Fintech Innovations have made Financial Services More Accessible, Efficient, and Customer-Centric: KredX

Fintech innovations have not merely disrupted but revolutionized the BFSI sector. These innovations have redefined how financial transactions are conducted, making them faster, more secure, and increasingly accessible. Devang Mundhra, Chief Technology Officer, KredX, offers an inside look into how this transformation is unfolding. From the game-changing impact of UPI and blockchain technology to the role of AI in personalizing financial services, Mundhra provides invaluable insights. Moreover, he sheds light on how KredX’s supply chain finance platform is bridging gaps that traditional lenders often overlook

 From your perspective, what major shifts in technology have led to the rapid transformation of traditional financial practices?

Devang Mundhra: Fintech innovations have played a significant role in reshaping the Banking, Financial Services, and Insurance (BFSI) sector, and they continue to drive major shifts in the industry. UPI, for instance, has made it easier for consumers to make digital payments and transfer money. Additionally, the emergence of cryptocurrencies like Bitcoin and Ethereum has created an entirely new asset class. Blockchain technology is revolutionizing cross-border payments and settlement systems. Innovations such as peer-to-peer (P2P) lending and alternative credit scoring have disrupted traditional banking and made it possible to serve the under banked segment.

Fintech solutions for regulatory compliance have made it easier for financial institutions to navigate complex regulatory environments, reducing operational risks and costs. Technologies like AI and ML are enhancing both security and customer experience. In essence, fintech innovations have made financial services more accessible, efficient, and customer-centric. Major technological shifts, including the adoption of mobile technology, blockchain, AI/ML, and regulatory technology, have underpinned this transformation. The BFSI sector will likely continue to evolve as fintech innovations advance further, posing both opportunities and challenges for traditional financial institutions.

How does your financing platform address the specific financial needs that traditional lenders might not cater to? Could you share the niche or underserved segments your lending solutions target?

Devang: KredX is a supply chain finance platform that allows businesses to access cash quickly by selling their unpaid invoices to investors at a discount. This service addresses specific financial needs that traditional lenders may not cater to. It helps businesses bridge their working capital gaps by offering a quick and efficient way to convert outstanding invoices into cash. Traditional lenders often have stringent lending criteria and longer approval processes, making it challenging for businesses to access working capital promptly. SMEs, in particular, face difficulties in securing loans from traditional banks due to their limited credit history or collateral. KredX’s invoice discounting platform becomes more accessible to these businesses as it relies on the creditworthiness of the invoices rather than the borrowing company.

KredX’s services enable businesses to manage their cash flow effectively by providing an immediate injection of cash, which is especially beneficial for companies that experience irregular payment cycles from their clients.

How does your organization leverage technologies like AI and data analytics to ensure risk assessment and borrower credibility?

Devang: AI and data analytics play a pivotal role in risk assessment and ensuring borrower credibility at KredX. We use AI and machine learning technologies to understand patterns in a borrower’s finances and operations. By comparing this data with the extensive dataset we’ve accumulated over the past 8 years of running a supply chain finance platform, we gain insights into a company’s position within the business cycle and its alignment with broader industry and economic trends. Additionally, we employ newer AI technologies like Generative AI to quickly sift through large amounts of unstructured data and extract specific insights with minimal fine-tuning.

Our ability to analyze both traditional and alternative data sets, including financials, GST filings, revenue accounts, and marketing data, allows us to build a live model of a business’s real-time health. This dynamic monitoring, akin to an ECG machine for the heart, enables us to course-correct actively throughout the tenure, significantly reducing risks and non-performing assets compared to traditional lenders. We prioritize flexibility and collaborate with founders to foster revenue growth.

Our revenue forecasting engine is battle-tested, and our robust risk assessment process ensures over 96% accuracy in risk mitigation, instilling confidence in the SMBs we work with.

How do you tailor lending products to cater to the diverse financial needs of your borrowers? Devang: KredX, as a digital-native platform, offers a unique advantage in tailoring products to the specific needs of customers while maintaining adherence to processes and attention to detail comparable to larger companies with standard SOPs. We deeply analyze a customer’s business, workflows, and supply chain dynamics to create products tailored to their requirements. For example, we’ve collaborated with large companies needing capital to extend customer credit periods and with commodity exchanges to expedite payments to suppliers upon the delivery of commodities.

Our sector-agnostic approach has enabled us to work across diverse industries, including manufacturing, IT, insurance, BFSI, logistics, services, facilities, F&B, FMCG, and more. For instance, our Inventory Financing product was introduced at the request of a founder facing cash flow issues due to extended payment periods from a supply chain partner. This solution provides borrowers with fixed payments at predetermined intervals, helping them maintain operational continuity.

We’ve also capitalized on the embedded finance opportunity, partnering with marketplaces, payment gateways, and logistics platforms to provide no-code financing solutions, aiming to become one of India’s largest embedded finance solutions providers in the coming years.

How do you enhance customer experience and personalize financial services in ways that were not possible before?

