Startups in India want to start a rating system of their customers to help them determine if certain habitual offenders should be denied services. Some of these models do exist in some of the developed countries. Now, a consortium of Indian startups is being constituted to develop a model and share it across members, an Economic Times report states.
Take this scenario: Bounce, a scooter rental startup finds that one of its customers has the habit of vandalising its scooters and gets hauled up. If this information is fed into its system, Bounce may deny the vehicle renting facility to that person. Whatâ€™s more, if the vehicle insurance provider Acko is part of this consortium and access such data, it may decide to charge a higher premium from the same customer if he or she approaches for an accident policy.
Concept-wise, this may be no different from the credit rating done by agencies like CIBIL which is then shared with all lenders.
The startups to have already signed up for this initiative are Bounce, home rental startup NestAway, insurance startup Acko and pre-owned two-wheeler financier Wheels EMI. The offline behaviour of the customer gets recorded in a particular format or a rating system is evolved and based on this, the other companies can deal with the customers having low rating. The system must provide for rewarding the ones with high ratings as well. The model is currently under construction and may go online by the end of this year.
Interestingly, there are systems in place in some of the customer-facing apps to rate their behaviour. The challenge will be to place them in one common denominator that can be useful for the other startups to understand and implement in their business. A startup like Bounce has a way of blacklisting customers if they are found to be committing the same offence repeatedly.
In the Indian context, this risk of renting out assets and hoping that the customer will use it properly and return it intact is real and the startups have realized this the hard way. When a startup like Bounce gets into the business of renting two-wheelers it would have worked out a certain level of wear and tear and accidents that would need replacements. These are cost factors and will directly impact the startupâ€™s profitability.
In order not to cross the data privacy limits, the startups may have to take the consent of the customers before the data is shared with the other startups within the consortium. The issue of whether a fee is to be charged for accessing the pooled data has also to be determined.