London-based fintech startup Wiserfunding is planning to enter the Indian market and is willing to invest ₹35-40 crores over the next three years. The funds will go into tailoring the credit-risk models for small businesses, the company said in a statement.
Wiserfunding uses artificial intelligence to reach an accuracy of 80 percent while evaluating the credit risk of small businesses struggling for funds following the coronavirus outbreak. The market is nascent as banks have been slow in offering them loans and most of the NBFCs in India are on backfoot following the 6-months moratorium.
“It will be important to have a reliable assessment of businesses’ viability and Indian banks and financial institutions will definitely see a significant benefit in using a more independent and unbiased risk assessment platform,” Edward Altman, cofounder, Wiserfunding, said.
Edward, a professor emeritus at the New York University’s Stern School of Business, is a pioneer in credit-risk analysis and has invented Z Score, also referred to as Altman Z Score, honoring his name.
The UK-based firm will create a technology platform that will connect public and private databases to automate the lending models. It plans to partner with four banks and 10 non-banking players to reach 8.5 million small businesses by the end of the financial year.
The Z-Score platform uses advanced AI algorithms to provide reliable credit risk assessment tools to evaluate the quality of businesses through transaction history and public data. The model provides geographical and sectoral segmentation to be designed specifically for SMEs.
This will be company’s first out-of-country office (outside of the UK) and will be headed by Avantika Goel, who will relocate from London to Mumbai. It aims to target banks, NBFCs, investors, funds, insurance companies, and SMEs.
The startup is already operating in 38 countries and has clients in the UK, Italy, Portugal, Poland, Latvia, Thailand, Singapore, South Africa, Germany, and the Netherlands. The solutions offered by Wiserfunding has been adopted by 40 banking and non-banking companies and investors all across the globe.