In an exclusive interview with TimesTech, Kaushal Sampat, Founder of Rubix Data Sciences, delves into the innovative AI-driven solutions offered by Rubix, addressing the critical aspects of credit risk management, supply chain optimization, and export factoring in today’s dynamic business landscape.
Read the full interview here:
TimesTech: With your extensive experience in information services and leadership roles at Dun & Bradstreet India, what drove you to establish Rubix Data Sciences? How does Rubix offer a unique perspective on AI-driven decision-making solutions?
Mr Kaushal: The B2B Risk Information and Analytics domain is fascinating, not just in India but across the world. It serves a very powerful purpose: assessing credit, supplier, and compliance risk which allows trade credit to flow. Since time immemorial, businesses have been concerned about dealing with counterparties and providing credit to them because they are unsure about their creditworthiness. In today’s world, we face the information paradox— there seems to be so much data floating around, and we don’t know if it is accurate and reliable. How do you use this data to take credit and supplier decisions?
This is especially true for SMEs which form the bulk of industry and trade in India and most countries around the world. You may find a ton of information about large listed entities or other incorporated entities on company registries but what about proprietorship and partnership firms? These smaller firms are the ones that desperately need bank and trade credit to manage their cash flows to survive and grow. We found a massive gap in the market in terms of the B2B Risk Assessment of these firms.
This gap is what led to the creation of Rubix Data Sciences along with my former colleagues and friends Mohan Ramaswamy (Co-Founder & CEO), Samir Modi (Co-Founder & CFO), and Dr. Vishnu Ramachandran (Co-Founder & CTO/CPO).
We recognized that we could gather data about these businesses from public statutory data sources, social media, market intelligence, and interaction with these businesses by leveraging technology. Our Analytics Team led by risk analytics veteran Dr. Vishnu Ramachandran (Co-founder & CTO / CPO of Rubix) developed award-winning SME financial estimation models to fill in the data gaps pertaining to small businesses. The team developed Risk Scoring models for different sectors and for firms of different sizes, especially SMEs. Needless to say, handling vast amounts of data required us to deploy analytics and machine learning at scale.
We then developed the award-winning Rubix Automated Risk Management & Monitoring System (ARMS)platform and the Early Warning Signal (EWS) platform to provide CFOs, Credit, Compliance and Supply Chain Managers deep risk insights about their customers, distributors, dealers, franchisees, suppliers, and vendors in India and around the world. The platforms provide risk scoring and monitoring both at a portfolio and granular firm level. You want to know the risk of your distributors in North India, just click a button; you want to check the financial health of your suppliers in China? It’s just a click away.
Today, nearly 1,000 customers including corporates, MNCs, banks, credit insurance companies, and fintechs trust us to help assess the risk of the entities that they deal with in India and overseas.
TimesTech: How do credit risk management and supply chain optimisation intersect in today’s volatile business environment, particularly amid economic slowdowns?
Mr Kaushal: Economic slowdowns highlight the importance of building resilient supply and distribution chains. Quite obviously, in an economic downturn, the creditworthiness of customers, distributors and dealers gets adversely impacted. Unfortunately, this results in defaults even if you have a long-standing relationship with your customers. Credit risk management tools help in assessing the credit risk of your customers and distribution chain. They help alert you to deteriorating credit risk levels and enable you to quickly reduce exposure as may be required.
Equally, a deteriorating economic environment impacts supplier financials. Your best supplier from a year ago could be facing a cash crunch and is unable to meet its supply commitments to you. A constant supplier risk assessment by deploying tools helps you anticipate such disruption.
Supply chain optimisation goes hand in hand with credit risk management because it focuses on identifying vulnerabilities and building flexibility and redundancy in the supply chain. They intersect in today’s volatile business environment in several ways:
Identifying Alternate Suppliers: Risk Management tools help identify risky suppliers but it is not enough to do so. The Supply Chain team needs to identify alternate suppliers and build resilience in the system. Having a strong Supplier Risk Assessment framework helps to weed out weak suppliers and add robust suppliers who can meet their supply obligations despite economic or financial turbulence. Equally, the COVID-19 pandemic and geopolitical tensions have hammered home the requirement of near-shoring (having suppliers close to key markets) and led to the creation of a China+1 strategy to reduce supply chain vulnerability.
Inventory Management: Robust Supply Chain Management helps in optimizing inventory, keeping in mind the prevailing economic environment and geopolitical conditions. In a volatile business environment, businesses might keep more inventory to buffer against supply chain disruptions caused by non-performing suppliers. However, more inventory means more capital tied up in stock, which could increase the financial pressures on the business. Hence, both Risk Management and Supply Chain optimisation teams need to work closely to optimize inventory levels to minimise costs while ensuring sufficient stock availability, taking into account supplier risks.
