The #WITDA Challenge

Instant “Micro Credit” Opportunity for a Digital Payments Firm

Background and Company Overview

There has been a sudden growth in digital transactions in India due to the government's policy
change and uptake of contactless payment channels during the COVID-19 pandemic. With the
increasing penetration of high-speed internet and smartphones, the high growth trend in digital
payments is expected to continue for next few years.

Our client is an Indian digital payments firm which offers a digital wallet enabled solution that
allows users to make payments for utility bills, mobile recharges, ecommerce, travel etc. as well as
in-store payments through point-of-sale transactions using QR codes. The company’s user base and
transaction mix are similar to other large digital payment companies in India. Its main competitors
include Paytm, Google Pay, Phone Pay, among others. Our client has a 5% market share in the digital
payment market in India by user and transaction volume. The firm believes there is an opportunity
to offer instant “micro loans” (small ticket size loans) to the existing customers with insufficient
wallet balance at the time of transaction without any additional documentation.

Winning in this Digital Age 1 would require the digital payment players to create new product
engagement models by leveraging a combination of data, technology, and digital experience.
Incedo’s new age proprietary platforms (Incedo Lighthouse & IncedoPay) 2 are driving the digital
transformation agenda for the financial services and digital payment firms.

#WITDA Challenge
Through the “micro lending” opportunity, the client intends to target creditworthy customers and
provide them small ticket size loans (ranging from ₹500 to ₹15,000) as instant overdrafts. As an
example, if a customer is booking a flight ticket and is short of funds in the digital wallet, a loan
offer popup will appear on the screen instantly that will guide the user through the lending process

You need to create a data enabled loan decisioning proposal that should have the following key
components:

1. Decisioning Framework
Share the decisioning framework that your team would leverage to make a decision on offering vs
not offering a loan. Elaborate on all the potential data sources would you leverage to reach a sound
lending decision, given the fact that the micro loans will be offered for the first time by the client.

1 Seth, Nitin. Wining in the Digital Age, Section 2 – Chapter 1: Digital Banking 2.0 & Chapter 3: How Digital is
disrupting payments https://www.amazon.in/Winning-Digital-Age-Successful-Transformation/
2
Incedo Lighthouse https://www.incedoinc.com/platform/incedo-lighthouse/
Incedo Pay https://www.incedoinc.com/platform/incedopay/
2. Loan Scoring Model
Dataset for EMI loan offers will be shared for a sample of 10,000 customers with their transactional
history on the digital wallet. The customers who made on-time payment have been tagged as 0-
low risk and those who skipped payments as 1- High Risk. You have been tasked to develop a Loan
credit scoring model on a train sample of 8,000 customers and validate the same on a test sample
of 2,000 customers.

Key Deliverables
Submission of the loan decisioning approach and the quantitative model

• Each team needs to submit a proposal of not more than 2 slides with clear loan
decisioning framework & results of the Loan Scoring model
• The results for the credit scoring model should include the model performance metrics
like accuracy, precision, recall, false positive rate, and the confusion matrix for the test data
sample
• Any supporting content, assumptions, results, graphs etc can be included as appendices
post the main section
• Modelling code (Python, SAS etc) or excel file etc to be shared as attachment or part of
appendix

Evaluation Criteria
• Clarity of Solutioning Framework and Approach used for loan decisioning
• Statistical results of the Credit Scoring Model with identification of potential segments for
the loan offer
• Overall proposal & presentation quality