India’s Non-Banking Financial Companies (NBFC) sector is experiencing a rapid growth, courtesy macroeconomic conditions and high credit penetration. It is also witnessing disruptive digital trends. Playing a significant role, the corporate sector is helping the NBFCs in adapting tech-driven innovations, writes Rashi Aditi Ghosh of Elets News Network (ENN).
Corporate Sector Boosting NBFCs’ Growth NBFCs are undergoing a great revolution to erupt how financial services have been made available to individuals, businesses and entrepreneurs. The newly discovered focus of NBFCs is receiving a lot of support from the corporate sector in the form of products and services. Explaining about the role of corporate sector in terms of NBFCs, Manish Khera, Chief Executive Office and Founder, Happy Loans ,says , “NBFCs are moving away from a traditional credit data checks and exploring newer ways to include the
underserved masses in India. Happy, a brand of ArthImpact Finserve, offers small digital loans to microentrepreneurs starting from as low as Rs 2000 for as short as 30 days. “These loans are 100 per cent digital and require zero physical documentation. Happy partners with merchant aggregators like Mswipe, Weizman forex, Payworld, PayTm, Aditya Birla bank and more to capture alternate business data of these merchants to offer a line of credit for their retail businesses.” Like the Banking, Financial Services
and Insurance (BFSI) sector, the NBFCs too are inclined towards adapting the digital modes. “NBFC are competing with banks for more than a decade now. Borrowers prefer them over banks as they have faster decision-making capabilities, prompt services, and expertise in niche segments. They are more technologically advanced too. They have expanded its focus to reach NBFCs and microfinance companies with modular and highly customable solutions,” said Punit Jain, Chief Executive Officer, Nelito Systems.
Nelito Systems-Helping NBFCs in Ensuring Innovative offerings
How are NBFCs reinventing themselves and what role is corporate sector playing in this regard? NBFCs are competing with banks for more than a decade now. Borrowers prefer them over banks as they have faster decision-making capabilities, prompt services, and expertise in niche segments. They are more technologically advanced too. They have expanded its focus to reach NBFCs and Microfinance companies with modular and highly customable solutions. Our belief: Agility is achieved through a great product, and agile method of services delivery.
What services do you offer to NBFCs?
Nelito Systems has created a niche for itself by offering its own products as well as services. The comprehensive, open API enabled FinCraftTM Integrated Lending Management Solution (ILMS) delivers unparalleled value to your business – whether you are scaling up or looking to quickly launch new products. Designed to manage the complete loan lifecycle seamlessly, ILMS empowers you to optimize the operations, increase reach by combining straight through processing and analytical capabilities.
What changes did your product and services brought in the NBFCs that you cater to?
We have created an agile framework for NBFCs and Micro Finance Institutions (MFIs). Each NBFC/MFI has different business process and lot of new-age lending companies’ focus on niche markets for their loan products. Our framework is highly configurable to suit faster deployment. The solution also handles large volumes of transactions per day with our Mobile First and Cloud Ready interface.
How Nelito’sFinCraftTM Integrated Lending Management Solution helps NBFCs?
With the help of technology, customers would be able to transact just the way they want. Technology will also allow NBFCs to tailor make products and customise services. They can send out well targeted automated messages, provide more personal access to customers and provide more efficient service. Investing in new technologies will also allow NBFCs to lower their cost whether it is increasing their customer base, servicing existing customers or de-risking the portfolio while trying to overcome the increasing formal credit penetration in a growing economy. l Perennial problems as identified by the Nelito’s client l Manual Lending Process with multiple handoffs and loosely tied controls l Relationship Managers struggle to access accurate information Business leaders lack a comprehensive approach in managing risk and collaterals exposing the enterprise to high credit and operational threats Catering to audit requirements is strenuous as detailed trail of user action is not logged and there is no accountability Advising customers on the right product mix was always a challenge, as RMs rarely have access to reports on customer behaviour which could be tied to relevant product mix and service offerings.
