With the growing demand for credit in the market and so many lenders available, Finezza’s credit bureau analysis solution empowers banks, NBFCs, consortiums, and entrepreneurial ventures to make risk-free decisions. Backed by AI-powered predictive analysis and supplemented by detailed data reports from multiple sources, Finezza’s Credit Bureau Data Analyser offers you an all-in-one credit evaluation solution.

Top Features of Credit Bureau Data Analytics Solution from Finezza

Below are the salient features of Finezza’s Credit Bureau Data Analyser.

1. Integration with all main credit bureaus

Finezza’s credit bureau analysis engine integrates with all four main credit bureaus, including:

CIBIL – CIBIL covers the analysis for individuals as well as businesses. It gives a credit score rating between 300 to 850 – where 720 and above is an excellent score. For companies and other entities, it provides an additional scoring model called PERFORM score.
CRIF – Approved by the Reserve Bank of India, CRIF conducts credit rating analysis for individuals and corporations. The credit score rating falls between 300-850.
Experian – A pioneer in generating comprehensive credit scores for both individuals and organisations, Experian takes longer to send reports but is nevertheless worth the wait. The credit scores rating range from 300 to 900.
Equifax – A more recently established credit bureau, Equifax generates a wide range of credit reports for companies and individuals. The credit score rating from Equifax lies between 1 to 999. For corporations, they also provide credit fraud reports, portfolio management, risk management reports, industry diagnosis, and other reports that may be obtained on request.

All in all, this integration ensures that the credit data analysis coverage is maximum, and the best data from all the credit bureaus are available in a single view. As a result, it provides enormous support for the lender to make an informed decision. In addition, you will not miss any information about the individual or business and can leverage a multi-angle view of various credit bureau analytics to compare credit history.

Also read: What Does Embedded Finance and APIs Mean for the Lending Industry?

2. Credit Focused Grouping

Too much information and too linear fashion make it difficult for the lender to make a good decision. This is where Finezza’s Credit bureau Data Analyser makes a big difference by providing credit-focused grouping. It also provides alerts on essential data points that need quick attention. Besides, it highlights all the potential risks and renders comprehensive and flexible reporting at both micro and macro levels.

3. Borrowing History

Finezza’s credit bureau data analysis provides a detailed view of the entire loan history of the borrower. This includes the following:

Summary of Borrowings – What is the overall overview of the status of all borrowings in terms of the number of credit accounts, total outstanding credit balance, credit enquiries, etc.?
Repayment History – Has the borrower been consistent with loan payments and made all payments on time? This can help you gauge the probability that the borrower will meet their payment obligations.
‘Enquiry to Success’ ratio – Comparison of the number of loan enquiries made by the borrower and the number of times those were approved.

4. DPD Analysis

A DPD or ‘Days Past Due’ is one of the most crucial elements in the credit report from the credit bureaus. Finezza’s Credit Bureau Analyser tool reads this section in detail and lists all instalments that the borrowers have missed to pay on time. It also reveals the borrower’s credit card bills and whether they have paid their EMIs on time.

5. Access to the Required KYC information

KYC or Know Your Customer is the basic information about the borrower that sets the stage for the entire processing and credit evaluation process. The smart KYC framework gathers data from multiple sources to create a precise picture of the customer’s details. In addition, it makes identity checks as comprehensive as possible by automatically checking personal and business data from various credit bureaus and data points.

Instead of relying on the rudimentary credit score that a single credit bureau provides, you can gather multiple scores and reports from different credit bureaus to come up with a customised credit assessment.

Also read: The Future of SME Digital Lending Beyond COVID-19 Relief Phase

Finezza’s superior credit bureau analysis makes this possible in a single click by gathering data from multiple data points to put together a comprehensive credit evaluation process. As a result, this can help lending institutions decrease costs, identify and profitable onboard borrowers, meet demanding customer acquisition targets, and drastically mitigate credit risk or payment defaults.

Top 4 Credit Bureaus in India that Every Lender Trusts

Updates

We often talk a lot about credit bureaus and know that they are responsible for generating our credit scores. The credit information provided by these bureaus is used by various providers and businesses who want to assess the financial health and background of an individual. Let’s take a closer look at the prime functions of the credit bureau and the top credit bureaus in India.

What are Credit Bureaus?

Credit Bureaus are agencies that gather aggregate credit information from various data providers and compile credit reports. They then sell this information to creditors, lenders, financial institutions, and consumers and derive credit scores to assess the creditworthiness of an individual.

