Machine Learning: Revolutionizing the Microfinance Industry
Did you know that using artificial intelligence can reduce losses by 23% in a financial business? That is the power that machine learning and AI offer to the Microfinance industry.
Machine learning combined with artificial intelligence can go through a borrower’s digital interactions to point out variables and indicate an impending financial crisis in advance. A decrease in online transactions or an absence of salary records in the last few months can play a significant role in effectively assessing possible risks. It can be more of an assistance than a static credit score.
Machine learning can predict chances of default by studying customer behavioral patterns and records. It can help Microfinance companies take timely measures against defaulters to protect their cash flow liquidity and take informed and mutually beneficial financial decisions.
“The above graph shows the 14 most important features of the random forest model using machine learning in the field of credit scoring.”
Machine learning has made the microfinance industry smarter and more effective. Here are some of the positive changes that came with using it:
Despite the many positive effects of AI and machine learning in the microfinance industry, it is still in its beginning stages. However, it is reshaping the industry for good. Implementing automation in the processes saves both time and labor.
Another added benefit of using machine learning is better security. Since AI can assess both traditional and non-traditional data of the users, it significantly decreases the chances of fraud by the debtors. It is not just a boon for the lenders but also for the borrowers.