Blockchain has emerged as a new ecosystem within the FinTech category. In order to know what it means in the business sense and how it can impact the FinTech space, Dataquest spoke to Rohan Angrish, CTO, Capital Float. Rohan also runs us through how AI and machine-learning pans out in the present context of cashless India. Excerpts:
Can you explain in layman’s language what Blockchain means to Indian organizations?
Blockchain is the new protocol for “trust”, something absolutely essential in the tech domain. Since it’s not controlled by any single entity, but rather distributed across multiple, observable entities, it can form the backbone of trust-centric operations, basic communication being one such interaction. It’s the new buzz word because it has the ability to disrupt technology at a basic level.
How is Blockchain expected to be a big trend in Fintech organizations?
Fintech has created new ecosystems as well as sped up or optimized other existing ecosystems. The ones that already existed will have a harder time transitioning to the blockchain, as can be expected of any large ecosystem that tries to move from one framework or mind-set to another. Newer ecosystems like fractional lending or fractional insurance will take to blockchain much sooner. What this means is, you’ll see new blockchain specialist entities, like smart contract specialists, cropping up all over the place and becoming an integral part of the new age financial services.
Right now, it’s not easy to convince investors and management to divert resources and money for building blockchain tech in existing, large companies. This will happen only when the use-cases are compelling from a cost-benefit point of view. What this means is, it’s the start-ups that will bring about the largest spurt in innovation using blockchain, so that space needs to be watched carefully, and with keen interest.
What are the benefits of Blockchain?
Blockchain by nature disintermediates a number of legacy middle-men, leading to higher levels of trust and lower costs, both of which can then percolate into the financial system. A technological framework that boasts of higher trust and lower costs can lead to a quantum jump in the state of financial services.
How are you leveraging cell phone penetration to offer customized financial services?
Providing financial services to far-flung regions of India is not cost effective if not provided entirely over a cell phone. This means all the stages of lending need to happen over the cell phone. These include OTP based eKYC, reading cell phone data (SMSs etc) to get data on which to underwrite, OTP based eSign of loan agreements and a cell phone app to manage your loan. We are live today on an end-to-end automated entirely cell-phone-based loan process at Capital Float.
What is the role of machine learning/AI in Fintech space? Do you have any examples to quote?
Capital Float today has AI and machine learning in all aspects of its business, both internal and external. Internally, we use AI to decide which cases can go thru a green-channel, so to speak, and which cases can skip what stages based on their complex profiles. Externally, AI is used to come up with loan offers for borrowers. All the algorithms are based on models built from data we’ve collected, and are then refined based on learning from future data. In the worst case, a process at Capital Float may be machine-assisted. Most things are completely machine driven. Almost nothing is human-only.
How do you see the role of Blockchain and AI in cashless economy?
Financial services are predicated on trust. By design, blockchain brings trust into all transactions conducted in the blockchain paradigm. There are further bells and whistles like smart contracts, cryptocurrencies and ledgers that will add to the allure of blockchain. Today, it is possible to conduct almost all lending operations in the blockchain, the only impediment being regulation. Once regulatory bodies come to terms with the idea of the blockchain, it will greatly speed up the establishment of a cashless economy.
What is the use of APIs to exchange data allowing higher levels of scale, speed and accuracy?
The use of APIs to exchange data is common in the tech world. It is quick and ready to use. It allows us to reach levels of scale, speed and accuracy that cannot be achieved if humans are involved in the process. Data can be crunched and information can be exchanged at extremely fast rates, the results of which can then be displayed to the human being who is expected to act upon the results far down the funnel. The only scalable way of growing a platform is to have API-level integrations that all co-parties can use. If a process involves 1 human being and takes 1 day, the only way that process can scale to a 1000 a day is by hiring a 1000 people. Only machines can give exponential growth.
What are the innovative technology initiatives you’ve taken in your organization?
The 90-second loan is still one of the big wins for the India Stack initiative. We are looking to build on it to get credit to businesses in every nook and corner of the country.
Using eKYC and through our collaboration with India Stack and UIDAI, we are disbursing the fastest loans to SMEs in India. Data from third parties is consulted and crunched by machine-driven algorithms. Loan agreements and other regulatory formalities are completed; this entire process is executed using API. No human being, apart from the SME owner is involved in this process. All of this happens over 90 seconds, using a cell phone that is connected to the internet.