The Indian economy has been on a favourable track in terms of formal credit deployed, which has been bolstered by increased consumer discretionary income and ease of credit availability. Over the previous decade, credit offtake has increased by 11 per cent, spearheaded by public and private sector banks.
Despite overall credit growth, India is underserved in retail and MSME lending, with household credit to GDP2 ratios behind other key emerging and industrialised nations. Several non-banks have entered the retail lending industry through the use of new lending strategies and product innovation.
NBFCs have outpaced banks in terms of new credit deployment in recent years. They have capitalised on banks’ incapacity to swiftly grow operations and tailor inflexible regulations by utilising technology to access underserved niches. NBFCs have increased their share of total new disbursements at the expense of public sector banks.
Samir Mohanty, Chief Transformation Officer, Avanse Financial Services, at a panel discussion at Elets 12th 100Tech Summit, stated that, “AI is one area which has created a lot of revolution in the NBFC space. The sales side is yet to be explored. We are also using AI in the credit decisioning piece because the industry we belong to is all about alternate data and AI. When we fund a student , there is no bureau imprint; that’s the reason we are getting into it as AI is far more relevant for us. Another area that the NBFCs are looking into is Robotic Process Automation. Wherever you’ll find a challenge, your requirements will be always outpaced by technology availability and here, RPA can play a major role.”
The other panellists also talked about the different stages of evolution in the NBFC sector.
Varun Bhalla, Country Manager India, Provenir, said that, “Where we come from we look at it as an outside in view. We get to work with a lot of different NBFCs at different stages. We see a lot of NBFCs which are at different stages of evolution. There are ways where people have been able to extract additional value by building a single customer view layer. Once you get a customer into your ecosystem, how do you map out his journey? And make sure that you will provide him additional loans through out his life cycle. To map this, some of our customers have done really well. By building a data aggregation layer at the backend and combining that with multiple decisioning capabilities. Which can work when they are interacting with real time customers, as well as going on, and taking those calls later on in their journey with them.”
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Rishabh Garg, Chief Technology Officer, UGRO Capital, stated, “UGRO Capital has a presence across more than a hundred cities and we also have physical branches. We embraced the best of both worlds physical and digital. Physical presence is required to have confidence and digital presence is required to make the whole process of loan onboarding very efficient.”
Subhash Kelkar, Chief Technology & Digital Officer, ICICI Securities, said that, “think resilience is extremely important because our customers are mainly on digital platforms; they are either on their mobiles or on their websites. And all of their transactions need to be carried out in real-time and as quickly as possible. So they would expect the platform to be alive and kicking, performant, scalable and reliable. From the day they log in to the day they log out. It is a hygiene factor for us; but at the same time we have to think about DR, we have to think about scalability. And we have to think about availability zones instead of just saying we are on the cloud. Because sometimes cloud also does’nt works.”
Vitthal Naik, Chief Technology Officer, Profectus Capital, said that, “We are in SME financing and in our case, the richness of data and the transaction experience is very important. So when we evaluate an SME for giving a loan, we collect a bunch of data and a bunch of documents. All these documents are financial statements, bureau records, banking history, GST records, and property documents. So how efficiently you can extract all the data so that the credit guys can take fast and right decisions, is the key.”
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