How collect tech platform Spocto helping banks recover loans without using muscle

Increased credit disbursement has led to a spike in NPAs for both NBFCs and banks. "In times of rising bad loans and haunted debt collection methods, collect tech platform Spocto – is the first player to introduce AI-based contactless collections, assuring collection efficiencies for clients with reduced human dependency, lower bounce rates, and increased self-pay by deploying big data analytics and Machine learning (ML)," says Sumeet Srivastava, founder and CEO of digital debt recovery platform Spocto, a Yubi Company, in an exclusive interview with Bizz Buzz

How did you come across the idea for Spocto?

One of the most significant issues that lenders in the retail and MSME segments encounter is recovery. According to Crisil, stressed assets, including non-performing assets and restructured loans, might account for 11 per cent of bank portfolios by March 2022, up from 9 per cent in March 2021. A CARE Ratings study of Q1FY22 stated that gross non-performing assets (gross NPAs) in public sector banks' retail and MSME loan books increased to 7.28 per cent in June 2021 from roughly six per cent in June 2020. Private banks experienced a lower rate of problematic loans, with GNPAs at 3.32 per cent in June, up from 2.01 per cent a year earlier.

What role Spocto is playing in the debt recovery industry?

Increased credit disbursement has led to a spike in NPAs for both NBFCs and banks. In times of rising bad loans and haunted debt collection methods, Spocto is the first player to introduce AI-based contactless collections, assuring collection efficiencies for clients with reduced human dependency, lower bounce rates, and increased self-pay by deploying big data analytics and ML.

SmartCollect - uses its machine learning and AI-led platform to educate the farmers in their preferred language for paying their dues in time. Currently, we are helping between 3-4 lakh farmers every month make an automatic UPI payment.

Who are your market competitors and target audience?

Our AI-based platform has gained tremendous traction in India as well as abroad. Having established a successful history with eight out of the top 10 banks in India, and four out of the top eight financial institutions in UAE, we can safely say that a decent share of our revenue flows in from overseas. We are the first player to introduce AI-based contactless collections, having a first mover's advantage in the industry.

How do your products make work easier?

Spocto's AI-based prediction model uses behaviour sciences leveraging external digital footprints. This functionality gives an insight into the propensity to pay and identify early warning signals. It also recommends relevant collection efforts that would prevent delinquency and the formation of NPAs.

Spocto's journeys are customized to the borrower's personality across all digital platforms and integrated with major payment partners, like Razorpay, BillDesk, Cashfree and NCPI, who provide payment gateways and UPI deep links to process collections seamlessly.

Spocto overcomes the language barrier by personalising the communications in vernacular languages which enables a different level of connection and trust binding the customers. With the help of AI powered voice-bots, it is able to overcome the linguistic barriers that facilitate lending to newer segments and remote areas, which have remained outside the credit umbrella. This has resulted in a 96 per cent reduction in escalations of digital collections. Not only this, 61 per cent of customers from Tier 3, 4 & 5 cities have better engagement if communicated in their local language.

There is complete transparency and control over delinquency prevention efforts across channels and vendors. Real-time insights and a consolidated view of third-party data are also provided. Lenders can create self-serve reports and get recommendations that enable data-driven decisions.

The platform is enabled with complete privacy and purging policy norms that allow customers/lenders to be fully compliant with banking industry-approved practices of the country (like GDPR). Dedicated deployments are done with complete physical isolation of machines by utilising best-in-class data encryption (AES 256, ISO 270001, SOC1) at all interaction levels.

What are the specific challenges your tools help address?

India has the second-highest ratio of NPAs among the major economies of the world. However, there has been a gradual improvement. There has been an increasing amount of debt and other financial pressures on the heels of moratoriums ending along with Covid-related slowdown in the overall economy that MSMEs, farmers, and consumers have faced. Spocto is inducing penetration of financial independence in rural pockets in the country with financial counselling and services that empower the customers and enhance the propensity to pay with the following solutions.

SmartCollect: An AI-based platform that enables usage of non-human digital channels for performing various collection-related activities resulting in increased reach and contact of the client's portfolio, using advanced analytics which further reduces collections efforts/cost by right scoring and removing redundant steps and hence results in increased conversions of customer contact.

Kisan Pay: It is a one-stop solution BOT for the banks and farmers, where banks do not have to worry about farmer loan payments under Kisan Credit Cards. This is a first-of-its-kind innovative application that collates farmer data, such as due date, and outstanding using the linguistic features for better penetration.

One of the most significant issues that lenders in the retail and MSME segments encounter is recovery. During the moratorium and beyond, some lenders engaged in unethical methods and attempted to recover by employing harsh and inhuman measures, earning them a negative reputation. However, some emerging lenders have taken steps such as re-evaluating credit models to adapt for the 'new normal,' as well as implementing digital technology that uses alternative data to adjust recovery techniques. The three key issues faced by lenders includes: 1) Resources 2) Technology and 3) Customer experience. No holistic solution has resolved the overarching problem.

What is your vision for Spocto?

We at Spocto aim at democratising the lending landscape by improving the entire collection experience. Traditional unscrupulous methods have led to consumer harassment and even suicides at some point. Ushering in a new phase of debt collection, tech-based digital collection solutions provide a better customer experience and build a lifelong lending/borrowing relationship between financial institutions and borrowers.