Interviewed By The Asian Banker Live
Eight fintech finalists were selected for the competition. Each fintech made a seven minute presentation pitch followed by three minutes of questions from the panel of advisors during the event held at The Asian Banker Future of Finance Summit, 2018.
Here is the transcript:
Sheetal Mayekar: The first thing is that currently there is not a single platform where discovery can happen easily. And secondly, the distribution is completely unorganised. That is when we decided that let us go ahead and create a platform.
This is precisely what we built, not just an online lead aggregator platform, but a platform which can handhold the consumer and do complete end-to-end.
I’ll explain it to you. But first, in the platform what happens is that we have worked on the credit policies of the bank. Unlike any web aggregator, who there are listing sites and the consumer types in the inputs as a requirement and gets a list of offers, we actually do an eligibility check. We show him that he is eligible first, that he can go ahead. So, the entire process has a little certainty into getting an approval for him.
The second thing is the matchmaking algorithm, which is a proprietary, self-learning algorithm. I haven’t used any word like AI, machine learning. We know by default that every technology is built on those.
Currently in India, when we work with 89 financial institutions (FI), you can understand the kind of complexity that we handle because the risk appetite of every FI is different from each other, across 11 product categories from retail to SME. That’s the biggest entry barrier that we have created in India today because understanding a credit policy itself is a huge challenge.
So, we have digital analysis, we are trying to automate the entire process as much as we can. In fact, for some of the financial institutions who have been progressive to have APIs, we have directly integrated with financial institution’s underlying system to give a soft approval online, which nobody in India provides today.
Okay, the last leg, disbursal, unfortunately, in India because of the regulatory authorities, everything has not moved online yet because ‘know your customer’ (KYC) documentation still happens in the physical mode. How do we address that problem? So, for that problem also we went a little ahead because we decided to be on to the game and not just create a lead but be there with the customer.
Creating financial entrepreneurs – when we realised in the distribution system, we have a lot of chartered accountants, insurance advisors, delinquency agents which struggle a lot dealing with the banks. We created a platform in-house, which is our single point of truth (SPOT), which is nothing but a data platform, which actually connects every single stakeholder. The same platform is given to these influencers because India is an influencer-driven market. From a scalability point of view, this target segment is 5 million. Currently, I have not that much of marketing but I have 3,000 such partners on board who are using the system, out of which 1500 are active and given some kind of disbursement and have earned through it.
We have done the strategic tie-ups which we call lending gateway partners to all such e-commerce websites where actually need originates. If you see, this is a data platform which connects everything, even data analytics, everything is on that platform.
Just to check the retail loan, once we have a lead created, you get the offers which you are eligible for. Once you submit, the application goes directly into the assignment matrix and my partners collect the documentation, etc. And as you can see, it is completely transparent as to which stage the application was in.
SME finance is very subjective in India. Virtually complete online is not possible. But we have done the automation to a level of credit memo generation. Before even documentation starts, a credit memo gets generated on the platform, which is shared with the credit assessor of the bank and virtually the decision which takes two weeks currently, has reduced to 4 hours on the platform.
That’s 89 financial institutions on board, right from your bank, non banking financial companies (NBFC), new age lenders, even P2P lenders. 7.2 million Loans disbursed so far, 3000 disbursement points. We are launching insurance.
Currently, insurance is a natural fit to the category. That’s the reason why we are going ahead with insurance. Other geographies, we have already been selected in Abu Dhabi Sandbox initiative in first cohort. So, UAE is the first target segment that we have because the market dynamics are very similar. And of course, then we are looking at South Asia expansion also.
Zhang Qi: Founded in 2015, Xiaoyusan is an online insurance platform that develops customer-tailored products based on big data, in collaboration with 50 insurance companies currently.
We have 8 million customers so far with more than 400 products developed. Our actuary team works with insurance partners on research and development of new products to meet market demands and we hold the exclusive right of product selling.
Our founding team members are from Tencent with 8-10 years of associated work experience and started their career at Tencent at the most booming period of China’s internet development. We also have finance related experts.
We started raising funds through angel investment and first round of financing in 2015. In March 2017 we successfully obtained the second-round financing valued at 0.1 billion Yuan. Our first-tier investor institutes include Sequoia Capital, Matrix Partners China, Tianjin Tasly Pharmaceutical Co. Ltd and Albatross Venture.
We invented an artificial intelligence (AI) based insurance counsellor “Jing Jing” that is able to input customers’ basic information such as age, gender, income and economic role in family and then can generate a tailored insurance plan for customers within just 3 seconds. This is much faster than the previous handling time of 30 minutes.
