This Bengaluru-based Startup is Disrupting the Credit Scoring Industry with AI and Machine Learning

Digitap, a fintech startup located in Bangalore, provides banks and financial institutions with alternative data sources and scoring models that are primarily focused on individual borrowers. The company uses a variety of data sources, including telecom, social media, e-commerce, bank statements, and location, to help its clients make informed decisions about lending to potential borrowers. Digitap’s solutions are powered by AI and machine learning technology and are designed to reduce risk while increasing user lifecycle value for its clients. In light of the Covid-19 pandemic, Digitap’s services have become increasingly valuable in assisting banks and fintech firms in navigating the uncertainty of the economic climate and preventing Non-Performing Assets (NPAs). We are publishing an interview with Mr. Nageen Kommu, Founder & CEO, Digitap:

Q.: What is the problem you are trying to solve? Please share with us any insights that led you to believe that this is a big enough problem?

Ans: At present, we are currently focusing on individual borrowers as our primary segment. We gather data about these individuals which will enable our fintech clientele to know more about these customers and make an informed decision on whether they should provide credit to the customers or not.

When Covid-19 hit, the majority of the world’s economy came to a halt. This made lending money to companies and individuals risky. Many banks and fintech companies were caught off guard because they couldn’t determine the nature of their customers.

This is when I realized the value of having a company that would conduct background and financial checks for its clients, therefore helping them decide whether or not to lend to the prospective borrowers.

Q.: Please tell us about the founders

Ans: I’m the Founder and CEO of Digitap. With over 15 years of work experience, I have expertise in Product management, Business strategy, Go-to-market strategy, Digital strategy, Growth and margin improvement across Telecom and IT sectors as well as around 6 years of strategy consulting experience in Telecom / IT sector spanning geographies such as India, NZ, Middle East, South East Asia.

As the CEO of a tech startup, I am closely involved in development of API based solutions for Fintechs and Banks using Artificial Intelligence (AI)/ Machine Learning (ML) technologies. Prior to Digitap, I was associated with a sports-based tech startup – Dribl as the Co-Founder. At Dribl, I was responsible for product management and technology. Additionally, I have prior been associated with  Ernst & Young LLP, Value Partners Management Consulting and Alcatel-Lucent Technologies India Ltd.

Q.: List all the names of the core Team Members, along with their Designated Roles –

Ans: Giridharaprasad is the CTO of Digitap.AI who has a rich experience of over 20 years working in IT. He was involved in working with Fintechs and telecom equipment manufacturers before joining Digitap.

Digitap is also on the lookout for an enterprise sales head who will form the core part of the management team. His ideal skills should be where he has worked in SaaS based enterprise sales with a minimum experience of 10 years.

Q.: Tell us about the Product / Solution. How did you get your first customer? Explain how you went about the Product-Market Fit Process.

Ans: Digitap provides alternative data sources and scoring models to BFSI firms so that they can underwrite these clients and reduce their Non-Performing Assets (NPAs). We offer industry-leading alternative data solutions built on AI and ML that reduce risk while boosting users’ life-cycle value for our clients. We look at data from a range of sources, including telecom, social media, e-commerce, bank statements, employment, device data, and location.

The distinctive data sources found by us will have a significant impact on the customer’s credit profile and set our underwriting solutions apart from the competition.

Q.: What is your USP? * What is the insight that you have about this market, which no one else has? Uniqueness about your Startup.

Ans: The scoring model is part of the distinctive product stack that Digitap provides to its clients, enabling them to develop personalized scoring models that will benefit their target market. The main objective of a scoring model like this one is to assist businesses in enhancing risk management and lowering fraud. The platform’s onboarding options include KYC solutions, Optical Character Recognition (OCR), document validation, and a video KYC solution that complies with Reserve Bank of India (RBI) regulations.

Q.: What were your assumptions when you entered the market, learning that you have? Who in your mind is your ideal customer? Do you have at least one of them signed up?

Ans: We initially thought that the market would be easy to crack through price differentiation. However, we quickly realized that the support and the agility to improvise or customize the product for catering to the needs of clients becomes paramount.

We have been successful in signing up a lot of our ideal clients who are inclined towards using data and scoring models to refine their risk management strategies and are willing to invest in technology, not just in areas of onboarding but also in risk management.

Q.: What has been your biggest failure as an entrepreneur and what did you learn from it?

Ans: The failure of Dribl, my previous venture, is the biggest failure as an entrepreneur and the biggest learning I took away from that is the importance of product and i’s market fit.

Q.: How are you pricing the Product? What is the logic behind it?

Ans: Our business model is fairly simple. We typically don’t charge any hefty upfront fees or integration fees because we only ask our customers to pay for the services they actually use. We only charge our clients for the APIs they actually use, and we only accept postpaid payments.

Q.: Please tell us about the investors.

Ans: We don’t have any investors as of now as this is a bootstrapped company.

Q.: Is there any interesting success story of your startup? If yes, please write about it. ?

Ans: Being listed as a certified Technology Service Provider (TSP) on the Sahamati platform, which implements the Financial Information Users (FIU) module is one of the milestones that we have achieved. As a TSP, it makes it possible for us to certify the module and offer analytics in addition to the raw data shared by the Financial Information Provider (FIP). Being listed as a TSP keeps us connected to all Account Aggregators (AA). Our goal mainly is to provide FIUs with an end-to-end technical solution that limits their effort to processing pertinent documentation.

Currently, we are associated with over 90+ financial institutions, and are confident to scale this up to 250+ by 2025.

Q.: What is the big picture of your startup? Is this Product/service leading to something bigger? If so, how?

Ans: We are a data oriented startup whose focus is on two main things: ability to gather data and the ability to make sense of that data to fulfill a use case. We are use-case driven and use the data at our disposal for that purpose alone. We are bringing in a  change in the way lending companies view data by providing them with meaningful insights for risk management. This is leading to a complete shift in their underwriting abilities, thereby enabling them to serve a wider customer base in turn enabling financial inclusion.

Q.: Who do You Perceive as Your Competition? How do you differentiate yourself with them?

Ans: Our differentiation with regard to our competition comes from our ability to provide a wide range of products and services under one roof and also with the level of support we provide to our customers in terms of the customization that is needed from their end.

Q.: What would be your goal to accomplish in the next six months? Any other information you would like to share?

Ans: We believe there is a tremendous opportunity for a broad range of data-related use cases considering the significance of data in business decision-making, particularly in the BFSI industry. In addition to credit underwriting, the company is planning to concentrate on expanding the data-related use cases to encompass marketing, fraud detection, and identity management. We wish to engage customers worldwide in addition to the BFSI sector in India and aim to reach an ARR of USD 20–25 million during the next few years.

Q.: What message do you want to convey to fellow entrepreneurs?

Ans:  For an entrepreneur, learning forms a major part of the growth journey. It is essential to identify right opportunities and attempt to capitalize them. There are crucial learnings, even from failures. An entrepreneur or a professional, must have a knack to constructively source feedback, identify gaps and work on them. Instilling the fundamental values of collaboration, humility and trust in your team lays down a solid foundation for your company’s success.