Credit bureaus, although are private companies, are largely regulated by the RBI. They play a critical role in deriving your credit scores based on previous credit history and impact the size of the loan you can qualify for, the interest rates for loans or credit cards can also serve as a background check.

Real Purpose of Credit Bureaus

Credit bureaus team up with creditors and lending institutions to help them accurate loan decisions. The key purpose of credit bureaus is to provide institutions with reliable credit information that can assist with ascertaining the creditworthiness of the borrower. That being said, credit bureaus are not responsible for making the final decision; they simply synthesise and supply credit information to their clients.

Their clients typically include banks, finance lending companies, credit card providers, mortgage lenders, etc. Consumers can also fetch their credit reports by visiting the individual credit bureau’s portal and keep a tab on their credit scores. Most credit bureaus calculate the credit score based on complex algorithms and data modelling techniques based on five critical components of credit, repayment history, credit exposure, age of credit, and credit inquiries.

Top 4 Credit Bureaus in India

Here are the top credit bureaus in India:

1. Experian

A global credit bureau agency has its corporate headquarters in Dublin and promotes itself as a premier global information services provider. It operates around 17 consumer credit bureaus and 11 commercial credit bureaus to provide a granular risk view of the customer.

Besides, it offers access to a comprehensive database including banking, trade data, legal items, third-party collections, and more to assist institutions to make informed decisions. It employs a range of modelling techniques to collect and combine data to arrive at a bespoke credit score that can be incorporated into existing processes and facilitate seamless automation of your decision-making to reduce underwriting costs.

2. TransUnion CIBIL

One of India’s leading credit information companies, it was incorporated in the year 2000 based on recommendations made by the RBI Siddiqui Committee and has one of the largest collections of consumer databases. It has over 5000 plus members including leading banks, NBFCs, housing finance companies, etc. and maintains credit records of over 1000 million individuals and businesses.

The CIBIL score is a reliable metric for creditworthiness and is India’s first generic risk scoring model for banks and financial institutions which was introduced in 2007. It was in the year 2017 that TransUnion acquired a stake in it and the CIBIL TransUnion Score was later launched.

3. Equifax

Another global player, Equifax is headquartered in Atlanta and was registered as a credit information company in 2010 in Mumbai as a joint venture between Equifax Inc. and seven leading financial institutions in India. They have access to the best and unique data to empower businesses to make the right decisions. They also provide analytical capabilities to deliver added knowledge with clever insights, greater flexibility, and faster time to market.

4. CRIF Highmark

CRIF India is one of India’s leading credit information providers. It has an extensive bureau database that caters to banks, NBFCs, insurance companies, telecom service providers amongst others. It is a pioneer of India’s first Microfinance Bureau database which is now the world’s largest microfinance bureau database. It leverages sophisticated made in India search algorithms and teamed up with CRIF in mid-2014. It now enjoys a global presence that brings the best of comprehensive data and sophisticated dedupe technology for India along with global best practices, expertise in scoring and top-rated credit management software solutions that aims to add more value to their clients.

Differences Between the Different Credit Bureaus in India

The key differences between the above credit bureaus lie in their provision of various products and services. They all provide instantaneous credit reports if requested online and are licensed by the RBI. The credit score can vary between each bureau as each company has its unique algorithm to aggregate and compute credit ratings.

Typically the credit score can range from 300 to 900, where 900 is the highest and 300 is the lowest. Thus the higher the credit score, the better the financial prospects of the individual. While for consumers instant credit reports may be readily available, one can get a credit report of a business or firm with additional time up to 1 week to process the entire credit report.

Finezza provides an industry-leading credit bureau data analytics platform with integrations into four main credit bureaus of CIBIL, CRIF, Experian and Equifax. As a result, the institution can gain access to multiple data sources of credit information through a singular system to highlight the complete financial picture and accurate risk assessment of the borrower.

The platform provides credit-focused grouping and alerts for pinpointing risks and a complete summary of loan history so that lenders can make well-informed loan decisions and avoid the risk of bad loans and NPAs.

Top 7 Valuable Business Lessons to Learn From Fintech Startups

Updates

Fintech has become an umbrella term that covers a host of companies using an amalgamation of software and technology for providing financial services. It has garnered attention in all industries including banking, insurance, wealth management, etc.

Fintech solutions have changed the world in a way wherein now many businesses are trying to take valuable business lessons from Fintech startups. According to a report from Deloitte, nearly 2,500 new financial companies were established during 2008-2017. Not only that, but these have also pushed many other industries to go to the next level of innovation.

So let’s go ahead and learn more about how Fintech startups can inspire other business sectors.

Why Fintech Matters to the World of Business?

