Bank of Baroda to Assess Credit Value with the Power of Technology and Data

Bank of Baroda intends to leapfrog their digitization journey by leveraging the power of technology and data to make the credit underwriting process more efficient, while being broad-based and inclusive.

Historically, banks have relied on Bureaus-based Credit Scores or face-to-face meetings with the applicant to make a credit decision.  The process usually starts off with a face-to-face meeting with the applicant, which is then followed up with the applicant submitting documents. The documents submitted help the lender to perform a financial assessment of the applicant. The last step, is to then do a physical verification before finally approving the loan.

The credit assessment based on alternate data helps the bank make a credit decision by holistically understanding the applicant and the credit need better. The use of alternate data sources to supplement existing financial data from the Credit bureaus helps the bank to lend to applicants with limited or no borrowing history. The business loan product has the ability to score the applicant and processes the application online and real-time.

The applicant is credit profiled when they apply for a loan with Bank of Baroda. As part of this approach, the borrower’s credit worthiness is assessed across five key pillars, which most lenders use to evaluate loan applications using over 1500 credit-relevant data points. The data used in the profiling is obtained and used only after applicant consent.

This approach enables Bank of Baroda to understand the applicant’s credit profile better, check the veracity of information provided by the applicant, and process the loan application faster. Technology enables the bank to offer low ticket credit products to even first time borrowers and expand into newer segments without the need for related large-scale investments. It also helps the bank reduce credit processing turnaround times by cutting down on need for expensive physical verification processes and expand into new, digitally aware consumer segments where Credit Bureau data is limited.