Cash Flow Management: During slowdowns, cash flow becomes critical for survival. Effective credit risk management ensures that credit is extended to customers with minimal risk of default, preserving cash flow. Supply chain optimisation initiatives also aim to reduce working capital requirements and improve cash flow, aligning with the overall financial objectives of a company in a tough economic environment.
Data Analytics and Technology: Both disciplines rely heavily on data analytics and technology for decision-making. Advanced analytics and predictive models are used in risk management to assess financial strength and predict default probabilities. Similarly, supply chain optimisation leverages data analytics to forecast demand, identify bottlenecks, and optimise logistics. Integrating data and technologies across credit risk management and supply chain functions enables better supplier risk mitigation, enhances operational efficiency and contributes to financial stability.
TimesTech: Could you discuss the significance of export factoring in trade finance and its role in facilitating international trade amidst geopolitical uncertainties and market fluctuations?
Mr Kaushal: Export factoring is a financial solution that allows exporters to receive immediate cash for their sales without the need to wait for their off-shore customers to pay. It is a three-party arrangement wherein an exporter sells its invoices to a factoring company, which then takes on the responsibility of collecting payments from the overseas customers involved in those deals. In fact, it offers a financial lifeline to businesses engaged in international trade. Imagine you are a company exporting medical supplies to South America. The deal is lucrative, but waiting months for overseas payments can strangle your cash flow and hinder your ability to fulfil new orders. This is where a factoring company steps in. The factoring company essentially purchases your unpaid invoices at a discount, providing immediate cash. It then assumes the responsibility of collecting the payment from your overseas buyer.
Therefore, export factoring can play a crucial role in trade finance by providing exporters with a mechanism to mitigate risks associated with international trade, especially amidst geopolitical uncertainties and market fluctuations. There are many ways in which export factoring contributes to facilitating international trade:
Risk Mitigation: Export factoring helps exporters minimise the risk of non-payment or delayed payment by providing them with immediate cash against their accounts receivable. This reduces credit default risk faced by the exporter which is particularly important in regions with unstable political or economic conditions.
Improved Cash Flow: By providing immediate liquidity, export factoring allows exporters to fund their operations, fulfil orders, and invest in growth initiatives without waiting for payment from overseas buyers. This liquidity is especially beneficial during times of market volatility when access to capital may be restricted.
Enhanced Working Capital Management: With the responsibility of credit risk management and collection activities being passed on to the factoring company, exporters can focus on their core business activities while ensuring timely payments. This not only improves working capital management but also enables the exporters to allocate resources more efficiently, even in uncertain market conditions.
Access to International Markets: Export factoring facilitates entry into new markets by providing exporters with the confidence to sell to foreign buyers without exposing themselves to significant payment risks. This enables them to capitalise on opportunities for growth and expansion, even in markets with complex regulatory environments or fluctuating demand.
Flexibility and Customisation: Export factoring offers flexible financing solutions tailored to the specific needs of exporters, including recourse and non-recourse factoring options, pre-export and post-export financing, and single invoice or whole turnover facilities. This flexibility allows exporters to adapt to changing market conditions and optimise their cash flow management strategies.
Credit Risk Assessment: Factors typically conduct thorough credit risk assessments on the foreign buyers in a transaction, providing exporters with valuable insights into the creditworthiness of their customers in international markets. Based on this, exporters can make informed decisions about selling to overseas buyers.
Hedging against Currency Fluctuation: Export factoring can also serve as a hedging mechanism against currency fluctuations by providing exporters with the option to receive payments in their preferred currency or hedge against exchange rate risks through currency hedging products offered by the factoring company.
TimesTech: What is Rubix’s approach to de-risking all stages of the credit lifecycle, and how does it meet the evolving needs of credit, risk, and compliance professionals?
Mr Kaushal: Rubix Data Sciences prides itself on offering a comprehensive, data-driven, and technologically advanced approach to de-risking all stages of the credit lifecycle for businesses. Our core platform, the Rubix Automated Risk Management and Monitoring System (Rubix ARMS), empowers credit, supply chain, compliance, and risk professionals across sectors to make informed decisions with confidence. Whether you are a bank, NBFC, corporate entity, or fintech, Rubix can be your partner in navigating the complexities of today’s financial landscape.
Right from the start of a transaction life cycle, Rubix helps ensure you are onboarding the right partners. We provide solutions like Video KYC, Key Registration Checks, and Promoter ID checks to thoroughly validate the identities of your potential counterparties. Additionally, as India’s first validation agent for the Legal Entity Identifier (LEI), we help companies acquire their unique LEI code that streamlines the KYC process and fosters trust through transparency.
