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Solving the challenges faced by Women SME banking customers with Data

The more money you have, the more you can earn. But it can have an inverse effect if you don’t have it. This holds true for data as well. Vast amounts of information improve banks’ ability to support customers, but financial institutions must know how to use it.

WSME customer are in serious need of guidance from banks, whether it’s about spending, saving, borrowing, planning or all of the above. Most WSME’s struggle with their finances.

In addition, their loyalty shifts easily, considering that digibanks are more accessible with instantaneous onboarding processes. Modern banks are challenged to familiarize themselves with their customers, dig deeper into the reasoning behind their financial decisions and enhance their knowledge of finance.

Not knowing which data is most valuable and how to understand WSME customer needs, broad approaches and profiles leave customers excluded from adequate financial support and the same financial position, maybe even worse.

For WSMEs to share their data with you, they first need to understand the real benefit of doing so.

Modern banks can use data and build trust to improve WSME financial health.

Obstacles for today’s banks

Banks must recognize that historical financial information and elements of those categorized as “the norm” are a general representation of the WSME market opportunity.

For example, a WSME wants to expand her product line with a new product. The product is a little more than she can afford. However, algorithms can tell a bank that others WSME’s bought this new or similar products, and a banks system can offer a line of credit or purchase order financing for this client. However, what happens if the WSME loses revenue due to the pandemic? What if she can’t make her payments?

PO Financing can be a convenient way to make purchases with attractive interest rates, but in case of an unexpected problem, the WSME might resort to making payments with a credit card. This would extend the life of that PO Financing debt while adding additional interest on top. Even if she finds new income streams, she might have put herself through more financial stress.

If a bank adopts a 365degree view of the client which Alternative Credit Scoring can provide via fintech for banks, information from their customers’ accounts to inform you where they and how much they buy, how much they spend on certain products, whether they have a car and insights into their family and education. However, staying on top of the latest data protection regulations means you have to constantly morph operations.

Modern banks need to ensure that they are compliant with privacy and security regulations to make their data safe. With comprehensive data rights legislation, banks must strictly use data for reasons agreed upon with the owner’s consent. They need to ensure customers understand how their bank uses their information with third parties.

There are some steps banks can take to mitigate the challenges with data.

Data to determine financial aptitude

It’s essential that banks create solid indicators to identify each WSME’s strengths and weaknesses . By looking at the WSME’s transactional data, spending habits and behaviors, banks can acknowledge recurring patterns and better align their products.

No matter the financial status of a WSME, if they can pay all their loans and bills at the right time, they’re an ideal candidate for a financial institution. Banks can offer digestible loans that benefit the bank and the customer instead of initiating high-interest rates and everlasting debt victims.

In cases of low credit scores or no transactional data, innovative businesses find ways to understand their customers’ financial strengths.

For instance, machine learning can assess a users’ financial and business aptitude levels based on analysis and system responses. Over time and as the WSME provides more data; the time it takes to get a 365 degree view of the WSME depends on the analysis of the data inclusive of supplemental questioning. After a few days or weeks, responses start to balance out, and banks can provide suitably manageable loans to their customers.

Depending on a bank's customer base and behavioral data, you may find your customers have a particular set of knowledge, and you should tailor your assessment to them.

Banks can stop relying on outdated credit scores by using transactional data, financial well-being surveys or AI-driven aptitude tests.

Drive WSME products with data.

Financial institutions that succeed will focus on SMEs or customer focused, rather than product-centric, support. By enabling data to generate a clear profile of the WSME instead of categorizing customers based on predetermined groups and judgment calls, banks can pinpoint behaviors and capabilities to provide personalized products for WSMEs.

There are thousands of data points that enable AI to build a client profile and incorporate new units of information in real time. However, there will be transactional patterns that don’t make sense, and the need for human intervention remains sometimes but less over time.

There needs to be integration between platforms and diversity within banks’ risk organizations to improve the financial health of today’s SME market. Banks can also use AI from some fintech’s like omnichannel conversational bots to capture contextual information, and examine the pattern logic.

Build trust and protect their data

For a user to share their life with you, they first need to understand the real benefit of doing so. Building trust takes time.

Trust and relationships don’t develop overnight.

Trust is built on solid foundations, so make those particularly strong when it comes to data. APIs connect organizations and govern how information is shared, displayed and protected. Having a governing interface will help you keep data safe with third parties by monitoring its use based on mandatory security levels and additional requirements you agree to with your customer.

Onboarding processes where advisers or chatbots prompt the customer to answer questions or approve their apprehension at stages throughout the terms and conditions will ensure clarity. And when banks meet their clients’ expectations, they will increase their trust in you.

Financial institutions already have the most valuable data at their disposal. They have broader details on WSME spending, behaviors, needs and desires than any other institution.

Open banking provides banks with more efficient solutions for their customers, but this is only possible with strict security regulations or APIs to govern fair use and transparency.

Modern banks’ data used to build accurate client profiles and personalized products vary by individual and require customer input and trust. But remember, building trust in an untrusted playing field that requires transparency and putting the customer first. One such example is Kiu Global working in Bangladesh that has created a data collection tool and an AI powered alternative scoring engine to assess the ability of WSMEs in Bangladesh to receive loans.

Kiu has implemented a 360-degree solution to improve data collection and analytics to enhance access to finance across regions in Bangladesh. And with the increasing involvement of young entrepreneurs in sectors in the training on digital solutions, fintech was able to provide an extensive training program to increase digital literacy among women entrepreneurs.

Aside from the gender gap, there is also a wide finance gap among women entrepreneurs especially those in the MSME/SME sectors. In many developing countries such as Bangladesh, women entrepreneurs usually need small loans to launch a business while banks are reluctant to provide a loan without any security. And many times, these MSME/SMEs do not have financial records and lack experience of managing a business. In order to bridge that gap, Fintech created a customized credit scorecard aligned with Bank’s regulations and bank/MFI risk policies. This process enables banks and MFIs to MSME/SMEs to minimize risk and increase lending to women owned businesses through Kiu’s automated loan system.


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