Rohit Arora is the co-founder and CEO of Biz2Credit. He is known for his immense expertise in the field of small business finance. Under his tutelage, Biz2Credit has witnessed a stupendous growth since its inception. Rohit Arora was named Crain's NY Business "Entrepreneur of the Year 2011." due to his pioneering business model and entrepreneurial vision. His expert opinions on small business lending have been covered by major news media that include New York Times, The Wall St. Journal, Bloomberg, Entrepreneur, American Banker, CNNMoney, MSNBC, Inc., and Washington Post. Besides, he is a frequent guest speaker for small business lending seminars and conferences. Rohit's columns are published on SMB finance for FOX Small Business Center, SmallBizTrends, Franchise Handbook, NewJerseyNewsroom and New York Enterprise Report, just to name a few.
1. Tell us about your role in Biz2Credit?
I serve as CEO and head strategist of Biz2Credit.
2. Can you tell us about your journey into this market?
While working for Deloitte Consulting, I discovered that small business loans made up banks’ most profitable portfolios and that banks that were serving ethnic-owned firms had the fewest defaults. With this knowledge and an entrepreneurial spirit, my brother, Ramit, and I began helping members of the South Asian community in New York City navigate the small business loan requirements of banks and other lenders who could provide capital.
Many immigrants lacked an understanding of the U.S. credit systems and were intimidated by the process. They believed the loan application process to be a time-consuming and frustrating effort that offered little chance of success. It was at that point we launched Biz2Credit as an immigrant-friendly online platform that streamlined the small business loan application experience by doing all underwriting through a fully digital process. The company expanded beyond the ethnic community and became more mainstream during the “credit crunch” that followed the Great Recession of 2008-09. Since its inception in 2007, Biz2Credit has now arranged more than $2 billion in funding and has over 200,000 registered small and mid-sized company clients. The platform handles more than 5,000 new loan applications each month, on average.
3. How do you think technology is developing the Finance Sector?
Technology has totally transformed business and commercial finance. The days of going from bank to bank and filling out business loan applications with unknown prospects of success are over. Today’s small business owners work long hours and have embraced technology to search for sources of capital. On Biz2Credit’s platform, about two-thirds of the prospective borrowers submit applications via mobile devices. A decade ago this was unheard of. Now, more and more banks are waking up to the urgency of having a digital strategy, too. That’s why Biz2Credit has now launched Biz2X, our software platform for banks to use as a digital loan application.
4. How has digitalization redefined lending?
Advanced data analytics and AI have enabled lenders to make much more well-informed decisions on small business loan approvals. The default rates are miniscule. We are seeing today that banks, credit unions and other lenders that have not embraced technology and offer digital loan applications are now falling behind the competition. Many of these lenders are partnering with FinTech companies, such as Biz2Credit, to enhance their digital offerings.
5. How has your Biz2X platform contributed in the growth of your clients?
The Biz2X Platform is the natural outgrowth of Biz2Credit’s established platform software that brands like HSBC and Popular Bank have chosen to launch new online lending initiatives. With enhanced loan management, servicing, risk analytics and a configurable customer journey, Biz2X is helping banks like these run their lending operations at scale.
Biz2X uses a streamlined user interface, AI-driven analytics and a customizable white label environment to help banks enhance their core services such as offering focused customer service, growing their portfolio, and increasing the use of their products. The Biz2X Platform offers end-to-end loan management features, including:
- Loan Level Pricing
- A Risk Analytics Tool Suite
- Credit Policies Configured to Banks’ Needs
- An Intelligent, Dynamic Application for Each Product Type
- Low to No IT Work Required
- Cross-Device Compatibility
In the conventional banking model, the lending process is paperwork-heavy for the customer and expensive for the bank. The Biz2X Platform is designed for banks that are ready to streamline that process.
6. How has AI helped in making your services more efficient?
We have made significant investments of capital in our platform as we serve the client needs to be brought about by an ever-evolving credit environment. Advances in risk management are among the greatest benefits for our customers.
Biz2X uses artificial intelligence (AI) and machine learning (ML) extensively to automate key risk assessment tasks. Through a combination of natural language processing, image analytics and using data from tens of millions of financial transactions by small and medium businesses, Biz2X offers banks a way to automate manual tasks in the underwriting process and improve the customer experience.