Devang: AI is at the heart of our financial services, revolutionizing customer experiences in innovative ways that were previously unimaginable. Here’s an overview of how AI is reshaping our approach:

• Data-Driven Personalization: AI analyzes extensive customer data, including transaction history and behavior, to understand individual preferences and needs better. AI-powered robo-advisors offer personalized investment and financial planning recommendations based on a customer’s goals, risk tolerance, and financial situation.
• Credit Scoring and Risk Assessment: AI evaluates credit risk more accurately by considering diverse data sources, benefiting customers with limited credit histories or unique financial backgrounds.
• Fraud Detection and Prevention: AI-powered systems continuously monitor transactions for suspicious activity, bolstering security and customer confidence.
• Credit Monitoring and Alerts: AI-driven tools track changes in a customer’s credit profile and offer alerts, enabling proactive credit management.
• Predictive Analytics: AI predicts future financial needs or events based on historical data, such as loan requirements or savings opportunities.

In what ways are fintech firms driving operational efficiencies and reducing costs for financial institutions?

Devang: Fintech firms introduce a new set of tools and experiences that traditional financial institutions may be hesitant to adopt due to constraints like bandwidth, experimentation size, or skill gaps. Fintechs help financial institutions expand their business perimeters, whether from a product, customer profile, or process perspective, enabling growth for FIs while reducing costs. For instance, digital onboarding, API-driven integration, behavior-driven collections, and more are areas where we’ve worked with FIs to reduce costs and expand their business.

How is blockchain technology contributing to the increased security, transparency, and efficiency of financial transactions?

Devang: Blockchain technology provides an unalterable, secure ledger that enhances trust and transparency in financial transactions while reducing transaction costs. In trade finance, for example, a blockchain can record information about a ship’s movement and goods transfer between ports, providing trustworthy data for financiers to make informed decisions about financing such transactions. This creates a win-win situation for all involved parties.

How do no-code/low-code platforms empower fintech innovation by enabling rapid development and deployment of solutions?

Devang: No-code/low-code platforms are reshaping fintech by enabling rapid development and deployment of financial solutions with unprecedented efficiency. These platforms require minimal coding expertise, allowing even non-technical users to swiftly build and customize applications, significantly reducing development timelines. Fintech startups, in particular, benefit from this agility, allowing them to prototype and test ideas quickly without the resource-intensive traditional development process.

These platforms also offer pre-built templates, integration capabilities, and compliance features, streamlining the development journey. Examples abound, such as payment processing apps using no-code/low-code platforms to expedite front-end development and API integration, leading to faster time-to-market. Fintech lenders efficiently build loan origination systems, including credit scoring and KYC, streamlining loan approval processes. Financial analytics providers create interactive dashboards swiftly, delivering real-time financial insights. Regulatory technology (regtech) startups automate compliance checks and reporting, significantly reducing complexities associated with regulatory adherence.

No-code/low-code platforms democratize fintech innovation, offering the tools needed to bring innovative products to market quickly. By simplifying coding complexities and providing pre-built components, these platforms enable fintech innovators to focus on delivering unique value while accelerating their time-to-market, revolutionizing the financial services industry.

As a leader in the fintech space, how do you anticipate the future trajectory of the BFSI sector, considering the ongoing technology-driven changes?

Devang: The future of the BFSI sector is marked by a profound digital transformation. Technology will permeate every facet of financial services, encompassing customer interactions, backend processes, and data analytics. Personalization will deepen as fintech and AI leverage customer data to tailor products, services, and advice. Open banking will mature, creating expansive financial ecosystems with collaboration among traditional banks, fintech startups, and non-financial entities.

Artificial Intelligence and automation will be ubiquitous, with AI-driven chatbots, robo-advisors, and predictive analytics handling routine tasks. Blockchain technology will play a prominent role beyond cryptocurrencies, ensuring secure transactions and digitizing assets like real estate and art. Regulatory changes will drive Regtech adoption, aided by AI and data analytics. Technology will expand financial inclusion, bridging gaps for underserved populations.

With the growing reliance on digital platforms, cybersecurity, and data privacy will be paramount, leading to heavy investments in protection. Environmental, Social, and Governance (ESG) factors will influence financial products and investment decisions, with sustainability at the forefront. Central Bank Digital Currencies (CBDCs) and Decentralized Finance (DeFi) platforms will disrupt traditional finance, transforming payments and financial intermediaries.

Cross-border transactions will become faster and more transparent thanks to blockchain and digital currencies, fostering globalization. Ethical AI and responsible finance will address concerns related to bias and ethical considerations in AI-driven financial decision-making.

In essence, the BFSI sector’s future will be characterized by interconnectivity, digitization, and customer-centricity. It will offer innovative services while addressing security, privacy, and responsible finance challenges. Adaptation and the ability to harness emerging technologies will be key for institutions and fintech firms navigating this evolving landscape. The sector will continue to evolve rapidly, bringing both opportunities and challenges to the forefront, and shaping the future of finance in profound ways.