Bringing Glitter Of Gold In Banking Sector

K N C Nair
CIO, Muthoot Group

“We have a strong IT team here, we took around 18 months to develop a Core Banking  Solution, which is flexible, user friendly and extremely cost effective,” says K N C Nair. In conversation with Sunil Kumar

Please provide us with an overview of the work that Muthoot Group is doing in the financial sector in India?
Muthoot Group has 4400+ branches across the country; these branches are spread across 21 states and 4 Union Territories. Basically we are one of India’s largest gold loan companies; our gold loan business continues to grow at a healthy rate. We provide loans to individuals who are ready to pledge their gold and are not able to approach banks for immediate requirement. We ensure that they are able to access formal credit within a reasonable time. When they come to us, they get a loan within minutes of pledging their gold to us. The formalities take very less time to complete. It is almost like going in ATM and withdrawing Cash. We are also contributing to financial inclusion. This is because more than 60 percent of our branches are in very rural areas where there bank branches are unable to reach. We provide loans in these areas and thus we save the customers from the associated risks of having to go to unorganized money lenders or brokers who charge very high interest.

Muthoot Group has applied for banking licenses. What kinds of opportunities do you see in this sector?
From our point of view, Muthoot Group is a suitable candidate for being awarded the banking license in the country. This is because we already have more than 2500 branches in rural areas. It will be much easier for us to convert the branches into banking operations. We also know the customers, as we have been operating in these areas for many decades now. All these are the factors that will help us provide high quality banking services to people in all parts of the country.

Can you tell us about your initiatives taken on the technological front? How did the company adapt to the technology? Any milestones you would like to mention specifically?
We have been doing the transactions processing with each branch having a PC based LAN system, where the customer data is captured there with its own database. At the end of the day, we used to update the central system with all the transactions done during the day. This had many constraints as it could not enable us to provide anywhere, anytime, banking services to the customers; his relationship would be confined to any particular branch. Essential central control was also limited as each branch is having its own database, with problems like customer duplication across branches, laxity in KYC, etc. So we have developed a core banking solution and interconnected all the branches to the centralised database just like banks have implemented the core banking solutions. In our case we didn’t have any standard package available in the market. We decided to develop our own software considering all the pros and cons. Fortunately we had a strong IT team in house and it took around 18 months to develop the solution which is flexible, user friendly and extremely cost effective too. We could roll it out across all the branches within nine months. CBS helps our customer to do the transaction very fast. For example, he has to complete the KYC formalities one time. We take the required documents, scan it and feed it into the system. Also system takes the photograph thru the Web cam and store in the system and within 10 – 15 minutes, we can finfish all the processes. Technology is helping us to attain effective centralized control and better efficiencies.

When it comes to making IT implementations in a diverse organisation like Muthoot, what are the key challenges that you face? What are the solutions to these challenges?
One of the major problems that we face is related to connectivity. As I mentioned earlier, we are having branches in very remote rural areas, where connectivity is either unavailable or is irregular and of bad quality. This is a major challenge. To overcome this challenge, we have fine tuned the software that we are using for CBS so that it can work on the normal broadband connectivity. There is no need of dedicated line or leased line. Of course, we also face other challenges like nonavailability of regular power supply in remote areas. In such cases we have to manage with UPS and battery backup.

Financial Services are sensitive sector in the sense that they deal with the lifelong savings of the people. How are your technological solutions addressing these inherent complexities?
Security issue wise, for the customer data, the privacy and confidentiality are fully ensured through the CBS system design. Encrypting of data is done before transmitting it to the central database. We have co located our servers in a highly secured Datacenter in Bangalore; we have also installed other security systems like filters, firewalls, intrusion detection system, and prevention system at the Datacenter.

Muthoot Group is a suitable candidate for being awarded the banking license in the country

To deepen the ATM infrastructure in the country, Government has permitted non-banks to set up, own and operate white lable ATMs (WLAs) in India. What kind of role is Muthoot playing in this initiative?
In June 2012, the Reserve Bank of India had issued policy guidelines permitting non-bank entities to set up and operate WLAs in the country after seeking Authorisation under the Payment and Settlement Systems Act, 2007. We are one of the few organisations that have been given the license to own and operate white label ATMs. Now we are at the final stage of implementing this initiative and in the next three years we could have more than 9000 WLAs in place. Muthoot Group aims to set-up these WLAs in three years time span – 1000 in first year; 2000 in second year and 6000 in third year. Having a dominant presence in the country with 4000+ branches in over 21 states & 4 Union Territories of India, the company has taken a strategic decision to establish 65 percent of these WLAs in semi-urban and rural areas. White Label ATMs will extend basic banking services, including cash withdrawals, to debit/credit/prepaid card customers of Indian banks, at convenient locations.

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