Modern agriculture has to tackle a challenging task: feed the ever-growing world population under unfavorable climate change. The latest estimates suggest the global food demand will hit dramatic 70% growth by 2050, urging around $80 billion investments in farming to supply provision for the projected nine billion people.
Agricultural banks provide agribusinesses with financing for various farming operations, whether crop planting, harvesting, or equipment purchasing. However, before granting landowners loans, banks need to assess farms’ yielding capacity to prevent credit default risk. And this is where EOS Data Analytics solutions may come useful.
We’ve asked Mohammed Altaqatqa, Partner Sales Manager at EOS Data Analytics, about the company’s plans on establishing partnerships with agricultural banks of Australia, New Zealand, and the Middle East and the benefits banks can get from collaboration with EOSDA.
What Expectations Do We Have Entering The Financial Sector?
We believe that satellite-based precision agriculture solutions EOS Data Analytics offers will bring high value to partners in agribusiness banking, providing critical information for loan risk assessment and management. Moreover, this year we’re launching our own satellite under the EOS SAT project — the first agro-focused constellation launched by the company utilizing remote sensing technology enabling us to deliver even more accurate data within our products to serve banks’ specific purposes. For example, before granting a loan to a landowner, a bank can check a farm’s historical data, get information about the cropping power, and evaluate the farmland’s profitability.
What Is The Capacity Of Australian, New Zealand, And The Middle East Financial Markets?
These countries’ financial industry is huge, significantly contributing to regions’ economies. Let’s take a look at Australia first. The total country’s financial services market showed 13.2% growth in 2020﹘2021 fiscal years and made up $10.9 trillion as of June 2021. Agricultural credits amounted to $91.5 billion in August 2021 compared to $84.6 billion in the same period of 2020.
New Zealand’s banking sector contributed $7.86 billion to the state’s economy in 2020.
As to the Middle East, it’s said that, in 2021, only the Top 50 banks valued $513.6 billion, so we can assume the entire financial sector is way bigger.
What Goals Does EOSDA Set Coming Into The Banking Market?
We intend to boost the demand for satellite monitoring as a highly informative technology capable of streamlining the risk assessment process. From what I know, none of the banks in Australia, New Zealand, and the Middle East are using satellite imagery and crop monitoring tools to evaluate the state of farmlands prior to giving loans. It’s a purely untapped market, therefore very attractive to us. Our goal is to approach banks and showcase the new ways of risk assessment powered by space-driven tech.
What Banks’ Challenges Do Our Solutions Help Solve?
The main challenge agri-oriented banks face is an accurate risk assessment to reduce the chance of credit default. They need to define whether clients — smallholding growers, farm-owned cooperatives, and agribusinesses — are eligible to be issued a loan. In other words, banks analyze all available farm-related documents to understand a farmland’s yielding ability and make sure a borrower won’t fail to repay a debt.
Sometimes, to verify the information stated in the documents or complement it with the missing data, banks need to send scouts to physically check the fields. It’s quite a painstaking and time-consuming task, requiring a good few man-hours and efforts. However, satellite-powered technologies may significantly ease this job! With crop monitoring platforms like ours, bank employees can quickly access a farm’s historical data, assess the field’s productivity and crop-producing power, and offer loan conditions based on the received data. We also can do custom yield prediction projects on a field or even on a country level to help banks perform more precise risk assessments and reduce the percentage of defaulters.
How Many Users From Australia, New Zealand, And The Middle East Utilize EOSDA Products?
According to our internal estimation, more than 1,000 users from Australia have monitored 208,000+ ha with EOS Crop Monitoring platform within 2019–2021. Also, besides having direct customers, we keep working on growing partnerships with local agricultural banks.
New Zealand’s user base accounts for around 200 users who monitored 37,000+ ha up to now. We’ve recently onboarded a new partner, and we are confident about expanding New Zealand’s partnerships network, considering that loans to NZ agricultural sector totaled $62.5 billion in December 2020.
The Middle East makes up the most considerable portion of the EOSDA portfolio, with over 8,700 users and 2,800,000+ ha covered since 2019.
