How are NBFCs overcoming digital challenges?

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India has witnessed phenomenal economic growth in the recent past and that has raised it to the position of the seventh largest economy in the world. However, this economic growth has been sporadic across the region with the urban population reaping the benefits of the economic boom while the rural population (still a major chunk of the population) having little or no means to access them.

To address the situation at hand, the Government of India has been aggressively pushing the idea of financial inclusion to which Non-Banking Financial Companies (NBFCs)responded in kind by focusing on extending their products and service offerings to bank the unbanked.

However, due to reasons such as poor network connectivity, extensive paperwork, and high customer acquisition costs, NBFCs have found it hard in the past, to make their offerings available to the entire spectrum of their target audience.

All that is changing;Mobile first as a business model is gaining popularity worldwide and it is expected that by 2020, 315 million people living in rural India will be connected to the Internet. This implies that more and more people would have access to financial products and services offered through digital channels. These figures make a strong case in point as to why a digital transformation journey is so important for NBFCs. It is also important to note that recent advancements in technology have created synergies in business, operations, analytics, and mobile technologies that will help NBFCs deliver financial offerings in an efficient and cost-effective model.

A digital transformation initiative is mutually beneficial for both NBFCs and their clientele alike. Using digital technologies, NBFCs can mitigate risks involved in dealing with cash by switching to digital modes of payments while customers can use safe and secure ways of making payments through digital channels. This approach saves considerable amount of time and effort involved in collecting and dropping off money. Today, the bulk of financial transactions undertaken by NBFCs generally include disbursements of loans. By going digital, NBFC customers would benefit from quicker loan processing due to the ready availability of customer data. Thus, investing in technology would reduce capital expenditure and improve operational efficiency.

For example, a prominent micro-finance institution offers their customers several types of loan products with an optional insurance coverage. However, in the unfortunate event of a death, the existing claim management and settlement process was time-consuming, resource intensive, and prone to operational errors.

Using i-exceed’s Appzillon Insurance Claim Management, the micro-finance institution was able to automate the process to improve operational efficiency and accuracy. This was possible due to Appzillon’s automated integration capabilities with backend financial systems, efficient data capture and document archiving features, maker-checker processes at every stage, dynamic workflow management, tracking mechanisms to monitor different stages of the settlement process, information dashboards with customisable filters, and last but not the least, report generation capabilities for senior management to track claims and tweak processes for better operational efficiency.

Addressing the move, i-exceed’s Executive Director S.Sundararajan commented, “i-exceed is present right at the centre of India’s financial inclusion initiative. Out of the 10 NBFCs / microfinance institutions that received RBI’s in-principle approval to start small finance banks in 2015, four of them today useour flagship product Appzillon to realize their digital transformation initiatives. The agile and reusable approach offered by Appzillon reduces the time and cost involved in deploying digital solutions thereby assuring their success in banking the unbanked.”

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