After our customers choose what they intend, we move to the underwriting phase at which AI underwriter “Yuan Fang” quickly responds to whether the customer can buy the chosen insurance product according to the pre-set listed questions. For example - Did you have the disease? When did you have the disease and how serious was it? The AI will quickly evaluate the answers of above questions within several minutes and the customer will know whether he is entitled to buy the insurance.
Then are the insurance claims that we actually are not happy to be involved in. Insurance company shall be called in for handling cases involved with claimed amounts of hundreds of thousands, or even millions of RMB, as claimers are suspected of possible insurance fraud or of concealing the facts of any disease when they applied the insurance. Insurance company shall verify personally to avoid such fraud. For small amount of insurance claims, we released a quick claim service, “Snap shot” by which the claimer will be able to proceed to the claim procedure simply by taking a selfie and uploading it as required.
We independently developed an AICS smart algorithm by which the amount of insurance to be claimed will be automatically calculated right after the uploading of claimer’s selfie with the use of character and image recognition technology. The letter for settlement of claim will be also issued later. It previously took two to three weeks for the settlement of a claim with an amount of just 300 Yuan spent on medical treatment of a sick child, but now we have cut the time to 2.5 hours from the time of uploading of claimer’s information to the final settlement.
David Gyori: What is your strategic goal and what is the end game?
Zhang Qi: The entire insurance industry in China obtained a total premium income of about 4 trillion Yuan last year but only 10% was through internet, indicating that Chinese market still remains to be explored. We believe that there will be a lot of opportunities ahead for us to take advantage of and we also work with some medical institutions, hospitals and other physical examination centers to tap on it.
We expect to have more data connected in near future to achieve real customer-tailored insurance service, which will meet customer’s personal conditions including health, hospital treatment and other related information.
Grace Xie: Our core team members are from Zhejiang University and our CEO has been cooperating with State Street Corp for more than 10 years, both as a partner and as an employee there. The CEO has rich experience in technical aspect of financial and business fields and helps the team explore digital bills, supply chain finance, electronic evidence and other financial aspects at the time of product development.
We were founded in August 2016 and at the end of 2016 we established the first core banking system based on enterprise-level league chains which have been steadily running for over a year. Prof. Chen Chun, chairman of our company and academician at the Chinese Academy of Engineering, has abundant technical industrial sources that promote the company and products towards a promising future. With over 90% of technical staff, we have obtained more than 20 patents over the past year which has gained the industry recognition to some extent. We were the first testing platform that obtained the certification issued by Ministry of Industry and Information Technology of the People’s Republic of China.
We develop blockchain underlying technology which can be viewed as the ready-to-work product from the underlying chain. We support all cloud platforms including Alibaba Cloud, Tencent Cloud, Microsoft Cloud and Huawei Cloud. We have been a close partner to Huawei and Microsoft which have some of our cloud products installed. Those cloud products can be directly purchased from the platform and applied. We have created a ‘Blockchain as a service’ (BaaS) platform, different from the traditional one, defining it as a service which integrates blockchain building and self-management on a platform.
Key blockchain technology involves three parts: First is security system achieved by multi-level encryption, authorization management and allied self-management. Second is consensus algorithm, an independently developed pluggable RBFT-alike system which supports varied algorithms. Third is the smart contract that supports varied contract definitions. We also created an ecological development platform on this to monitor developer platform, operation and maintenance tools, software, integrated software packs and visible contracts.
There are over 20 banks at state, provincial and regional levels. We have also conducted researches in many non-financial fields involving logistics, green energy, smart governmental affairs and medical industry.
Urs Bolt: Artificial intelligence is a common thread we see with the startups and growth companies these days. Interestingly, also now we see enterprise-wide blockchain approaches, especially the last one. What is definitely that I haven’t seen so far in Europe is the scale you look at it in terms of credit process or the number of partners involved given the huge markets in India and China, especially.
Matt Dooley: So, small startups were able to get into the insurance companies, large banks. The Indian startups were able to get their banks actually involved. That’s a real positive. We’re starting to see a real scale. We are seeing that a lot of banks, 5-10 ten years ago, used to say, “Okay, great idea, but we can build it internally.” What we are seeing now is that the startups are actually running with the larger organisations.
David Gyori: We see the diversity. Each eight has a different concept, a different business model. This is what makes the next ten years very hard for incumbent players. You have to play multi-level, multi-dimension defense.
Alex Medana: What’s interesting is that we have reached a cycle, they were disruptors ten years ago, are now enablers. Let’s see if they can build even further or if they will be both.
Everybody understood their concept so nicely and they sold their problem completely and they are very different. For people who want to be entrepreneurs, they come from banking, moving into that world, when they can use their experience from the past, that is an amazing thing.
Amit Goel: All the pitches were great. We also have the results by the way. All the startups performed really well but we had to choose one. It was a collective decision of the entire panel.
So, the winner of the competition tonight is Rubique from India.