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Gaurav Lahoti, VP, Engineering, Khatabook talks about extending data analytics to MSMEs in the non-metro areas.
What are the key trends driving growth in Big Data analytics, AI, Machine Learning and deep tech for the next 2 years?
Gaurav Lahoti - In the information and digital transformation age, AI, ML and Data analytics have proven to be disruptive forces. As more and more innovative use cases are being explored and given the benefits deep tech offers in business analysis, risk assessment, R&D and cost-savings, tech implementation will continue to rise. One impactful use of data and AI/ML models in fintech are to mitigate risk and fraud, especially for financial services organizations. For such organizations, having a strong KYC (Know Your Customer) check is a must.
Besides Financial Services, the usage of Big Data analytics/AI/ML at Khatabook touches many other domains, such as Marketing Analytics (Growth and Retention), Product Analytics (Feature Performance), Operations Analytics (Efficiency), etc. So, this particular discipline has become pervasive and how well we strategise Big Data analytics/AI/ML for our business objectives is the key differentiator.
What are some major challenges in implementing these technologies for the MSMEs?
Gaurav Lahoti - Most business management tools are designed keeping in mind the large organisation with a skilled workforce. So, it is not that there was no inclination in small businesses in India to go digital. Still, only recently, the innovation focused on small businesses needs has started coming forth.
The first step in our journey was to encourage digital adoption. So, we created a business management digital tool, which was phone-first, intuitive and easy to use, and available in most regional Indian languages, making sure it warrants minimum behavioral change on the users' part.
MSMEs in India mostly conduct their business on the gut. They have no real-time visibility into their business and do not have the answers for the basic quotations like how much sale amount is outstanding, the timeline of payment recovery, the cash flow at a healthy level, etc. Going digital is making Indian MSMEs more and more efficient and self-reliant. As per our user insights, Khatabook improved cash flows by more than 3x. We have also pivoted to digital lending to address the unmet financial needs of these businesses and help them to fulfill their operational liquidity/ working capital requirements. Our core value proposition for our MSME users is simple. We Enable them with Higher Efficiency, Higher Profitability, and Lower Costs through technology.
How to resolve these challenges?
Gaurav Lahoti - Just a few years back, most of the MSME businesses faced significant challenges in upgrading and modernising their business capabilities because of the lack of relevant solutions. Since the pandemic, there is a definite acceleration in digital adoption, especially in tier 3,4 and beyond. This means that semi-urban to rural India is demanding digital transformation. However, most of the past technology is built keeping the urban users in mind. The technology needs to work as per users' requirements and should not expect users to change their modus operandi. We need to understand the digital behavior of rural India and try to accommodate that in our innovations. For example, from very early on Khatabook App was available in 11 Indian languages because we did not want users to use the app in the language they were not comfortable with. We also realized that the MSME segment relies heavily on sales on credit, which means their customers purchase now and pay later; we started with enabling their journey to digitisation through our app by digitizing bahi khata (ledgers). So our solution was based on India's age-old accounting practice of Bahi Khata. We never aimed to change this practice but just make it more efficient with digital.
Today, proficiency with digital tools is increasing. Initially, people just focused on joining digital for its basic functionality. Now, people are exploring more and more features within the app, what more they can do with it, and how it would benefit their business and lifestyle.
How to extend this technology to the non-metro areas of India?
Gaurav Lahoti - If you want to grow as a company, your focus has to be non-metros, as the most extensive user base of digital is coming from tier 3,4,5 and beyond. Khatabook has 10 Mn monthly active users spread across almost every district of India. Today, we are organically adding 1.2 Million monthly installs. Based on our user engagement in the remotest parts of India, I can share insights on what works for non-metro users. Ensure your product is user-friendly with a simple, intuitive UI that is easy to use for merchants, capture the right user behavior through language inclusion, relevant features, etc., consider the IT infra-related challenges like data connectivity, educate and hand hold users throughout their digital journey but most importantly be very clear on your value proposition to your customers.