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Given that it’s a part of Indian fintech unicorn Yubi, one would expect that digital collections company Spocto could easily enter any market in the world. And that factor speaks volumes for the appeal of the UAE as a market, in that the Yubi management chose the Arab nation to be the home for Spocto’s very first international office. “The UAE leads the MENA fintech market, making the nation an ideal springboard for Spocto’s global expansion ambitions,” states Gaurav Kumar, founder and CEO, Yubi.
Kumar says that his belief in the UAE stems from it being home to world-class financial centers like Dubai and Abu Dhabi, and over 50 onshore commercial banks, as well as a constantly evolving legal and regulatory system, and the region’s highest financial inclusion rate at 46%. However, zooming in onto one part of the UAE fintech market -its debt ecosystem- Kumar shares data that seems even more promising for the Spocto platform, which is designed to help lenders collect and reduce loan default rates, fully via digital channels. “The MENA’s digital lending platform market was valued at US$551.81 million in 2021, and it is expected to reach $2060 million by 2029, registering a compound annual growth rate (CAGR) of 17.90% during the forecast period of 2022-2029,” Kumar explains. “Furthermore, the GCC banking sector continued to record growth during Q1 2022, backed by solid economic recovery and demand post the COVID-19 pandemic, with net profits indicating strong quarter-to- quarter growth at 25.1%, reaching quarterly levels at $10.9 billion, as compared to $8.7 billion during Q4 of 2021. These figures indicate a good outlook for the region.”
It was in February 2022 that Yubi acquired Spocto on the basis of its strong results- indeed, Spocto’s artificial intelligence (AI) and machine learning-powered solution has, to date, enabled more than 30 institutions to improve collections, served more than 52 million customers, and processed $95 billion assets under management. In bringing this solution to the UAE’s strong fintech market, Kumar is thus confident that Spocto will digitally transform the entire lending experience in the MENA. “Digitizing credit offers is set to bring significant benefits for both banks and customers,” he says. “In our view, access to financial services for those who are new to the UAE is now greater than it used to be, and since our products are tailored to the UAE market, we will continue forging partnerships with financial institutions, of which we already have 21, and building a product that users love and that is in line with the existing regulatory environment.”
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The Yubi-Spocto team has appointed seasoned fintech executive Vikas Thapar as Chief Business Officer at Spocto MENA. And, one goal on Thapar’s everyday agenda is to de-risk credit exposure, and provide guidance for risk assessment and decision making for financial institutions. “Looking at collections at a micro-segment level, we have been very successful in using technology to target much smaller and more narrowly defined groups of customers,” Thapar says. “Leveraging the power of data analytics, we help financial institutions maximize the value of customer data, building that trust in borrowers, and expanding lenders’ risk appetite through the Spocto product suite, which imple- ments more than 5,000 proprietary algorithms, applies machine learning, and uses predictive AI to extract insights from otherwise ambiguous data. As a result, we provide lenders with seamless, digitally-led processes that help them expand their business scope, and unlock new opportunities with a wider range of customers.”
Sumeet Srivastava, founder and CEO of Spocto. Source: Spocto
Thapar believes that this process will also improve the integrity of the MENA lending ecosystem, and encourage lenders to revise loan terms for individuals and SMEs. “Lending behavior has changed over the past few years, as borrowers have become increasingly digital-first, especially in the wake of the pandemic,” Thapar explains. “Customers are more comfortable than ever using digital channels, suggesting that lenders that provide smarter, more interactive, and more personalized services will perform better than their less responsive peers. That is where Spocto sets itself apart in the market, as we seek to leverage this evolution to bridge the gap between lenders and borrowers, while maintaining traditional methods and customizing communication through an omni-channel approach.”
In addition, Thapar also expects a behavioral change among lenders who are currently too cautious and reluctant to change collection mechanisms. “That is especially the case with large loans such as small business loans, personal loans, mortgages, and credit cards, where product-specific adjustments are required,” he says. “At Spocto, we use machine learning-based predictive and prescriptive analytics, including technographic, psychographic, demographic, and socio-graphic insights, to improve customer engagement and predict behaviors. Thus, we help lenders improve customer engagement by introducing a collaborative, digitally-focused approach to risk mitigation in the UAE banking and finance landscape.”
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