The 2022 state of food and agriculture report released by FAO is all about automation in agriculture. It states the main problem with the automation of farming processes is the immaturity of technologies and the lack of necessary infrastructure to take full advantage of them.

Yet one technology – satellite monitoring – already hit the market and is ready for scaled use all over the world. While its advantages for farming and agricultural businesses around the world are already well-known, many banks and insurance companies working with such clientele are yet to introduce it into their workflow and increase their effectiveness. And with the satellite-driven crop monitoring solutions provided by EOS Data Analytics, a global provider of AI-powered satellite imagery analytics, there are at least five ways to achieve that.

1.     Improved loss mitigation strategies. The analytics available in the EOSDA Crop Monitoring, an online satellite-based precision agriculture platform for field monitoring, provides up-to-date data on weather patterns, crop growth, and soil moisture levels. This information helps banks and insurance companies to monitor yields, anticipate potential risks such as droughts or floods, and develop improved loss mitigation strategies.

2.     More informed lending decisions. Objective data on farmers' land use and farming practices enable the finance and banking businesses to assess credit risk more accurately. Since satellite images and analytics remain in the system, the easily available historical data on the quality of crops grown in the fields of interest may become essential for making more informed lending decisions, not to mention that it also reduces the need for on-site visits to farms.

3.     Alignment with environmental requirements. Insurance and banking companies increasingly need to ensure that their lending practices align with environmental and social standards. Satellite data – and the analytics on top of it – can also be used to monitor compliance with such standards by providing data on various environmental indicators. As a result, a lending decision strategy can also encourage sustainable and responsible agricultural practices.

4.     Promoting precision agriculture. One of the most obvious processes where satellite data is of most use is the evaluation of new farming projects. Prioritizing agribusinesses caring about yield crop optimization and waste reduction can help foster precision agriculture practices and allow financial institutions to contribute to the UN’s sustainable development goals such as food security.

5.     Climate risk management. Apart from analyzing the effectiveness of farming efforts, satellite imagery can also reveal the effect of climate change on the land and its threat to agricultural productivity. With timely satellite data insights, banks and insurers can identify and evaluate the risks of flooding, drought, or other climate-related hazards and mitigate these risks.

How does satellite data help monitor farms? Image: EOS Data Analytics

"Ultimately, satellite imagery analytics is a game-changer for banks and financial institutions in assessing credit risk and building farm credit trust. By leveraging this technology, they can monitor crop yields, evaluate potential risks, and ensure compliance with environmental and social standards. This enables them to make more informed lending decisions and support sustainable agricultural practices, ultimately promoting economic growth and development in rural communities," states Oleksandr Dzhevaga, Partner Account Executive at EOS Data Analytics.

While the notion of satellite monitoring seems to be established, the future of these technologies will bring even more opportunities for financial services companies working in the agriculture industry.

For instance, in January 2023 EOS Data Analytics launched its first satellite into low Earth orbit. Being the first out of seven spacecraft of the EOS SAT agri-oriented constellation, it is designed to provide even more advanced and precise analytics for field monitoring and crop assessment.

The development of AI technologies already enables custom solutions like yield prediction and crop classification, allowing lenders to come up with even more sophisticated risk assessment models and be more effective in developing countries, where access to credit is limited but tends to be crucial in stimulating agricultural productivity and economic growth.

Overall, with the increasing demand for food and the need to ensure the sustainability of agricultural practices, satellite monitoring technology becomes an indispensable tool for banks and financial institutions worldwide, and those still lagging in adopting it risk losing their market share.