Once you’ve onboarded the right partners, Rubix ARMS comes into play to assess their creditworthiness. This platform evaluates potential distributors, dealers, customers, suppliers, and more, forming the basis for setting credit limits, identifying potential supplier risks, and ensuring compliance with relevant regulations. But risk management isn’t a one-time event. Therefore, our Rubix Early Warning System (EWS) continuously monitors the risk profile of your counterparties. It tracks changes in various data sources, including statutory compliance filings, news, and media, to provide you with a dynamic view of your partners’ evolving risk profile. This allows for adjustments to credit limits and risk scores as needed.
Finally, Rubix understands that even the most thorough risk management strategies can’t eliminate the possibility of encountering late payments or defaults. That’s why we offer end-to-end B2B debt collection solutions. Combining our data analytics expertise with the capabilities of leading legal firms and field collection teams, we help you recover your dues and minimise the Days Sales Outstanding (DSO).
By providing a comprehensive suite of solutions that leverage data, cutting-edge technology, and regulatory compliance best practices, Rubix Data Sciences empowers businesses to make prudent credit decisions, build stronger relationships with counterparties, and ultimately achieve financial stability and growth.
TimesTech: How does Rubix leverage analytics to mitigate supply chain finance risks?
Mr Kaushal: Rubix employs advanced analytics and machine learning to bolster supply chain resilience and mitigate finance risks. Our solutions are designed to provide comprehensive risk assessment and monitoring throughout the supply chain lifecycle.
Rubix Video KYC: In today’s complex global supply chains, ensuring the legitimacy and integrity of your counterparties is paramount. Mitigating risks like fraud, counterfeiting, and money laundering is crucial for protecting your business and maintaining regulatory compliance. Therefore, we empower businesses to streamline counterparty onboarding with the Rubix Video KYC solution. This cutting-edge system leverages the power of AI through advanced Optical Character Recognition (OCR) and facial recognition technology. During live video calls, it facilitates secure and seamless identity verification. Our solution seamlessly cross-checks the provided identity documents against trusted statutory databases like Aadhar and PAN in India. Additionally, we employ real-time geolocation tagging and liveness checks to ensure the physical presence and authenticity of the individual being verified. This comprehensive approach delivers unparalleled accuracy and regulatory compliance, making Rubix Video KYC the ideal solution for onboarding counterparties across diverse industries. This comprehensive approach strengthens your entire supply chain by ensuring the legitimacy of your counterparties. By deterring fraudulent activity and ensuring regulatory compliance, Rubix Video KYC empowers businesses to build stronger, more resilient supply chains.
Rubix ARMS platform: This platform gathers and analyses vast amounts of data from internal and external sources. Sectoral Credit Risk Models are then deployed to generate Risk Scores on counterparties in each particular sector. These Credit Risk Models are basically probability of default models (PD models). The Risk Scoring Model factors variables such as factors such as financial performance, payment track record, transaction history, management background, external credit ratings and even non-financial data like court records and social media (employee and customer feedback) etc.
Rubix Risk Scoring employs an eight-point risk scale and scores credit risk from 0 (Highest Risk) to 100 (Lowest Risk). These Risk Scores facilitate informed credit limit setting and decision-making, reducing the likelihood of default.
Rubix EWS platform: The Rubix EWS platform offers near real-time monitoring of counterparties’ risk profiles by continuously tracking various parameters, including statutory filings, litigation data and external credit ratings. This enables proactive risk mitigation and timely response to emerging defaults.
Various banks, NBFCs, fintechs and credit insurance companies rely on Rubix to assess the credit risk of entities to whom supplier finance is being provided.
TimesTech: What strategies can businesses adopt to enhance supply chain resilience in today’s volatile market?
Mr Kaushal: In today’s turbulent market, where disruptions can arise from geopolitical tensions to natural disasters, building a resilient supply chain is no longer a luxury, it’s a necessity.
Reshoring and Nearshoring: Traditionally, companies sought lower production costs by offshoring. However, recent events have highlighted the vulnerability of long, international supply chains. Reshoring, bringing production back home, or nearshoring, placing it in geographically closer countries, can shorten lead times and reduce reliance on distant suppliers. This can also have a positive impact on a company’s carbon footprint by reducing transportation emissions.
