Biz2Credit provides Biz2X, a fully-managed digital lending platform that helps banks and financial institutions extend credit to small businesses. It also serves as a lender to small businesses, and has funded $10B worth of loans to date. Biz2Credit is backed by Nexus Venture Partners and recently completed a Series B capital financing round of $52 million led by WestBridge Capital.
At the onset of the global financial recession in 2007, brothers Rohit and Ramit Arora noticed a concerning trend across the financial services industry. Access to credit was becoming increasingly limited amid the meltdown of the banking system, which was hitting small and medium-sized enterprises (SMEs) especially hard. Yet, these SMEs were still growing and needed additional capital to fuel their businesses and struggled to find the financial support to back their initiatives. The Arora brothers saw digital lending as a viable solution for these SMEs, and spent the next few years developing an online platform (now known as Biz2X) to crystalize their idea.
Initially, Biz2Credit relied on lending institutions to extend credit to SMEs. However, they realized that even with an automated onboarding process, it would still take 3-4 weeks for the lending institution to finalize their credit approval, which was not the seamless experience they had in mind for customers. As such, the company expanded its business model from where it started as a marketplace aggregator to also becoming a lender so that it could manage the end-to-end credit approval process. The underlying Biz2X platform is also sold as a white label, fully managed service, and is currently used by 15 global banks including HSBC and Popular Bank.
One of the pain points that Biz2Credit has sought to resolve through its Biz2X platform is to reduce the waiting time to approve a loan application. In a traditional bank setup, there are multiple departments involved in processing a loan application including credit, onboarding, and operations, which can result in a lengthy turnaround time of around 7-10 days – particularly if there are multiple systems and silos across departments. Biz2X provides a unified platform to improve the efficiency of the credit application process, resulting in a 3-5X reduction in the turnaround time.
"Biz2X is built on the same technology that has helped Biz2Credit become the premier digital lending platform for small businesses. Our clients get to use that expertise to automate their small business lending and improve their pricing and credit decisions,” said Rohit Arora, Chief Executive Officer and Co-Founder of Biz2Credit.
A key component of Biz2Credit’s ability to improve process efficiency for loan applications is its use of AI/ML to digitalize and analyze customer information. This starts from the moment the enterprise submits its application, which includes Know Your Customer (KYC) information to identify and verify the company’s registration, directors, authorized signatories, ownership structure, and recent bank statements among other requirements. By leveraging Amazon Rekognition, the Biz2X Platform can extract relevant fields from a scanned image of a customer’s identification document to extract the tax payer ID for example, which it can then validate through an online API. This compares to a typical bank setup whereby an onboarding team has to manually record and verify a customer’s identification details into a customer relationship management (CRM) system.
Biz2Credit also uses a proprietary AI/ML model to determine the credit worthiness of its applicants based on bank statements or transaction data. The model estimates the applicant’s revenue, expenses, and seasonality to generate a cash flow analysis for the customer, which calculates the enterprise’s credit risk. Biz2Credit states that their bad-loan ratio is a third of the industry standard, allowing the banks who use its Biz2X platform to extend more credit with less risk.
As Biz2Credit looks to grow its global footprint beyond the US, Canada, Australia, and India, the ability to scale is critical. To enable this, it sees the Biz2X platform moving towards a stage where everything will intrinsically be a microservice and serverless driven. For example, Biz2Credit is transforming its AI/ML processing to become serverless as the ability to scale is critical for the amount of computation, data, and analytics required to run their Biz2X platform. It has also dockerized its Biz2X platform to run on Amazon Elastic Kubernetes Service (Amazon EKS), which will allow it to handle the data-intensive workloads required to automate $400M worth of new loan applications each year.
That said, Biz2Credit’s ambitions do not stop at global expansion – it also has its eyes set on expanding its service offerings to become a full digital banking provider. According to Biz2Credit, traditional banks have yet to reach the stage of providing instant gratification to their customers. For instance, if a customer has a query regarding potential fraudulent use of a credit card, he or she may have to wait days for an investigation to be completed. Biz2Credit aims to empower banks with the ability to give customers this instant gratification by continuing to innovate and simplify current practices into automated decision-making. Moreover, it sees potential in harnessing data science to understand customer needs so that they are matched to the appropriate products and services that satisfy their requirements.
To learn more, visit aws.amazon.com/ai/.