Muthoot Homefin — Aligning Technology With Strategy

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Imagine the digital footprints being left behind every minute. Every time a person uses his phone to call, message, browse the internet, use social media, recharge – he leaves trail. Intelligent systems can use this data for consumer risk assessment and credit scoring and profiling, says Mehjabeen Taj Aalam, Head of Information Technology at Muthoot Homefin (India) Limited, in an interview with Elets News Network (ENN).

The Home Finance Industry in India is diversifying in alignment with digitisation. What role is Muthoot playing in this regard?

Any line of business capable of diversification would want to enlarge its range of products and field of operations.

But irrespective of the propensity to diversify, the feasibility often falls prey to many delimiters. Digitisation is helping pave the way for making these options viable.

Since the advent of digital lending, the entire drama around initiating a home loan application has been cut.

The stress of visiting branches while waiting queues with piles of paper is uncommon these days. Borrowers today can calculate their eligibility from the comfort of their home and even generate in-principle sanction letters. At Muthoot, we believe in aligning technology with strategy, where it acts as an enabler for both us and our customers. Affordable housing is shifting paradigm and we are hopeful of putting technology to good use.

How do you rate the level of technology adaptation among NonBanking Financial Companies (NBFCs)? Do you think technologies like Artificial intelligence or Machine Learning has a future in India?

NBFCs and small & medium lending firms have the most to gain from the digital wave. Their business models which are based on non-traditional methods of lending and which have a lot of scope and pliancy when it comes to product designs and offerings, can put digitisation to good use. And in fact, they already have! Digitisation is no longer the latest fad in that sector. NBFCs by their very nature, work with higher operational risks, scenarios where their banking counterparts would ideally tighten their purse strings. Technology that can help de-risk the portfolio without impacting the quantum of business will get adopted beyond doubt. Artificial intelligence based analytics is helping organisations track a customer’s journey and design highly customised service offerings. With so many players in the market, customer loyalties have become fragile and customer retention has evolved into a science of its own. Companies are also using AI to manage risk by interpreting regulations and accordingly codifying compliance rules. So you see, all these subsets -AI, machine learning or deep learning, they hog on data and digitisation provides them just that. It’s a pretty selfsustaining model once you’ve got your digital agenda right.

Union Budget 2018 outlined the significance of Blockchain and Fintech in the financial industry. How enduring this would be for the BFSI sector?

Frankly, it’s difficult to predict the durability of these technologies at this point. Agreed that these concepts are revolutionary,and in the wake of their initial success they are touted to be the next big thing, but their usability is yet to be tested to a great extent in the Indian scenario. I mean we have been going gaga about the Cloud for more than a decade now but it’s still in the test mode as far as pureplay financial data is concerned. Cloud adoption has grown but mostly in a hybrid mode. The trust factor with placing sensitive and confidential financial data on cloud is still missing. The hitches are there today, may not be tomorrow, but who can tell? Unless verifiable technical solutions are made available, this tentativeness will keep clinging to it. Blockchain is a decentralised technology. Any stir anywhere, is a function of the entire network. That’s huge. That’s what makes it so attractive to the finance industry. But again, that’s exactly what will make you squirm should something go wrong somewhere. Hence institutions today are playing safe and operating in the experimental mode. The model is pretty much hybrid here as well. Recently RBI banned banks and other entities regulated by it from dealing in virtual currencies. There have been events of frauds around cryptocurrencies where investors lost chunks of money. These are complicated technologies. Don’t toy with them till you understand them fully. The underlying technology concept might not be flawed, but if it’s vulnerable, it’s better to exercise caution. Having said that, the financial industry has the biggest use case for Fintech and digital technology. Because unlike other industries, it is made up of information which is nothing but data which is nothing but digital. It has largely been a good disruption so far as it has helped us operate at lower costs, improve TATs and identify newer business avenues. Going forward, how effectively Fintech is put to use with minimum loopholes will determine its future course of success.

Majority of the populace in the country resides in rural areas. How challenging is it for the financial companies to implement digitisation in the regions where financial inclusion is not yet achieved?

 Indians are the second largest mobile phone users in the world, over 590 million unique users. Out of which 300 million are smartphone users, estimated to double in next 2-3 years. But the digital wave so far has primarily reached consumers who have a high personal disposable income and are well educated and well connected, so I see where your question is coming from. However, the fact to note here is that the next level penetration is pretty much WIP and is constantly catching pace.

Government initiatives like the National Digital Literacy Mission where they aspire to make at least one person per family digitally literate, are contributing to its spread and acceptance. Around 8.2 million people had already been trained under NDLM as on Dec 2016. With such focus on digitisation backed by government support, rural India would soon be on boarding and riding this wave. And in view of this development, lending can actually get very innovative. Technologies that can combine analysis on credit scoring, behavioral study and social analytics will be able to capture a huge underserved market segment and fill a large SME funding gap in rural India.

Technology is significant so is the risk of getting infected with malicious activities. What measures should organisations take for ensuring in terms of safety?

Security risks come with digitisation as fine prints on an agreement, infallibly there, invariably ignored. If you are looking at going digital, the first thing you’ll see standing in your way will be the security question. The more we spread digitally, the more surface area we expose for attack. With hacking scripts available on public forums and plethora of unsecured IoT devices, even amateur hackers are able to dig in. In today’s technical landscape, limited point solutions won’t work. Whatever be your defense mechanism – threat / data breach protection, cybersecurity solution – be mindful of the fact that no solution would be perfect, but taking adequate measures will make a big difference. See, digitisation can make contamination easier and that is exactly why it should be judiciously applied. Do a genuine assessment of your digital needs. And if you choose to go digital, don’t shy away from security expenses. There is no point buying a grand palace and then leaving the doors unguarded for the thugs. How prepared are you will determine if you draw benefits or end up paying a price.

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