How Think Analytics is using alternative data to disrupt the lending business
Mumbai-based Think Analytics positions itself as a comprehensive alternative data solution that provides curated business insights for instant decisions. The firm leverages non-traditional data assets and algorithms to transform the way businesses, be it banking, finance or e-commerce, engage with customers.
“How many people do you know who don’t have access to basic financial services because they don’t meet the pre-criteria?” Amit Das asks. I think of dozens of hired help who have, over the years, turned to us, their employers, for an advance because the alternative is a loan shark in their neighborhood.
“And yet, there is data available on them, some form of digital data,” continues Amit, an analytics incubation specialist. “Someone has to look at a range of these financial, behavioural, and social attributes, make sense of them and make the data available to institutions in a manner that they can trust and use for lending.”
This gap is what led Amit to set up Think Analytics, which he calls an alternative data engine. Along with domain expert Suryadip Ghoshal and technologist Mohnish Salot, he founded the startup where data sits at the core. Algo360, their flagship product, is used by banks, finance companies and e-commerce players to come to instant decisions on the credit-worthiness of a customer.
Set up in 2014, the company has taken rapidly strides and currently services 19 clients across industries like banking, financial services, e-commerce, pharma and healthcare.
But what is alternate data? Think of it as any form of data gathered through non-traditional sources. Remember all those times when you are downloading apps and easily allow access to data on your device and social media networks? Think Analytics uses mobile data, apps data, social media data and device usage information among others to gather information.
For companies, this is useful to gauge credit-worthiness. If an e-commerce customer has clicked on the “Pay as EMI” option while purchasing a high-value item, it’s easy for a bank to find out whether s/he has multiple financial relationships. The bill payment history can help gauge the person’s reliability as a customer.
“Most institutions are completely missing out on maximising how they use old data, let aside new data and new insights. Alternative data may be the answer,” Amit says.
For instance, the name and details on an Aadhaar card may not exactly match the individual’s name on the PAN card. Location data might suggest that the person is living elsewhere. Or an individual may on paper be working with Company X, while social data suggests that they’ve already moved on to Company Y.
For an institution assessing risk, these are valuable insights and help bring down costs for lending institutions. Default rates go down too.
“The more you know about your customer, the better you can manage the ‘customer lifetime value’,” Think Analytics says on its blog.
Mobile and app data isn’t entirely clean in India, where use-and-throw prepaid sim cards and frequent device changing are the norm, especially among the unbanked.
But Amit believes algorithms just have to “get smarter” to counter this.
Coming together as a team
The genesis of this three-year-old company lies in the discussions that Amit and Surya had over creative use of data to build real-life solutions when they worked together at PwC a decade ago. Mohnish, Amit’s colleague from 3i Infotech, joined them soon after to build the technology for the product.
“Surya and I are the data analytics guys, the nerds in the room who are now the cool AI and ML guys,” Amit laughs. “Mohnish joined the band a little later. He fills a very important void in the team – systems thinking.”
“There was a sense of shared values – hard working, data rich, client first, bootstrapped ventures - and efficient working relationships that brought us together,” he adds.
It expects to cross $1 million in revenue although investments may outstrip revenue in the coming months.
Besides Algo360, Think Analytics also offers AppSights, which uses app analytics to give customer insights; and Vito, which aggregates all offers, discounts, and coupons on various e-commerce sites for a single product on one platform. The name is a hat tip to Marlon Brando’s Godfather — an offer you cannot refuse!
Coming up are some tough decisions for the team – dive deeper locally or move overseas to grow the business?
The analytics business in India itself is about $1.64 billion, growing at roughly under a third annually, with finance, marketing and e-commerce leading the charge. Clearly, there’s plenty of room to grow locally as well.
“A few months back, we realised that the journey to alternative lending is nine-12 months away, and that we should expect (to make) heavy upfront investments in getting our clients up the curve on adopting alternative data,” Amit says.
“One of the questions we asked ourselves is whether we wanted to continue investing in it, or move our resources to something else. We really believe in the idea of alternative data, and one of the benefits of being bootstrapped is that you can really back your own convictions. So, we continued down that path,” he says.
But the path isn’t easy. There’s competition all around them. Some fintech companies are building similar systems in-house. CreditVidya, a competitor, has raised Series A funding, while Think Analytics remains bootstrapped.
On the other hand, the problem is acute and widespread enough to accommodate more than one player. It is accepted that Big Data can transform the way businesses interact with customers in real time.
With their embedded analytics solutions and focus on providing a comprehensive, 360-degree insight about customers, Think Analytics is hopeful of building the best alternative data assets in the world.