Why use muscle? Let a bot be the debt collector and never lose a customer
A 2021 remake of Get Shorty might not have much use for John
Travolta’s Miami mobster character. The debt collector role could go to a bot.
You can test this hypothesis in a most unlikely place to roll out
a new technology: the Indian countryside. The setting is perhaps not as odd as
it seems, with about 5% to 10% of the country’s farmers not repaying their
tractor loans on time. The explanations for tardiness range from failed crops
to medical emergencies and strategic defaults in anticipation of state-mandated
debt waivers, a regular feature of the political economy.
But delinquency often stems from more mundane reasons: Borrowers
forget their due dates, or fail to withdraw cash to pay the nonbank financiers
who provide the bulk of loans for farm equipment purchases.
Like in most emerging markets, these last-mile hurdles pose a
frustratingly complex challenge to India’s creditors. They also increase the
overall risk premium for rural advances.
Of late, three things have changed. First, the world’s cheapest
data prices have made smartphones ubiquitous. Second, a strong push for
financial inclusion has seen more than 400 million no-frills savings accounts
opened in the last seven years. Finally, banks are now on a nationwide mobile
payment network that is fast, convenient and supports apps like Google Pay
and Walmart Inc.’s PhonePe. Google has even recommended the architecture to the
U. S. Federal Reserve.
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