SMEs process and cut costs using Cloud Computing, AI & Blockchain: Nirav Choksi, CEO CredAble


In the era of all things digital, small and medium-sized businesses are evolving rapidly. Today’s MSMEs are taking maximum advantage of technological advancements be it in terms of payments or financial operations, shared Nirav Choksi, Co-founder & Chief Executive Officer, CredAble, in an exclusive interview with Shruti Jain of Elets News Network (ENN).

What is your current strategy to leverage technology for digital transformation in the BFSI sector?

CredAble is at the forefront of leveraging technology to transform the working capital landscape. We are entirely focused on solving the working capital financing challenges of enterprise ecosystems & SMEs. We do it with our fully white-labelled ‘Banking as a Service (BaaS)’ offering to leading banks to power them with:

1. A Digital Supply Chain Financing Platform for the Bank to run anchor led financing programs to free up working capital for their corporate clients, and for SMEs who are either suppliers or customers of these anchor corporates.

2. A Digital Financing Platform for the bank to offer SMEs with trade and working capital financing products of the bank digitally along with opportunities to cross sell other banking products.

3. An Embedded Finance Platform for the bank to run digital lending programs participating in external platforms or ecosystems where SMEs are sellers or customers.

The goal is to enable our partner banks and financial institutions to become nimble and deliver value to both internal and external eco-systems for working capital. The suite of products available in our Banking-as-aService category ranges from customised KYC and onboarding journeys, anchor and vendor led programs, loan origination and management systems to features like early warning signals and receivables financing module.

Today, CredAble is working with over 35 large banks and financial institutions and has transformed that way 125+ enterprises deal with working capital, which has in turn benefited more than 275,000 SMEs and MSMEs.

How is the MSME sector evolving with digital transformation? How is it creating an impact on the millennials in India?

In the era of all things digital, small and medium-sized businesses are evolving rapidly. Today’s MSMEs are taking maximum advantage of technological advancements be it in terms of payments or financial operations. The extensive use of digital payment has made financial transactions a lot easier than the traditional cash only mode of transactions. Business’s digital transformation has also helped financial institutions process business loans at a faster pace, which in turn helps businesses get access to working capital at the right time.

Today, small and medium-sized enterprises (SMEs) can expand their customer bases and enter new markets thanks to the rise of digital channels such as e commerce marketplaces, social media, and mobile apps. Their popularity and customer base have grown immensely because of this.

In addition, SMEs have benefited from digital transformation by having better supply chain management, increased productivity, and streamlined operations. Using cloud computing, AI, and blockchain, they can now automate their processes and cut costs.

Young generation in India have also felt the effects of the digital revolution. Because of their upbringing in a digital environment, millennials are more likely to use digital channels for purchasing, communicating with merchants, and making purchases.

Because of this, micro, small, and mediumsized enterprises (MSMEs) now have more opportunities than ever to connect with this group via online mediums.

In addition, millennials can now launch their own businesses with limited financial outlay thanks to digital platforms. By utilizing online communities and marketplaces, they can expand their customer bases internationally.

All things considered; the adoption of digital technologies is causing a dramatic shift in the MSME sector in India. It opens doors for companies to expand their operations, attract new customers, and boost efficiency. Likewise, it encourages young people to become self-employed.

How is CredAble making a market for the underserved or unserved by traditional banking systems?

According to a report by the Indian government, the country has a $275 billion credit gap in its working capital. Utilizing three ecosystems, i.e., enterprise, financial institutions, and MSMEs. CredAble taps into the vast potential of reshaping the working capital landscape.

CredAble’s diverse product catalogue serves SMBs across a range of industries. CredAble uses its own NBFCs to meet the short-term funding requirements of the independent small and medium enterprises with a range of supply chain funding programs including invoice discounting, PO Financing and a host of other working capital solutions efficiently.

Our comprehensive working capital platform and tech-enabled solutions offer ease of access to capital via an extensive network of marquee financial institutions partnerships.

Using state-of-the-art technology platforms, partnerships with capital providers, deep ERP and bank integrations we have enabled more than USD 6 billion annually in working capital in the past year.

How are NBFCs contributing to achieving the USD 5 trillion economies?

NBFCs are playing a pivotal role in the national goal of a $5 trillion economy. Being nimbler compared to large banks that run on legacy systems, modern NBFCs are increasing their use of analytics and data science in credit assessment processes. Robust digital underwriting engines empower the NBFCs today and enable them to leverage both structured and unstructured data to arrive at a credit score estimation of businesses. Data-driven statistical models used today increase objectivity, allow for greater scalability in the underwriting process, and expand coverage.

CredAble, with its own NBFC, has focused on providing working capital finance beyond traditional products like working capital demand loans and term loans to reach the underserved sector in a more sustainable manner. We offer both pre and post shipment financing products to ensure that the working capital is available to SMEs and MSMEs as and when they need it. The scalability of the offerings of our NBFC is ensured through an end-to-end digital post-shipment journey for working capital loan applicants. Our in-house technology products starting from E-KYC, digital documentation and onboarding to digital credit underwriting through parametrized score cards to disbursement and collections ensure the process is highly streamlined, cost-effective and time-saving.

How do you foresee the upcoming year for the digital lending industry? What are the opportunities coming?

As with every technological innovation, we move a step closer to a completely digital age, the digital lending industry is set to benefit from the increased digital adoption of both businesses and consumers. AI-powered credit assessment will contribute towards better credit assessment, monitoring and enable a more robust early warning signal engine.

The regulatory support through the Government of India, in recent years, has provided a massive boost to the digital lending fraternity. Thanks to the timely government initiatives aimed at making affordable working capital easily accessible to MSMEs. FinTechs are now able to leverage data infrastructures and serve a larger base of the under served segment.

Some of the key initiatives in recent times are:

1. OCEN (Open Credit Enablement Network): To standardize the loan journeys across financial institutions and marketplaces.

2. Account Aggregator Network: To provide individuals with greater access and control over their financial records.

3. ONDC (Open Network for Digital Commerce): To standardize operations like cataloging, inventory management, order management, and order fulfillment.

In line with these government objectives, CredAble has built technologies for better implementation of initiatives. For OCEN, CredAble acts as an LSP and based on the new lending protocol infrastructure enables the digital origination, underwriting, and servicing process of loans. With ONDC, CredAble is defining a protocol over which SMEs can avail of quick financing over the ONDC network. This will help the SME in discovering the right credit product for themselves and availing the same through a completely digital process.

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