We use core machine learning models for risk assessment and are actively exploring new-age AI language models to improve customer interactions and service: Padmanabhan Balasubramanian, Partner, Protium

Protium, an innovative financial technology, has been causing ripples in both the finance and non-banking financial company (NBFC) sectors, reshaping how financial institutions handle their assets and streamline their operations. In a exclusive interview with Express Computer, Padmanabhan Balasubramanian, Partner at Protium, shared insights into how the adaptation of generative AI models customised for Indian languages will elevate customer interactions. Furthermore, he emphasised that customers are becoming increasingly digitally adept, contributing data effortlessly, which is poised to revolutionise the lending process.

Can you provide an overview of Protium’s mission and how it aims to differentiate itself in the competitive landscape of lending and finance?

Certainly, this question has two parts: understanding Protium and how we set ourselves apart in the competitive finance landscape. Protium’s primary focus is lending to small businesses, typically defined as those with annual revenues ranging from 50 lakhs to about 5-10 crores. This segment remains underserved by large banks and is still transitioning into the formal banking sector. Our primary lending involves secured loans, typically collateralised against immovable properties like commercial and residential real estate, and sometimes manufacturing units. We assess the borrower’s ability to repay and back it up with collateral support. Unsecured loans follow a similar process but lack collateral support. Secured loans are usually smaller in size than unsecured ones.

Our thesis revolves around India’s MSME-driven growth story. Lending to MSMEs is crucial for India’s development, and this segment presents a significant opportunity. We also engage in consumer lending, particularly consumer durable loans, such as mobile phones. We operate at scale with a presence across India, boasting over 85 branches in 60+ cities and a robust distribution network, including partnerships with other distribution networks.

Our differentiation strategy focuses on two key areas: risk assessment and engineering finance. We invest significantly in technology and talent to excel in assessing risk and servicing customers throughout the loan lifecycle. Additionally, we streamline financial processes within the Indian ecosystem, with a focus on risk management. These two pillars set us apart.

The rise of fintech startups and disruptive tech technologies seems to be shaking up the traditional financial scene. How is Protium planning to ride this wave of change and bring about innovation?

In understanding this, let’s break down the lending value chain into three parts: customer acquisition, risk assessment, and loan servicing. Fintech companies mainly operate in customer acquisition, leveraging their large customer bases and offering other services alongside lending. Lending is either an embedded utility or a primary focus for them. Our technology primarily resides in the middle, where we focus on risk assessment, as well as customer acquisition and servicing. We don’t directly compete with e-commerce marketplaces that embed lending as a feature; instead, we aim to complement their platforms.

How do you visualise artificial intelligence and machine learning enhancing risk assessment and fraud detection for your customers in finance, and where does Protium fit into this transformative picture?

The leadership at Protium recognises the importance of AI and machine learning in our operations. Machine learning is central to our risk assessment process. It involves not only skill but also organisational design. We align our teams to adopt machine learning and embed it into our system comprehensively. Machine learning models help us segment and assess customers in a granular way. As we grow, we develop more targeted machine learning models for specific segments, allowing us to outperform generalised models. Our focus on machine learning targets risk assessment.

In the broader spectrum of artificial intelligence, particularly in conversational AI and language models, we are still exploring and running pilots to enhance customer interactions and servicing capabilities. While these technologies are promising, their full economic potential is yet to be realised. Nevertheless, there is substantial evidence that they will transform customer acquisition and interaction in the future. To summarise, we use core machine learning models for risk assessment and are actively exploring new-age AI language models to improve customer interactions and service.

 From your standpoint, which emerging technologies do you see as game-changers, and how is your company preparing to capitalise on them?

There are a few technologies I believe could be game-changers in India’s financial landscape. First, the public infrastructure that enabled the payment revolution has not yet fully impacted lending and customer data acquisition. This involves platforms like account aggregators and Open Credit Enablement Network (OCEN) that simplify the sharing of necessary data for lending. If implemented effectively, it could significantly reduce friction when customers provide information. The underlying technology involves consent security and shifting ownership of data from institutions to customers. This has the potential to revolutionise the lending process in India.

The second transformative technology is the ability of language models to interact with human beings in their native languages. While much of the development has been in English, localised language models will play a pivotal role in how customers interact with financial services. India is well-positioned to leverage this technology and provide more natural interactions.

With the recent surge in cyber threats and data breaches, how does Protium ensure the security of customer information in today’s rapidly evolving digital environment?

Ensuring the security of customer information is a top priority for us. We employ several strategies to safeguard customer data. From a technical perspective, we have adopted a microservices architecture, which segregates data and reduces the potential impact of a breach. We invest in technologies like firewalls, encryption at every stage of data transfer, and dynamic key management to ensure data remains secure.

Additionally, we design our systems to minimise the blast radius in case of any security incident. Human errors are an inherent risk, so we continuously train and educate our team members to follow best practices in data security.

What are the challenges, risks, and opportunities you see in the realm of decentralised finance platforms?

Decentralised finance (DeFi) platforms offer significant opportunities for lenders like us. They allow us to access customers through various platforms, reducing customer acquisition costs and expanding our reach. The recent clarity on roles and responsibilities within the ecosystem has mitigated many risks.

Challenges include understanding the evolving landscape, adapting to changes in regulations, and keeping up with technological advancements. However, as long as both sides of the platform invest in state-of-the-art technology, the risk-reward equation remains favourable.

How do you envision the finance landscape in the coming years, and how is Protium adapting its strategy to embrace these changes? What significant technological advancements do you predict will reshape finance in India?

In the coming years, I see several technological advancements shaping India’s financial landscape. Firstly, the widespread adoption of generative AI models tailored to Indian languages will enhance customer interactions. Secondly, customers will become more digital-savvy, providing data in a frictionless manner, which will transform the lending process. Thirdly, improved algorithms for risk assessment will play a crucial role in minimising losses. Lastly, digital verification of property ownership could reduce friction in property-related transactions.

At Protium, we are preparing to leverage these advancements by staying at the forefront of technology adoption. Our component-based workflow platform allows us to adapt swiftly to changes and deploy new technologies effectively. We aim to be power users of generative AI, enhance our data-driven risk assessment, and collaborate with related platforms for better.