Impact Credit Solutions: Banking on data-driven credit decisions to increase SME lending

About Impact Credit Solutions

Founded in 2018, Impact Credit Solutions (ICS) is a fintech company which enables small business lending throughout Southeast Asia. ICS connects banks with SMEs through originators like fintech and technology providers on its digital lending platform.

Industries: Financial Services & Insurance
Location: Singapore

Tell us your challenge. We're here to help.

Contact us

About Thought Machine

A Google Cloud Premier Partner, Thought Machine provides banks with Vault, a modern API-based core banking platform that can be customized to the needs of individual clients.

ICS ramps up core banking capabilities with Vault by Thought Machine and machine learning with BigQuery to enable banks to make faster loan decisions for millions of small businesses.

Google Cloud results

  • Optimizes queries for credit risk analysis at scale with BigQuery
  • Reduces time to market by half with each product launch by microservices on Google Kubernetes Engine
  • Launches Vault core banking platform in three months to ramp up operations

Reduces credit decision-making time from weeks to milliseconds

Small and medium business (SME) loans have huge potential to incite change. A farmer can increase crop yields with an effective irrigation system instead of hand watering. A furniture maker can meet production demand and grow the business by investing in woodworking equipment. In tough times, a bank loan can mean the difference between keeping workers or closing the business. However, SMEs find it hard to get funding from traditional lenders.

For banks, existing SME lending poses two challenges, high operational costs to serve many borrowers for small loans and high risk exposure to companies with limited credit history. Addressing these challenges, financial technology company Impact Credit Solutions (ICS) makes it easier for banks to lend to SMEs through automation and analytics on its digital credit platform, powered by Google Cloud.

“Digital lending is inevitable, but banks often don’t have the infrastructure to act quickly,” says Reinier Musters, founder and Chief Executive Officer at ICS. “Banks can leverage our digital credit platform hosted on Google Cloud to support SMEs, without spending time to build the IT system or the partner ecosystem.”

“To solve the SME credit gap with technology, we may need to make a sideways or lateral move in terms of our product,” says Austin. “Vault on Google Cloud gives us the flexibility and flavor to offer new services by adding modules to our core platform without buying additional software licenses.”

Jonathan Austin, Chief Technology Officer, ICS

Accelerating SME lending on a cloud-native platform

Indonesia is the primary focus for ICS, where more than 64 million SMEs contribute to 61% of GDP and employ 91% of the workforce.

“Thanks to Google Cloud’s presence in Indonesia, we can meet data sovereignty rules and quickly set up our operations to help SMEs,” says Jonathan (Jon) Austin, Chief Technology Officer at ICS. “One notable example is helping pharmacies get loans faster to meet the unprecedented demand for medical supplies during the COVID-19 pandemic.”

ICS runs microservices on Google Kubernetes Engine (GKE) and Vault core banking engine by Thought Machine, a Google Cloud partner. The company stores transactional data on Cloud SQL and leverages machine learning (ML) models to analyze credit risks in BigQuery.

“To solve the SME credit gap with technology, we may need to make a sideways or lateral move in terms of our product,” says Austin. “Vault on Google Cloud gives us the flexibility and flavor to offer new services by adding modules to our core platform without buying additional software licenses.”

Thought Machine was instrumental in helping ICS deploy and configure Vault in three months. The team continues to support ICS as it explores the full capabilities of Vault. The microservices-based architecture and single-platform nature of Vault allows ICS to launch new features quickly while reaping benefits in scalability, agility, and cost.

Photo of three men in business attire
Jonathon Austin (CTO), Mackenzie Tan (co-founder, COO & Head of Legal), Reinier Musters (founder & CEO)

“When a borrower applies for a loan through a fintech or digital platform that we support, we can predict the default risk with BigQuery and deliver a loan recommendation in milliseconds.”

Jonathan Austin, Chief Technology Officer, ICS

Driving down the cost of SME lending with streamlined workflows

Typically banks need to check multiple documents from borrowers such as identification documents and company records to comply with Know Your Customer (KYC) regulations in the financial industry. A lot of paperwork is required for the SME segment, which is often a hurdle for loan officers and slows down the approval process. ICS removes the lending friction by automating document processing at scale.

It was vital for ICS to digitize the KYC process, particularly during the COVID-19 pandemic when loan officers couldn’t conduct in-person verification. Keeping their customer’s health and safety in mind, ICS incorporated e-signatures and e-contracts to facilitate digital loan documents.

ICS uses a microservices architecture to speed up development time by reusing a common code for deploying existing capabilities to different partners. “Within six months of adopting Google Kubernetes Engine, we launched five products including e-signatures and cut the time to market by half each time,” says Austin.

Furthermore, being able to automatically integrate certified electronic signature providers in Indonesia with the ICS system on GKE allows banks to identify more than 30 million potential customers. This now enables loan officers to focus on understanding customer needs and recommending the right products instead of chasing down missing information and reentering data from KYC documents in the correct format.

“Currently, we query hundreds of millions of records each day, from model development to monitoring. BigQuery can easily scale to billions of rows of data as we expand our business and provide our lending partners with predictive analysis to better manage SME credit risks.”

Jonathan Austin, Chief Technology Officer, ICS

Improving risk decisions with machine learning and BigQuery

Credit decision-making is often considered by banks the most challenging stage of a loan life cycle. To help ease the process, ICS analyzed and anonymized the transaction dataset of four million SME customers with the help of BigQuery to understand loan repayment patterns and built ML models to predict the likelihood of default.

“It is common for SMEs to wait two to three weeks for banks to decide on loan applications,” says Austin. “However, when a borrower applies for a loan through a fintech or digital platform that we support, we can predict the default risk with BigQuery and deliver a loan recommendation in milliseconds.”

ICS also combines other data sources such as bank transaction data for accurate credit decisions, which is more predictive of a borrower’s credit risk than deposits alone. If the borrower doesn’t meet the bank’s acceptable level of default risk, the credit model recommends a reduced loan amount to the originator instead of an outright rejection.

From a data science perspective, ICS continually monitors the performance of the ML models and updates them as new scenarios present themselves.

“Currently, we query hundreds of millions of records each day, from model development to monitoring,” Austin adds. “BigQuery can easily scale to billions of rows of data as we expand our business and provide our lending partners with predictive analysis to better manage SME credit risks.”

Musters says that as technology plays a pivotal role in changing the future of SME lending, he is optimistic about the company’s vision of closing the SME credit gap by helping banks improve lending processes and credit analytics on our platform. “We certainly want to do more with our Google Cloud products such as GKE and BigQuery, to accelerate innovation and help more SMEs get the funds they need to grow and contribute to the economy.”

5 people in business attire gather around a table with a laptop and tablet

Tell us your challenge. We're here to help.

Contact us

About Impact Credit Solutions

Founded in 2018, Impact Credit Solutions (ICS) is a fintech company which enables small business lending throughout Southeast Asia. ICS connects banks with SMEs through originators like fintech and technology providers on its digital lending platform.

Industries: Financial Services & Insurance
Location: Singapore

About Thought Machine

A Google Cloud Premier Partner, Thought Machine provides banks with Vault, a modern API-based core banking platform that can be customized to the needs of individual clients.