Supplier Network Diversification: Don’t put all your eggs in one basket may be an old cliché, but is an important lesson. Spreading your supplier base across different geographical regions lessens the blow from disruptions in any single location. This might involve identifying secondary suppliers with comparable quality standards or fostering relationships with local vendors who can provide faster response times in the event of a primary supplier disruption. The China +1 Strategy being deployed by leading MNCs around the world is a great example of supplier network diversification.
Inventory Buffer Management: While excessive stockpiling can be wasteful, strategically placed buffers of critical materials or finished goods can act as a shock absorber during disruptions. However, companies should leverage data analytics to optimise these buffers, ensuring they hold just enough inventory to weather short-term storms without incurring unnecessary carrying costs. Additionally, exploring safety stock programs with key suppliers can provide a reliable buffer without requiring companies to hold excess inventory themselves.
Demand Forecasting and Collaboration: Gone are the days of siloed operations; by collaborating with customers, retailers and distributors, companies can gain better insights into future demand fluctuations. This foresight allows for more flexible production planning and the ability to adjust inventory levels proactively. Additionally, Collaborative Planning, Forecasting, and Replenishment (CPFR) techniques can be implemented to streamline information sharing across the supply chain, enabling all parties to optimise inventory levels and meet customer demand more effectively.
Digital Transformation: Supply Chain Management Systems (SCMS) and Enterprise Resource Planning (ERP) software integrate data across the entire supply chain, providing real-time visibility into inventory levels, production schedules, and potential bottlenecks. This empowers businesses to react swiftly to disruptions and make data-driven decisions. Additionally, integrating blockchain technology can enhance transparency and traceability within the supply chain, allowing companies to track the movement of goods more effectively and identify potential issues before they snowball.
Advanced Analytics: Leveraging data analytics allows companies to move beyond reactive measures to proactive risk management. By analysing past disruptions, market trends, and supplier performance data, businesses can identify potential vulnerabilities and develop contingency plans to mitigate their impact. Predictive analytics can also be employed to forecast potential disruptions and allow companies to take preventative actions, such as securing alternative sources of materials or expediting production schedules.
Supplier Relationship Management (SRM): Building strong, collaborative relationships with suppliers goes beyond simply negotiating the lowest price. Regular communication, information sharing, and joint planning exercises foster trust and transparency, enabling all parties to weather challenges together. SRM programs can also involve jointly developing quality standards, implementing supplier performance monitoring processes, and collaborating on innovation initiatives.
Investing in People: A skilled and adaptable workforce is vital for supply chain resilience. Empowering employees through training and fostering a culture of innovation equips them to think critically and find solutions during disruptions. Cross-functional teams comprised of individuals from procurement, logistics, operations and risk management can work together to develop contingency plans and identify improvement opportunities throughout the supply chain.
Supply chain resilience is not a one-time fix; it’s an ongoing process that requires continuous monitoring, adaptation, and investment. As the business environment becomes more volatile due to economic downturns and geopolitical conflicts, companies that prioritise supply chain resilience will be better positioned to navigate challenges, ensure customer satisfaction, and thrive in the long run.
TimesTech: In decision-making processes, how crucial is master data management, and how does Rubix incorporate it into its solutions to empower businesses?
Mr Kaushal: Master Data Management (MDM) plays a very crucial role in effective decision-making across an organisation. Imagine trying to navigate a city with outdated or inaccurate maps. In the business world, data is your map, and master data, encompassing critical information on customers, products, suppliers, and more, is the most essential part. MDM ensures a ‘single source of truth’ for this data, meaning everyone in the company is relying on the same consistent and high-quality information. This eliminates the dangers of basing decisions on inaccurate or conflicting data points scattered throughout various systems (data silos). With MDM in place, businesses can be confident that their analytics and reports are using correct and accurate data to reflect a true picture of reality. This empowers leaders to make well-informed business decisions. Furthermore, MDM improves data quality by identifying and correcting errors and inconsistencies. This not only fosters trust in the data but also allows for more sophisticated data analysis, leading to deeper insights that might otherwise be missed. In essence, MDM provides the foundation for data-driven decision-making. Without it, businesses risk basing critical choices on faulty information, potentially leading to missed opportunities, wasted resources, and even damaged customer relationships.
Rubix solutions are built on three pillars: Data, Analytics and Technology. Each year we perform over 200,000 risk assessments and look at more than 1,000 data elements for each assessment. Hence, we integrate millions of structured and unstructured data elements from 150+ data sources in a year. It is imperative that the data we analyse is of high quality in order to ensure that our Risk Scores and Business Information Reports are accurate and reliable. It would be impossible to do this without robust Master Data Management practices. We have built MDM protocols into all that we do at Rubix. In fact, we are now assisting several of our large customers in managing their data across business functions by deploying our MDM solutions.
