June 11, 2020 | Use Cases

How to make the process of getting microloans secure and safe for clients and banks

There are situations when money is needed quickly and for a short period of time, in such cases, a microcredit organization could be a better decision than trying to borrow some money from a friend or a neighbor. Muhammad Yunus, a Bangladeshi Professor of Economics and a banker, the pioneer of the microcredit concept, was awarded the Nobel Peace Prize for his “efforts to create economic and social development from below” which he and his colleagues conducted through microcredit of those who could not afford to get traditional bank loans. When you go to a microcredit organization to get a short-term loan, you should understand that in any business the activities of one organization may significantly differ from the business rival. Micro financial institutions (MFIs) are different: reliable or unreliable, conscientious or unconscientious, secure or insecure. One of the distinctive features of a safe and reliable credit organization is the policy towards its customers and their personal data.

Sometimes applying for a loan without visiting an MFI branch, especially during the COVID-19 pandemic, becomes a necessity rather than a whim. Nowadays not all banks have an opportunity to give loans via self-service banking: this privilege applies to existing customers who receive their money on payroll debit cards, already visited the bank and confirmed their identity, or gave their biometric data to a biometric identification system.
Some financial institutions (certain banks and MFIs are already implementing software modules in their apps, these modules help to identify new customers and apply for loans remotely.

One of the key issues for MFIs in the process of giving a loan is the user’s identification. The successful interaction between the organization and the client depends on how secure and convenient this procedure is. The organization must know who takes a loan: it gets the client’s identification document and then verifies that the person is who he/she claims to be, in order to prevent fraud. Nowadays the requirement to provide a selfie of you holding a passport (send a photo of your face from your shoulders to the top of your head, similar to a passport or ID photo, to the MFI is the most precarious user’s identification procedure. If these photos are stolen, any fraudster can finalize a registered loan to a third-party person.

A secure alternative of sending your selfie photos holding a passport to organizations’ services is the use of ID Engine technology, which makes the process of user identification in the system as fast, convenient, and secure as possible. Unlike “selfie with passport”, the application with ID Engine intelligent document recognition (IDR) technology does not send the client’s photo to a third-party server ID Engine recognition technology will help to make the process of getting a loan as fast as possible. To register in the system, you need to point the camera of your mobile device on your passport, the technology automatically recognizes the necessary fields and fills out registration data fields. This technology does not require specific lighting conditions, or you don’t need to think about a better position of the document in front of the camera: computer vision, which is the principle of ID Engine, allows the app to adjust the lightness on its own, highlight the borders of the document and individual fields, regardless of the camera angle.

The system will also verify the passport against forgery, if there are any document frauds, it will issue an error message and will not allow to register in the system. Then the client has to take a selfie after that the technology will compare the applicant’s face with the photo in the passport. Draw your attention to the fact that neither the passport photo nor the client’s photo is saved in the system: the app only compares two photos in order to perform identification. All these procedures are operated automatically, and on the device, whereas systems which require uploading photos usually rely on manual verification by operators.

The use of Smart IDreader technology in mobile apps for obtaining loans in MFIs is beneficial for both credit institutions and their clients.

The most simple on-boarding process and a service speed of providing the loan allows the organization to retain old customers and attract new ones faster, as well as increase the conversion rate from site visits and client mobile apps. But above and beyond a significant benefit is achieved by reducing staff operation costs and office occupancy while KYC procedures.

Users get benefits from using recognition technologies when they apply for a loan, the process is enjoyable and takes less time. And the last but not the least is that while using a mobile app with integrated ID Engine recognition technology, the user can be confident that their data will be processed with all security requirements, minimizing the risk of personal data leaks.

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