We have a very special guest on this week’s episode of OmniTalk! Santosh Thiruthi, Co-founder and CEO of Lokyata, introduces us to his company and discusses how they can help financial institutions use AI to mimic human behavior in order to make more intelligent lending decisions. Lokyata allows their clients to expand access to more potential borrowers while reducing risk and fraud for the lender. It’s a win-win for everyone! 

Lokyata is a Washington DC-based, multinational financial technology company with a mission to advance financial access to under-banked. Lokyata’s Artificial Intelligence-driven platform enables banks do data driven and fully automated Lead Analytics, Credit Decisioning and Risk Analytics. Lokyata’s client base include banks, consumer lenders, CDFIs and FinTech lenders in US. Lokyata’s comprehensive scoring and analytics platform can use both traditional and non-traditional data sources and applies advanced machine learning techniques to create custom models that enable institutions to maximize revenues and minimize losses. The methodology behind the AI platform exploits years of expertise in scoring (30+ countries) and state of the art machine learning algorithms.

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Santosh Thiruthi, Co-founder and CEO, Lokyata – Mr. Santosh Thiruthi is the Co-founder and CEO of the Washington DC based Fintech company Lokyata. Mr. Thiruthi is a Digital Banking expert with a track record of 20 years in the financial sector. He has previously worked at International Finance Corporation (World Bank group), Aga Khan Development Network and Enclude ( now Palladium) at Executive roles. He has functioned as Lead or Advisor for several large and innovative projects for telcos, banks and payments service providers. Mr. Thiruthi has a Master’s degree in International Development Policy from Duke University, USA and a BSc in Agriculture from Kerala Agricultural University in India.



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Podcast Transcript:

Amy Rice: Welcome to OmniTalk powered by NXTsoft. I’m your host, Amy Rice, and OmniTalk is a podcast focusing on Fintech and how it affects banks and credit unions. On today’s episode, Santosh Thiruthi, co-founder and CEO of Lokyata, will be introducing us to his company and discussing how AI can help financial institutions make more intelligent loan decisions. Today on the podcast, I have Santosh Thiruthi. He is the CEO and co-founder of Lokyata. How are you doing Santosh?

Santosh Thiruthi: I’m doing well. Thank you for having me, Amy.

AR: Yeah, no problem. Lokyata is actually a new partner of NXTsoft, so we wanted to do a deep dive into all about your company. So, could you tell me a little bit about Lokyata as a company and your products?

ST: Yeah, sure. Lokyata is a Washington, D.C. based AI startup with a mission to expand financial access to the underbanked. Lokyata was started by a group of banking risk professionals, technology evangelists, and data science experts that believe that the financial sector is moving into more automation and even autonomy. AI is going to play a big part in what we call internally self-driving banking. So, to support banks in that evolution, we started the company and we developed our AI platform. More and more automation means more intelligent analysis of data. We have developed an AI platform that enables lenders to better analyze data and take better and instant credit decisions. Our platform, which is called ExcelRate, it is able to integrate with the credit bureaus and alternate data sources on behalf of lenders and the platform can do lead analytics, provide lending decisions, instant account verification and collection analytics, so basically the entire value chain of a loan.

A lot of people in the United States are currently excluded from getting a loan from traditional banks. And I think that number is about, more than 100 million people. And research shows that if banks are able to collect and analyze or domain data, along with the traditional credit bureau schools, many of these people can become eligible for a loan at an affordable rate. So Lokyata, through our platform, helps banks to do this by developing lending and risk analytics models that can incorporate all available data out there to achieve the business goal. So the bank, even in cases where there is not much data available to start, which is a frequent talking point that we hear, we are able to develop models with the business rules, but with the long-term strategy to collect data, and you use AI lending models in in due course. So this approach enables lenders starting the percent, in whatever data is available, or even no data is available, but then at the same time, our data strategy in place that allows them to move into fully digital lending and use state of the art data analytics tools.

AR: You mentioned AI, can you explain why a financial institution should use AI, and what makes look Lokyata’s AI solution unique or superior in the market?

ST: Yeah, sure. So these days, AI is everywhere and just like many other sectors, AI is making banking softwares much more intelligent and more efficient. And so, some people ask what’s the difference between a normal software and AI. So unlike the process automation software, where repeatable tasks can be automated, where inputs and outputs are known, the difference in AI is that, it is mimicking human behavior for more intelligent decision-making. And that can have a lot of impact on improving quality of banking services, and we are already seeing that in terms of credit decisioning, where Lokyata focuses on. Use of AI tools bring the capability to analyze a whole lot of data in banking. And research shows that this can actually expand access to lending to a lot more people, at the same time, can reduce risk and fraud for lenders.

So this is a win-win situation. And this is not me saying, it’s various reports from Accenture to Vane consulting to autonomy. They all say that AI can save more than $1 trillion for the banking industry in the next 10 years. And several reports conclude that apart from expanding services and providing access to more people and detecting fraud better, financial institutions can expect up to 22% cost reduction in operating expenses due to AI. And this is consistent with the one we are seeing with our own Lokyata customers as well. So this is a big change in the financial sector that is happening, but I would say, and this is a very positive change for the clients that can get better services, and for the lenders that can basically improve their bottom line.