7. What benefits of your lending solutions makes you a leading lender for small businesses?
Biz2Credit is a pioneer in the digital small business lending space. Over the years, we have developed a reputation for being able to get deals done for our clients when others have failed. Our advanced analytics enable us to fund small business owners with higher amounts and more flexible terms than other lenders could provide. Even those with bad credit histories have been able to secure business loans. After a while, when the companies have been able to establish a track record of repayment, we frequently are able to help them refinance, thereby lowering their cost of capital. Many of our small business borrowers have returned to us many times over as their financial needs change.
8. What advice would you like to give to the Startups?
The advice I’ve long given entrepreneurs is to make sure they are adequately funded at the very beginning. Estimate what you think you will need to borrow and double it.
Inevitably, surprises will arise during the start-up phase and during the first year in business. You don’t want to have to keep going back to the bank to borrow money, which is a sign that you are unable to manage your costs or, worse yet, a sign that the business isn’t truly viable. If you don’t need all of the money you have borrowed, you can pay it back. However, being in a position of constantly having to borrow money because you have underestimated in the very beginning can cause a business to lose out on future funding opportunities because lenders will no longer view the company as a good credit risk.
9. Which Startup technology has grabbed your attention?
I am always paying attention to new technology that is coming out of my home country of India and South Asia in general. I love the entrepreneurial spirit and digital-driven innovation that so many great companies from that part of the world are showing off now. Two in particular that I am following closely are OYO and Grab. These companies have a mobile-first and digital experience-driven approach that I think a lot of U.S. startups (even big ones like Uber or AirBnB) are still lacking. And they have a connection to customer bases that is very hard to replicate.
But if you’re just asking about pure technology, then I have to say that the areas I’m most excited about all have to do with artificial intelligence, machine learning (AI/ML) and applications of these highly automatic services. For instance, we are building a lot of these services directly into our Biz2X Platform (Biz2X AI covers image recognition, natural language processing and algorithmic decision logic) and we’re partnering with some very smart companies here in the U.S. that are offering AI-based services for lending on top of these capabilities.
10. How do you prepare for a Technology-centric world?
There’s no perfect way for banks to prepare for the digital future. Each company has its own unique history and experience with implementing new digital technology. However, it’s clear to anyone in a strategic position at most companies that digital transformation is needed. The important thing to keep in mind is how you can effectively run your digital transformation projects in parallel while your existing operations are ongoing.
There are three main things to consider:
- Talent; how to mix new talent (people who are capable with using new tech) with your existing talent. Make sure that your new staff are able to train and upskill your existing team members.
- Learn to collaborate well. Test ideas, encourage innovation without large upfront investments. Even if they fail, they will teach you invaluable lessons about the digital world.
- Change yourself as well. Don’t try to make your physical-world processes map into the digital world. Instead, adapt to the way that the digital world works. It’s a basic change in culture.
11. Can you tell us about your team and how it supports you?
Biz2Credit recently announced a commitment of more than $10 million to further enhance the skills of more than 100 of its employees globally in areas such as software engineering, AI, data analytics, and IT support.
12. What are the major developments you are planning, in recent time?
With the Biz2X platform, we are building technology to transform digital banking and SME financing. Our focus is on using artificial intelligence/machine learning to drive higher efficiencies, better insights and create valuable business outcomes for our clients. We are committing a significant investment towards providing the best infrastructure and training to our employees to better service all of our clients.
13. Which Book are you reading these days?
Unscaled: How AI and a New Generation of Upstarts Are Creating the Economy of the Future by Hemant Taneja
14. We have heard that you have a very joyful work culture, we won’t mind having a look at some of the pictures?
15. Can you give us a glance of the applications you use on your phone?
There are some apps that I couldn’t live without. For one, I can’t get through a day without using WhatsApp to reach our teams in India to discuss projects they’re working on and new initiatives that I want us to tackle. WhatsApp is really a great tool – I’m surprised that more people in the U.S. actually don’t know about how much more productive it can make collaboration in the workplace.
Another similar tool I love is Microsoft Teams – we switched to Microsoft 365 as a company about 9 months ago, and Teams is one of those apps that has made everything smoother.
When it comes to other apps I can’t go without, Credit Karma is one of those. We’ve actually built many of our tools for small businesses in a similar way to how easy Credit Karma makes it check on your credit score, so I always like to keep an eye on what those guys are doing for future inspiration. I also like TransferWise and Moneygram since I’m always transferring funds all around the globe. Great apps to break down barriers to getting things done.