The evolution of Fintech has forever changed the way companies do business. The traditional method of a startup directly turning to its local high street bank or a conventional investor is not only the game in town now.

There has never been much choice for entrepreneurs from crowdsourcing to mobile payments as there is now. For instance, crowdsourcing allows people to get funding quickly and easily from anywhere in the world from people whom they have never met. All credits go to the innovations of Fintechs.

Now entrepreneurs can pitch directly to the world instead of talking for months with the investors and also enables them to see the funds roll in within a matter of weeks rather than months.

Another area is transferring money across the borders – a bane of entrepreneurs’ lives since time immemorial. Fintechs have turned this traditional and expensive banking solution on its head and enabled transferring money across borders far cheaper than was previously possible.

The above are just a few of the many ways Fintechs matters to the business world. These can pass on huge savings as they are far more agile than the traditional banks, and since they lack size this also allows them to innovate and adapt in a bigger way.

7 Incredible Lessons from the Fintech Space

Lesson #1 – Understanding the Customers

This may sound similar but is never too much of it. The most important and profitable secret of any Fintech is its customer-centric approach. Traditional banks have had non-friendly services due to their rules and bureaucracy primacies,

For instance, TransferWise CEO – Taavet Hinrikus, had once decided to launch a P2P money transfer service with low fees as he found that he loses 5% on each transaction. He also found that many people face the same. So he enabled empathy to find out the customer needs and introduced a viable solution.

Lesson #2 – Foster Inclusion

Inclusion divides into two essential elements – audience coverage and omnichannel interactions. Similarly, banks need to focus on them:

1. Audience Coverage: Similar to individuals, some small and medium-sized enterprises may also be unbanked or underbanked. So, startups can target them to deliver the needed offers like money transfers, loans, or savings accounts.

2. Omnichannel Interactions: Apart from the general inclusions, financial institutions should focus on reach. Invest in different channels, from traditional phones and emails to the alluring social media platforms. This clearly shows that combining digital and physical interactions helps to cover the majority of your business customers.

Lesson #3 – Focusing on One Solution

Nowadays, enterprises focus on a wide range of services – investment banking, payments, management, billing, and so on. However the fintech startup bankings don’t have enough resources, so they focus on only one service and polish it.

Hence by creating targeted products they reach higher ROI. This clearly indicates other businesses to look at delivering core value into new narrow areas.

Lesson #4 – Be Agile

Most often, startups stick to agile development wherein they facilitate quick releases, feedback gathering, budget spending, etc. it focuses on a series of short sprints with unique goals along with regular customer feedback so that customers can adapt to the changes rapidly.

A versatile reaction to customer concerns can save the entire business. Adding several support options like channels in messengers such as Telegram or Slack or by enabling 24/7 custom online chats, you show that you prioritise client needs and are ready to answer their queries at any moment.

Lesson #5 – Move to Open Banking

Earlier banks used to hide data. But with new initiatives in the area of open banking, this approach has become way outdated. Startups have realised the potential benefits, so have built products based on open APIs and third-party connections.

This innovative financial ecosystem enables developers to create apps and connect them to existing solutions, wherein their data is protected and users get more control over it.

Lesson #6 – Use of Interactive Elements

A good per cent of users leveraging the benefits of Fintechs are millennials and Gen Z. Fintech players sure know how to keep the users engaged. In order to prolong users’ time inside the application, the Fintech app developers know very well to put unconventional in-app elements in the form of games, contests, quizzes, etc.

Here they also intend to aim to educate their users about their new product launches or feature additions. In addition, the users receive rewards in the form of low-interest rates, subscriptions, and discounts, or even gadgets.

Lesson #7 – Inclusion of Voice Assistants and Chatbots

Chatbots are always known for changing a business’s growth story. The inclusion of voice assistants and chatbots can open up the business to the never-sleeping Gen Z and it was a great contribution by Fintechs.

These bots can assist users by checking the account balance, paying utility bills, reviewing transaction history, etc. These chatbots can even send users notification about their bill payments dues, warn them of low balance, and also offer extensive proactive financial guidance. This leads to more convenience for the end-user.

Let’s Evolve Together

So, why are these lessons important? Well, most importantly it’s because of their relevance. With the Fintech startups emerging at an insane rate, they focus on traditional businesses as well as on the underbanked companies. They are innovation financial transactions and how banking is conducted in this new decade.

Finezza assists lending firms in leveraging the latest technologies for disbursing loans and managing entire lending lifecycle management. Our team of tech and product veterans has the domain knowledge and understanding of what matters for financial inclusion.