And you asked the question why, what makes our solutions superior, right? So I would say mainly three key aspects. One is our AI transparency methodology. So, our solution is not a black box where data goes in and the result is thrown out. And no one knows how the machine came up with that result. And this is a big issue for many banks when they want to use AI, but they are a little bit concerned that this is going to be a black box sitting there. Our platform, Lokyata platform, is able to provide the full details on how a decision is made and how the lending models are actually working, how somebody got along or somebody got rejected. And this is very important to our clients from a compliance point of view, and risk point of view. This type of transparency can also give a more understanding about the customer for our banking clients and enhance the customer engagement by banks if they know more about their customers.

Most of our competitors, the AI solution is a black box, where they just state data and they give you result. And so, I would say this is a one key advantage of Lokyata platform. The second one is our approach of managed services. And what I mean about that is, when a bank takes us as a vendor, we don’t need that bank to have a big data science team and analytics capability to understand and operate the AI models. We will do that for them. Any lending model, as we all know, will require frequent updates and fine tuning. For example, when COVID happened, every lender had to update their lending models. For our clients, Lokyota managed all that. We managed all the updates and fine tuning of the lending models on behalf of our clients and to do impact assessment of every change that we make.

And we presented that to our clients. And in consultation with the client, deploys the changes and the fine tuning of the models to reach the business goals of the client. It could be expanding client base, it could be reducing risk, it could be something else. But we made those changes and we managed the AI model for them. And this takes away a big concern for banks, which is how to keep models updated with the changing market realities. And as part of the managed services, we also connect to data providers, additional data providers. And that is the third advantage. We have our platform, our common is backed by a really robust, common data model that is able to incorporate any type of data into the lending model and whether if financial behavioral or social media data.

And then our banking clients may be concerned. Okay, how are we going to collect all these data? So we do all those connections. And not only that, we evaluate all the data out there for a client and understand which data is providing insights about the customer and use it in the lending models to reduce risk. So this allows banks to decide which data to buy. And these days, data can be very, very expensive. And so this allows banks to keep the costs under control. So basically, the advantage of our platform is that, we manage all the models, we manage all the data connections, and we provide the full transparency to our clients.

AR: What pain points do you see in the financial industry that caused you to develop this product?

ST: A part from the broader moveytguij of a banking sector to more autonomy, as I mentioned earlier, a lot of customers are excluded from the banking system due to low or no credit. And banks know that this is a problem. And they also know that it can be addressed by collecting alternate data and better analytics. However, research shows that most of the banks are not connected with alternate data sources and 90% of the banks in the US do not have internal capacity to develop and to use data science and AI tools that are needed to analyze large amounts of data. So Lokyota’s platform addresses these issues by providing that data connectivity as I said earlier, and all the tools to analyze that data intelligently and to get instant results. So our approach of providing that easily integrated and the managed service platform makes it easy for banks to take the decision, to use AI tools and address these pain points.

AR: What benefits have your customers gained from using Lokyota’s AI solution?

ST: After deploying Lokyata’s platform, we have 10 clients as of now. Within a span of six to eight months, our clients were able to increase loan volumes on average by 25% while reducing default by 20%. And so on one side your business is going up, and on the other side, you are reducing that overall default percentage, and this directly feeds into the bottom line. So this results in better financial income for our clients. Apart from that, our platform also enabled more than 200,000 underbanked borrowers to get an affordable loan from a bank and have build credit history that enables them to approach other banks as well. So, I would say these are the benefits on the side of our lender clients and borrowers.

AR: What benefits does the partnership with NXTsoft offer your customers?

ST: Yeah. So, NXTsoft offers seamless connectivity for banks to Lokyata’s platform. And that is the reason why we are really happy with this partnership. So banks that are already connected with the NXTsoft can take advantage of this robust underwriting and analytics tool through NXTsoft’s marketplace. I think this partnership will enable banks to access an AI platform at a very low cost, use it as needed and pay only for the use. So, I believe this partnership has the potential to make a big change in the banking sector in terms of expanding access to affordable credit in the US market.

AR: Awesome. Yeah, I think I can speak for everyone at NXTsoft that we’re definitely excited for the partnership and excited for the possibilities of what we can do together in the future.

ST: Excellent. Thank you.

Amy Rice: Great. So I just have one more question for you. I know for the past year, we’ve all been under quarantine and haven’t been able to travel as much as we’d like to. But with the vaccine distribution on its way, it looks like everybody can start traveling in the near future. So my question for you is, what is your favorite place that you’ve ever traveled?

ST: Well, maybe a surprise for some people, but the best beach that I have ever been to is in a country called the Papua New Guinea. And there are many people might not know where it is, it is near Australia. And I have never seen water so nice and the sand so white, and I really enjoyed there. So it’s not, it might not be a typical travel destination for more people, but I would like to travel back there. It is going to be a long trip through three or four airports. So definitely, we’ll need that this pandemic to end before I travel, but I look forward to going back to Papua New Guinea and going back to some of those beautiful resorts.

AR: That sounds amazing. Yeah give me a beach any day and I’ll be happy.

ST: Yeah, same here.

AR: Thank you so much Santosh for joining us. And thank you for telling us more about your company and about AI and what you’re doing and how you can help banks.

ST: You are welcome, and thank you Amy for this opportunity. We are definitely excited about our partnership with NXTsoft.