How NBFCs are leveraging AI and blockchain

India’s Non-Banking Financial Companies (NBFCs) are rapidly evolving to keep pace with technological advancements. AI and blockchain are emerging as key enablers in this transformation, helping NBFCs streamline operations, improve decision-making, and enhance customer trust. Startups in the fintech innovation industry are driving this evolution by providing solutions that enable NBFCs to effectively leverage these technologies.

AI: Driving Operational Efficiency for NBFCs

AI is playing a critical role in improving operational processes and enhancing customer experiences across the financial ecosystem. AI-based algorithms enable real-time risk analysis, predicting potential defaults by monitoring borrower behavior and repayment patterns. NBFCs can also deploy credit models that offer risk-based pricing tailored to borrowers.

Technology lies at the core of every solution in the fintech industry, enabling precision, efficiency, and scalability for NBFCs. By integrating advanced tools like Vision OCR (Computer Vision-based Optical Character Recognition), AI-powered solutions help NBFCs automate document processing by converting images into structured data. This approach reduces manual errors, decreases operational overhead, and accelerates the customer onboarding process, providing a seamless experience for both NBFCs and their customers.

AI is transforming credit modelling and underwriting across the fintech industry. Advanced predictive analytics are being used to assess risk based on vast amounts of data, enabling NBFCs to make more informed lending decisions. This approach not only reduces default rates but also allows for more personalized lending solutions, including risk-based pricing tailored to individual borrower profiles.

In the field of fraud detection and prevention, AI tools can verify document authenticity, perform face-matching and liveliness detection, and conduct related-party analysis to identify suspicious activities.

Delinquency monitoring and early warning signals present another significant use case for AI. AI can provide early indications of potential loan payment defaults, allowing lenders to assist customers with restructuring repayments or increasing focus on recovery efforts.

NBFCs are also leveraging AI to enhance customer experiences. AI-powered chatbots are increasingly becoming the first point of contact, providing customers with instant answers, guiding them through loan applications, and offering product recommendations. Moreover, chatbots can assist with customer servicing, handling transaction inquiries, statements of accounts, and even repayments, thereby improving both customer experience and collection efficiency. These AI-driven interfaces are accessible across multiple platforms, including mobile apps and messaging services like WhatsApp, ensuring customers can engage with their financial institutions anytime, anywhere.

Blockchain: Building Trust and Transparency

While AI improves efficiency, blockchain technology is crucial for building trust in the financial sector. Blockchain's decentralized, tamper-proof ledger provides an immutable record of transactions, making it essential for ensuring transparency and security in NBFC operations.

Through blockchain solutions, NBFCs can securely store and verify important documents, such as KYC data or banking and income records. This document verification process ensures that sensitive data cannot be tampered with, protecting both customers and institutions from fraud.

In areas such as supply chain financing, blockchain plays a pivotal role by providing transparency across multi-party transactions. By offering a clear and tamper-proof record of each transaction, blockchain reduces the risk of fraud and enhances trust between NBFCs and their partners. Blockchain can also be used in invoice discounting to verify the status and authenticity of invoices.

AI and Blockchain: A Powerful Combination

The integration of AI and blockchain provides NBFCs with a powerful toolkit to enhance both operational efficiency and security. By combining these technologies, cutting-edge and innovative solutions can be developed, offering intelligent credit underwriting, faster loan processing, fraud prevention, and secure data storage. This results in robust, data-driven, and automated processes.

For instance, AI-based credit modelling enables NBFCs to assess creditworthiness with greater accuracy, while blockchain ensures that all associated data is securely stored and verifiable. This combination allows NBFCs to deliver faster, more secure, and personalized financial services, improving both internal operations and customer satisfaction.

Conclusion: The Future of NBFCs with AI and Blockchain

AI and blockchain are transforming the financial services landscape for NBFCs, equipping them with the tools needed to enhance operational efficiency, improve customer experiences, and build greater trust. These technologies positioned NBFCs to embrace digital advancements and thrive in an increasingly digital world.

By leveraging AI for predictive analytics, fraud detection, and underwriting, and using blockchain for document verification and supply chain transparency, NBFCs can remain competitive while providing a secure and seamless experience for their customers. The future of NBFCs lies in the successful integration of these technologies, driving the transformation of the financial services landscape.

AI and blockchain are not just reshaping how NBFCs operate—they are laying the foundation for the future of finance. These technologies enable faster, safer, and smarter lending, helping NBFCs unlock new markets, manage risks efficiently, and compete with both traditional and digital-native players.

As India accelerates toward a digital economy, NBFCs that embrace these innovations will drive financial inclusion and redefine customer experiences. The future belongs to institutions that act now, blending intelligence with trust to stay ahead of the curve and lead the next wave of financial growth.

Kushal Rastogi

---

Kushal Rastogi is Founder & CEO of Knight Fintech.