AI and Microfinance – A Powerful Combination Transforming the Microlending Sector

AI and Microfinance – A Powerful Combination Transforming the Microlending Sector

Microfinance, microcredit, and microlending have transformed the lives of several individuals, especially from the weaker sections across the globe. Microfinance has played an instrumental role in giving opportunities to millions of people worldwide to start their own business, and helped turn their dream into reality. Microfinance companies have constantly been looking for new opportunities to expand their reach and tap new customers. They have been heavily investing in AI systems which help them provide loans to those people who have no or minimal access to the traditional banking system.

Here is how the use of AI in microfinance is shaping the entire industry.

Making data available

  • One of the biggest challenges that microfinance companies face is the lack of proper customer data.
  • AI systems make it possible to collect a huge volume of data, carry out analysis, and present this data in comparable formats.
  • Using the valuable data presented by the AI software, microfinance institutions can reach a large number of customers, then otherwise.

Predictive analytics

  • By careful data analysis, especially historical data, AI systems can provide valuable insights to the microfinance sector about what can happen in the future. For example, predicting the rainfall and monsoon for agriculture.
  • This helps microfinance institutions make informed decisions regarding loan disbursals to farmers.

Understanding the creditworthiness

  • Most individuals who are not a part of the core banking system do not have any credit history or record against their name.
  • AI systems help microfinance to understand the creditworthiness of individuals based on their geographical location, purchase history, current market condition, social media behaviour, and other factors.

Save cost and time

  • Microfinance is making use of AI based chat software for answering questions and resolving queries of customers 24/7.
  • The use of chat software and other AI software saves a lot of time for the microfinance companies and reduces their operational expenditure.
  • It eliminates the constraints of time and space too.

Microfinance institutions are making use of AI systems to distribute more loans

  • Cashpor is a microfinance firm that has been using the credit analytics tool named ‘KiScore’, from Kaleidofin.
  • A member of Cashpor managed to get a loan approved for a big amount. This was the first time he got such a huge loan approved.
  • It was possible for the member to get such a big amount as loan since Cashpor was able to analyze his credit behaviour, based on his past loan payment records. His high credit score and the less risk score from KiScore made it possible for him to get the loan approved.
  • KiScore is an AI software powered by artificial intelligence and big data technology to help several microfinance institutions like Cashpor underwrite customers, disburse more loans, and do more business with customers.
  • AI software like KiScore makes it possible for microfinance to unlock customer potential with predictive and credit analytics.
  • KiScore assists microfinance in taking real-time loan decisions at the point of sale by conducting a deep analysis on future cash flow, understanding the risk involved, and risk assessment.
  • Kaleidofin has made use of artificial intelligence, machine learning, and robotics to design KiScore, that is helping microfinance companies to do more business by offering customized financial products, especially to the underbanked section of the population. – A sophisticated and powerful tool for transforming the microfinance business

  • When it comes to AI in microfinance, there are several AI based systems. One such AI system that offers a complete solution to microfinance institutions (MFIs), non-banking financial institutions (NBFI), and other small lending institutions is
  • offers improved customer insights, simplifies the customer onboarding process, and makes all financial products from microfinance easily accessible online to customers at their fingertips.
  • The AI system and application ‘’ is specifically designed and developed to support multiple local languages, thus helping to overcome the language barrier.
  • It saves valuable time for the microfinance institutions, increases their turnaround time, and improves customer satisfaction.
  • It boosts productivity and reduces the operational costs.
  • It has a dynamic dashboard and a live tracking system too, using which the loan officers, either on-field or in the office, get a comprehensive real-time view of what is actually happening.
  • It offers complete control to microfinance over the microcredit loan status, loan repayment, reminders to customers.
  • It helps microfinance institutions complete the KYC procedure easily and hassle-free and keep all the confidential customer data safe and secure.

AI and microfinance are working hand-in-hand to help people who are really looking out for loans to start their own business and become their own bosses. The use of artificial intelligence and machine learning has brought about a significant change to the microfinance and microlending sector. This is just the beginning, and the future of AI has a lot more in-store for microfinance.