ADVANCE.AI has opened offices in Bengaluru and Delhi
ADVANCE.AI provides solutions related to digital transformation, fraud prevention, and process automation
Startup is aiming at serving clients in fintech, ecommerce and retail
After the 2016 demonetization policy, while economic experts across the world were divided on whether it was the right decision or not, one picture that clearly emerged in the aftermath was India's position as a fintech hub. Backed by government efforts such as UPI and the rising lending space, India's banking and financial segment is at the global epicenter with praise coming from all corners.
But this burgeoning segment is also plagued with fraud. In the financial year 2019, Indian banks reported a 74% increase in fraud to INR 71,543 Cr, according to RBI. As most of these banks are lending partners of many fintech startups, the number of fraud cases have also risen sharply for these startups.
To curb these fraud cases, many startups leveraging new-age technologies such as artificial intelligence (AI) are helping fintech startups, bank, sand NBFCs to take appropriate measures. Joining the fight against fintech fraud in India is the Singapore-based enterprise ADVANCE.AI.
How ADVANCE.AI aims to curb fintech fraud?
Founded in 2015, ADVANCE.AI provides solutions related to digital transformation, fraud prevention, and process automation. The startup announced its entry into the Indian market with the launch of offices in Bengaluru and Delhi NCR to support India's fintech ecosystem. ADVANCE.AI is also planning to open its third office in Mumbai.
Speaking to Inc42, Charles Zhang, the country manager of ADVANCE.AI, India, said in March of last year, the company launched its product in India. Its first use case was in empowering financial institutions with AI-based anti-fraud verification and face recognition technologies. The technology helps clients to authenticate users which is now also used by Indian startups.
The company's flagship product— "Guardian", offers anti-fraud solutions to minimize the risk for clients. The tool uses AI-based facial recognition to identify individuals and alert the client if anything suspicious is detected by it thereby minimizing the risk. "The product is used mostly by clients offering financial services such as banks, fintech startups, non-banking financial institutions, etc., for completing digital identity verification of their customers. " Zhang said.
He said that the company used an advanced face recognition technology, as well as anti-spoofing technology. The platform of ADVANCE.AI can tell if the applicant is the same person as shown on the ID proof or not.
ADVANCE.AI claims that "Guardian" provides 99% accuracy for its digital identity verification capabilities based on facial recognition. Recently, the Reserve Bank of India (RBI) had announced a video-based KYC solution as an option to establish a customer's identity. The solutions of ADVANCE.AI can also come handy in completing the digital identity verification of users via video-call.
Additionally, the startup also offers AI consultancy services under the name "Booster". Also, " Advance Connect" empowers clients with targeted marketing by leveraging partners' existing data using AI.
After the success in Singapore, the startup ventured into the Philippines and Vietnam. In March 2019, ADVANCE.AI launched its products in India. It claims to be achieving 350% year-on-year growth in API call volume and 400% growth in enterprise clients. "In the last year, the company has brought over 100 clients on-board. We have seen now, double, triple, or even quadruple model-on-month growth in India," Zhang added.
Zhang noted the startup first established its credibility in the market and then ramped up its operation. "We started working with banks and major consumer financing giants like Netherlands-based Home Credit," he added.
With these tie-ups, the company gradually built a reputation and is now aiming to grow aggressively in India.
Zhang said that India had a low credit card penetration and only 25% of citizens had a credit history. This means that a lot of the population is still underbanked which comes as an opportunity for fintech players as well as for companies, such as ADVANCE.AI, which providing allied services to these companies.
Opportunities in lending Fintech
After entering India last year, ADVANCE.AI took small steps to understand the market. Zhang recalled that it tried to figure out the needs of its customer base and invested in improving and adapting the product suite according to the Indian market.
"After some months in India, we realized that the real opportunities presented in consumer lending space," Zhang said. "There are hundreds of new lending fintech and new-age NBFCs which are expanding and growing in this market. Digital lending is one of the few bright spots in the Indian economy. So we sensed this opportunity."
After this, the company started to invest heavily in marketing. As a result, the company was able to get a clientele of lending startups including Mumbai-based lending startup CASHe. "Our growth is continuing despite the current economic slowdown amid the coronavirus situation," Zhang said.
According to Zhang, the Indian market is somewhat similar to other Southeast Asian markets such as Indonesia. Both countries have a huge percentage of youth in the population but India's population is much bigger than that of Indonesia, as India is a five-times bigger market than Indonesia.
Also, he believes that India has a better financial system and a more mature regulatory system.
For the Indian journey, the startup appointed Darshan Shah as its Chief Advisor in January 2020. Shah has over 20 years of experience in credit scoring, alternative data, and digital lending at companies such as TransUnion CIBIL and Experian.
Zhang believes that there are a lot of unmet needs in terms of AI and big data application segments within India's fintech industry. The startup also wants to leverage its learning and experience gained from Southeast Asia to go beyond the financial domain to offer AI-based solutions to retail, e-commerce, and other segments.