Wiserfunding enters Indian market, to provide lending solutions for SME sector

Wiserfunding, the UK-based fintech firm, entered Indian market, and will tie-up with banks and NBFCs to provide credit risk assessment solutions for targeted lending to SME sector.

It introduced its Artificial Intelligence (AI) backed cloud-based credit risk assessment tool targeted for small and medium enterprises (SMEs), as existing models in lending sector are not specific to the SMEs, largely non-technology based and have low prediction accuracy, it added.

"The London headquartered fintech aims to invest USD 3–5 million (about ₹37 crore) over the next three years to tailor credit risk models specifically towards Indian SMEs to reach an accuracy level above 80 per cent," Wiserfunding said.

It added, "The company plans to partner with 3-4 banks and 8-10 NBFCs in India and cover 8.5 million Indian SMEs through its models by end of the financial year".

It is expected that the investment will also be towards creating technology to connect to various public and private databases to source all inputs to fully automate its models as it already does in Europe.

Professor Edward Altman, one of the pioneers of credit risk analytics since the late 1960s and the inventor of the famous Z-score is the co-founder and supporter of the fintech firm.

Wiserfunding is using a new SME Z-score that is based on AI and provide accurate, reliable, and unbiased credit risk assessment tools to assess the credit quality of SMEs using financial history.

Publicly available structured and unstructured data such as corporate governance, management experience and macroeconomic indicators for lending assessment are also used by the firm, the statement said.

According to the firm, its model is unique as it provides geographical and sectoral segmentation to maximise prediction power and is tailored specifically for SMEs.

"Typical to any economic shock, bank lending is expected to reduce for SMEs, making it more difficult for them to survive. It will be important to have a reliable and accurate assessment of businesses' viability, and technology will be central to such analysis," said Mr Altman.

He added that the Indian banks and financial institutions will see a considerable benefit in using a more independent and unbiased risk assessment platform with the entry of AI-powered models.

“Wiserfunding aims to target bank and non-bank lenders, investors, funds, insurance companies and SMEs”, said Ms Avantika Goel, its India country head.

The statement added that the company has been operating globally across 38 countries and its solution has been adopted by more than 40 bank and non-bank lenders and investors across the world.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.