This will target the 22to 28-year age group and new entrants into the banking system who have little by way of traditional credit footprint.
“EMIs will be restricted to highticket price categories, for example on purchase of white goods, etc.In the instance when a customer does not have a previous credit history, we will evaluate their mobile phone bill payment for credit worthiness. We will only share the rating with banks and the user will be informed of the process,“ said Amit Lakhotia, vice president -payments at Alibaba-backed marketplace and payment solution, Paytm. Last year, Alibaba had issued virtual credit cards to its customers in China, based on their transaction history.
The use of non-traditional data to evaluate credit worthiness opens up a new sector for lending agencies which have been working with sellers on online marketplaces based on a similar credit rating mechanism.
“We are utilising non-traditional data to match the right customer to the lending agency. We will analyse the credit history of an individual when they ask for a loan or EMI. It will be used by banks as a back-test where they will match traditional credit scores with the learnings from non-traditional data,“ says Tejasvi Mohanram, founder and CEO of RupeePower, digital finance services marketplace.
Earlier this year, Snapdeal had picked up majority stake in the company in order to extend its customer-focused financial services initiative. The online player refused to comment on the launch of the service though it is indicated that the services will be launched by early next year.
US and Europe were early in the adoption these services. However, after the crackdown on PayPal Credit’s Bill Me Later service in the US for signing up customers without their knowledge, the solution providers in India are treading cautiously with respect to customer data and privacy.
“Our product will give the customer a decision in 15 seconds flat on whether they are eligible for credit or not“said Jitendra Gupta, founder of Citrus Payment Solutions, which works as the payment gateway for multiple ecommerce marketplaces. “We will assign credit scores to customers on our database, using our analytics engine. This will be mashed against the data provided by the marketplaces working with us, and with the traditional credit data our partner banks provide. We will only tell the bank whether the customer is eligible or ineligible for the loan. Disclosing credit score will be unethical,“ he added.
While devising an alternative system, these solutions will form an additional layer of information for credit rating agencies.