What Region Out Of Those Three Do We Target Above All?
The Middle East and North Africa region, including Algeria, Egypt, Iraq, Jordan, Libya, Morocco, Oman, Tunisia, and United Arab Emirates (UAE), is the most attractive to us mainly due to the huge potential market and low competition.
Unlike in Australia and New Zealand, only a few agtech companies employ satellite imagery analytics in their solutions in the Middle East. So, we have a great opportunity to introduce our technology, build credibility with customers, and win the market share. Currently, we have one partner in UAE, and we’ll be expanding our presence in 2022 through partnerships with agricultural banks.
What Bottlenecks Do Banks Currently Have In Working With Data That We Can Help With?
The main issues banks have to deal with can be boiled down to:
- Credit default risk — the chance that a farmer will fail to make timely payments or break payment obligations always exists;
- Lack of transparency — the clients may provide false documents about their yields and profit, complicating the process of granting a loan;
- Insufficient data for proper assessment — without comprehensive past and present information, it’s pretty difficult to perform a 360-degree farm’s evaluation;
- Time-consuming scouting, which is sometimes the only way for banks to gather trustworthy information;
- Need in modern methodologies for risk analysis — traditional approach to risk assessment should be now replaced with smarter and faster ways to keep up with the fast-paced business environment;
- Revenue forecasting — the yield prediction may give banks the premises to assume a farm will have enough revenue to pay a loan back.
Which EOSDA Solutions Can Banks Use?
Our EOS Crop Monitoring platform could serve banks’ needs the best. It’s a satellite-driven online software that uses mathematical algorithms to process the satellite imagery and retrieve valuable insights on the state of crops. So instead of analyzing tons of documents and sending scouts, you can check a farmland’s historical data or close-to-real-time information from fields straight away from your comfy office. Moreover, once a loan is approved, banks can provide their clients with access to the platform to control and manage crops.
What EOS Crop Monitoring Features Are The Most Useful For Banks?
I would say these are historical data on fields’ productivity, crop rotation, weather patterns, and soil moisture, and the possibility to overview the crops’ quality in near real time. Based on the received insights, it becomes possible to make a yield prediction — and this matters to banks the most when it goes about crediting farmers. That’s where EOS Crop Monitoring may come in handy.
Also, one more feature that could be helpful is the field leaderboard displaying all the fields at once and allowing a user to get the most important information about each of them at a glance.
What Partnership Options For Banks Do We Offer?
We have two main options:
- The out-of-the-box EOS Crop Monitoring platform (starting from 5,000 ha);
- Simple (Basic) or Advanced White Label. EOS Crop Monitoring White Label is a fully customized platform allowing for applying clients’ branding, changing domain name, getting a mobile application for scouting, and much more, depending on the package.
What Steps Of The Implementation Process Do Banks Go Through?
The out-of-the-box solution is ready to be used immediately after the purchase. As for the white label option, our implementation specialists handle a hassle-free platform creation considering any customization requests the clients might have. It usually takes from four to twelve weeks for the platform to be up and running, and once everything is on track, we still don’t leave our partners alone offering continuous tech support.
We are very supportive to partners bearing in mind that their success is our success. We walk our customers through smooth onboarding, conduct product training, and assign dedicated account managers to address any issues to ensure the best customer experience.
What Benefits And Outcomes Will Banks Have In The Long-run Perspective With The Help Of EOSDA?
Using EOS Crop Monitoring will help:
- Facilitate risk assessment and reduce the credit default risk by providing reliable data on farmlands;
- Ensure better transparency between banks and clients throughout the loan approval process;
- Optimize workflow and time spent on fields’ trips with a scouting app;
- Shorten the loan processing time resulting in handling more loans that will lead to a higher customer satisfaction rate;
- Execute custom projects such as crop type classification, yield prediction on a field and a country level, soil type classification, etc.
We’re excited to expand the EOS Data Analytics business into the financial sector and introduce more agribanks to satellite-based crop monitoring technology capable of streamlining complex loan risk assessment processes.