UK-India trade deal to bridge India's credit gap

• UK trade envoys recently visited India as the two countries seek to conclude nearly two years of negotiations.

  
  

• Indian media are reporting that a deal could be reached by the end of the month.

  
  

• A deal would bring the two countries closer together and pave the way for deeper commercial cooperation.

As an international company headquartered in the UK with a large and growing business in India, Pepper Advantage is fully committed to supporting its customer base and strengthening its presence in both countries. One way we are doing this is by developing and leveraging new proprietary technology. In the UK, this takes the form of more data analytics and AI-driven software tools that improve our ability to help borrowers navigate the cost-of-living crisis and a higher interest rate environment. In India, we are using our technology to drive more responsible and equitable access to credit, financial inclusion and economic growth.

Technology plays a huge part in enabling us to grow our presence in India. Its fintech revolution has already gone a long way in powering the country’s development. The proliferation of internet access and mobile phones has brought financial services to more of the world’s most populous country. A G20 Global Partnership for Financial Inclusion report, prepared by the World Bank, showed financial inclusion has exploded in India, rising from 25% in 2008 to 80% in 2023. This growth is set to continue, with its total addressable fintech market forecast to reach $2.1 trillion by 2030, growing at 18% per annum.

But the revolution isn’t complete. The lack of traditional financial infrastructure means access to credit remains low. The Times of India reported earlier this year that only 14% of micro, small and medium enterprises had access to formal credit, while less than 5% of individuals have access to a credit card. This leaves an enormous opportunity for digital lending to free up capacity in the economy.

Technology can lead the way. Digital lending alone is expected to reach $350 billion by 2024, driven by neo-banks and fintechs. This will have a particular impact for female borrowers. Credit access for women has doubled in the last five years, with the number of women seeking business loans tripling over the same period.  As a result, the share of women borrowers grew from 25% in 2017 to 28% in 2022.

AI will accelerate this change and bridge the credit gap. From rapidly scaling customised credit assessments to bring credit to the traditionally underserved, to providing secure fraud detection and prevention to reassure consumers and small businesses unfamiliar with digital lending, AI will drive financial inclusion for millions. Our analysis of market data, including the World Bank’s, suggests that the growth in access to credit, driven by AI, will move India’s GDP by at least two percentage points by 2035. Pepper Advantage is investing heavily and we are committed to doing our part to improve access in credit in a responsible way, deploying new technology that improves the pre-loan credit risk assessment and sanctioning process.

In May, we acquired Rieom.ai, a specialist AI and machine learning credit assessment software platform. Rieom.ai supports the credit risk assessment of over 60 document types, from ID verification to bank statements and utility bills. This rapidly scales the volume and speed of assessments, bringing credit access to underserved Indians. All of this has powered Pepper Advantage India to a growth in assets under management of over 200% this year.

As a trade deal looks set to bring the UK and India closer together, we remain committed to developing new products and technology that will help drive India’s economic growth and prosperity.

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Eterna Partners
PepperAdvantage@eternapartners.com
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