Weak customer services lead to higher attrition l Benefits achieved by our clients through FinCraftTM Integrated Lending Management Solution l Lead to loan disbursement in 30 minutes l Integration with 20 external applications to achieve straight through processing l Cloud ready option for cost effective and secure deployment
Mobile first solution for: l Branchless operations to increase reach in market and reduction in operating cost l Dealer based solution helps in expansion of business. l Automated End to End loan management l Analytics to find cross selling and up selling opportunities l Agility- to quickly accommodate customer’s requirements and customisations.
Corporate Sector is Reinventing NBFCs: Kuliza Case Study
Sharing about the digital complications, Kuliza is a leading brand that helps NBFCs and banks transform their lending processes by providing new-age digital first lending systems, mentions of a case study of a leading NBFC. It describes the challenges it faced and how did the brand helped the financial entity. To cater to the needs of the emerging digital landscape, one of India’s leading NBFCs decided to digitalise its lending process – for both, business and retail lending. The process, which was completely offline earlier, led to high operational costs and customer drop offs. It also did not offer any insights into lending patterns and trends. Digitalising the loan process would not only help the NBFC achieve faster processing time and improve productivity but also serve as ‘value addition’ to today’s tech-savvy generation who prefer digital mediums over the traditional ones.
Challenges Faced by Kuliza’s Client
The leading NBFC had to tackle the following challenges to build a robust solution that could automate the end-toend lending process in line with the most critical requirements identified.
Need for high security and compliance with RBI guidelines Bespoke architecture design and planning to enable the solution to be secure. Design that ensured no server could be accessed from the internet, and only enabling the Application Programming Interface (API) gateway to access the servers inside the security groups.
Achieving a quick go-to-market for new loan products Process diagrams of different journeys had to be configured in the solution to achieve quicker time to market.
Need to adapt to credit model changes
Changing the credit model is a longdrawn process. Therefore, the solution had to be designed to read excel sheets and translate the cell formulas into the calculation code to make the journey agnostic to credit model changes and achieve faster turnarounds.
Fail-proof user journey during third party integration Firstly, the error codes had to be evaluated and based on the results, the journey and the messaging system had to be tweaked to make the user experience more meaningful. Secondly, all failure errors had to be captured, and an immediate alert was to be sent to the support team to help them understand and tackle the issue.
Long user wait times while calling third party APIs were called, and responses were awaited The solution designed had to ensure all the API calls were made ASYNC, eliminating undue waiting for the response. Additionally, user journey was to be brought to a soft-landing when information from the journey was awaited.
Ecosystem with multiple vendors
There were around 23 different vendors in the system who had be accounted for. The NBFC had to successfully tackle the issue by coordinating, planning and assigning clear ownership.
Lack of documentation from multiple vendors
Documents for multiple systems to create product visibility and understanding
Need to accommodate multiple journeys and the scale
The solution architecture had to be designed in such a way that the backend processes could be categorised into subbases and accommodate journeys with different needs. In addition, if scalability issue came up, the required sub-base had to be scaled without affecting other sub-bases.
Multiple incoherent systems made communication difficult
Dealing with different masters across systems (LOS, LMS and SAP) and to create a custom data dictionary.
Solutions Offered by Kuliza
The NBFC built a robust solution to transform their lending process and achieved the following by leveraging Kuliza’s expertise in Architecture Design, DevOps, Development and Support
Quicker GTM due to phase-wise development
The solution was deployed using best practices such as enforcing bucketing of the requirements and having a sprintbased GTM plan to help evolve the product quicker once introduced in the market.
Scalability The categorisation of backend processes into sub-bases made the solution extremely scalable to cater to future growth in volumes.
Bespoke Service Oriented Architecture
Built using bespoke, highly secure and fail-safe architecture, the solution created the roadmap of the lending process and offered BPM and API gateway optimisations. While NBFCs are gradually getting popular due to their services, corporate sector is helping them in attaining their endeavours. The association in the recent times is expected to grow further as NBFCs are perking up their decision- making capabilities services and are getting technologically advanced too.